Do you have a financial backup plan if your regular source of income suddenly stops? If no, then consider a Monthly Investment Plan or MIP. MIPs are debt-oriented hybrid mutual funds that invest 70% to 80% of their corpus in debt instruments. The remaining part goes into stocks. This division makes MIPs an ideal investment for risk-averse investors.

These funds help during financial adversity because they provide investors periodic or monthly pay-outs, depending on the fund’s performance. This feature often makes MIPs an alternative source of income. No wonder why several senior citizens or retired individuals opt for MIPs as they usually don’t have a continuous stream of funds coming in every month.

Should you invest in MIPs?

If you desire a possible alternate income source and want limited exposure to equity markets, invest in MIPS. Know that this instrument works wonders for people who don’t carry a stomach for risks. If you have a significant chunk of savings, parking them in MIPs can earn you a regular income.

These funds are also an excellent purchase for individuals who wish to buy mutual funds online for the first time. Not only will it give them a lick of the stock market, but it will also build their confidence in MFs.

Income Plan

Types of MIPs

Broadly speaking, there are two types of monthly investment plans. These include:

Growth-oriented MIP

Here, whatever you earn on the capital is added to your total invested amount. This way, you create wealth and grow your corpus simultaneously.

Dividend-oriented MIP

Here, you earn only from dividends. A salient feature of dividend-oriented MIP is that you don’t pay any tax on the dividend earned. Such funds distribute dividends only when the fund earns a profit.

Key features and benefits of MIPs

  • These funds don’t have an upper cap on investment. Meaning, you can start one with as high a sum as you want. MIPS awards investors the flexibility to invest according to their comfort and financial capability.
  • It costs nothing to start a MIP other than the amount you wish to deposit. Investors don’t pay any processing fee or entry load charges for
  • investing in this instrument.
  • MIPS comes with no lock-in period, which makes them entirely liquid. If an emergency befalls, you can quickly liquidate MIPs to cover your financial adversity.
  • Typically, MIPs offer higher returns than traditional savings instruments like post office monthly income schemes or fixed deposits.
  • MIPs are famous for being a low-risk instrument, as they invest in fixed-income instruments and dividend stocks.

To sum up

If, along with MIPs, you’re looking for other investment plans where you can deposit money every month, consider SIPs. You can start a systematic investment plan with only a few thousand rupees and earn steady and significant returns over time. This instrument invests in MFs and is a popular choice among savers.

Are you looking for an institution that can help you invest in MIPs or other types of MFs? If so, then consider Tata Capital Money. They offer a platform for investing in various financial instruments. You can compare and apply for a diverse set of MFs using their online portal or the Money app.