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Investing in MIPs

These attempt to provide regular incomes and not guarantee it

I have Rs 10 lakh that I want to invest in a monthly income scheme of a mutual fund, so that I get a fixed return every month. Please suggest the best monthly investment plan (MIP)

Monthly income plans (MIP) do not guarantee returns. For instance, in 2008, three MIPs, DSPBR Savings Manager Moderate, DSPBR Savings Manager Aggressive and DWS MIP B did not pay any dividend at all. MIPs aim to pro-vide 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, it is not guaranteed. A risk-averse investor, who cannot bear any capital erosion or needs assured returns, should avoid such investments and consider the fixed monthly returns offered by the post office monthly income scheme. However, if you are capable of undertaking some amount of risk, then opt for an MIP such as Birla Sun Life MIP II Savings 5, HDFC MIP Long-term or Reliance MIP.

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