Retirement is phase of your life. You have crossed all hurdles of financial or personal coming in way of your career. In order to relax and to lead peaceful life. Probably, in retirement you look for Safety of corpus. This can be made possible by parking your hard earned money at right place and in right manner. And these three schemes help to plan your finance. You can also read pension planning schemes.
Three types of monthly income schemes after retirement
You can invest in different ways to grow your money in most effective manner. At this point, most important thing is principal amount. You might be looking for some investment options that give decent returns without taking much risk. So you cannot opt to take high risk at this stage. Hence, view what is retirement planning?
Similarly, three schemes work in similar style. Such as Mutual Fund Systematic Withdrawal Plan (MF SWP), (POMIS) and Pradhan Mantri Vaya Vandana Yojana (PMVVY). You need to deposit funds to agent. In case of these schemes you need to deposit fund to LIC agent. And in case of Mutual Fund Systematic Withdrawal Plan you need to visit any fund house.
Thus, agent will invest your funds in market. Furthermore, they promise to fixed amount of money periodically. In addition, agent will promise to get interest rate. Agent need to know about where you want to invest your life savings depends on three schemes.
As above, 60 years age person can apply for PMVVY only. And you can apply till May 3, 2018 only. In case of PMVVY and MF SWP you can decide frequency receiving amount. Like monthly, quarterly, yearly or half yearly. And for POMIS there is time period to receive because promised funds is fixed.
What is Mutual Fund SWP?
Systematic Withdrawal Plan (SWP) is offer by mutual funds. And it provides you with specific amount of payout at fixed time. Like monthly, quarterly, half-yearly or annually. You can opt for Mutual Fund SWP for two reasons. Such as to meet your requirement after your retirement and for purpose of tax planning.
Post Office Monthly Income Scheme (POMIS) scheme
POMIS is five year investment with Maximum cap of Rs 9 lakh. And it is under joint ownership or single ownership with Rs 4.5 lakh cap. But interest rate is set each quarter. Investment in POMIS does not have any tax benefit and interest is fully taxable.
On the other hand, a penalty is levied on premature withdrawal. The account can be easily transferred to another post office. That’s why it is the one of the best options for those in the lower tax bracket.
Further, if you invest in POMIS you will receive money in your post office account every month through NET. And this scheme gives provision to link your recurring deposit account. At least for one year you need to keep invested in post office scheme.
Like post offices, mutual funds also offer income plans. But regular income comes from dividend payouts which are tax-free. Also, amount is not fixed in mutual fund. However, unlike post office plans returns are guaranteed. Hence, there is no such surety about dividends from mutual funds.
In case of PMVVY and POMIS income tax is levied on fixed amount received. Also after three years policy you can avail loans up to 75% of purchase price in PMVVY. Hence, loan interest will be recovered from pension installments.
Hence, PMVVY and POMIS are designed for retirements with no risk factor. But in MF SWP you can enter indirectly in stock market. And it is designed for retirement income. Therefore mutual fund investment risk is applicable to MF SWP. Hence, check list of Insurance companies in NSE exchange
Finally, you can also read why mutual funds are better than stocks. However, check best monthly income plan for senior citizen. And you can see types LIC monthly income policy. Hence, check Best mutual funds for all your different financial goals.