My dad retired in December 2009. Would a Monthly Income Plan of a mutual fund be of any help to him? Kindly enlighten me on any other plans.
- Hrishikesh A Morajkar
Monthyly Income Plans (MIPs) aim to provide a regular income by investing around 80-90 per cent in debt. The balance is invested in equity to deliver capital appreciation. Though they attempt to give dividends every month, they do not guarantee it nor can they assure you of capital safety.
A risk averse investor who can't bear any capital erosion or needs assured returns should avoid such investments. However, if your father is capable of undertaking some amount of risk, then he can opt for an MIP such as Birla Sun Life Monthly Income or HSBC MIP Regular. Alternatively, a small amount from the entire portfolio can be put in such plans. However, if your father is 60 or above, then he may invest in Senior Citizens Savings Scheme (SCSS) and earn assured returns. With a maturity period of 5 years (extendable by another three years), he would be able to earn a fixed return of 9 per cent per annum compounded quarterly.
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This article was originally published on April 26, 2010.
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