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I want an annual income of Rs 20,000. For that, should I invest an amount of Rs 3 lakh in MIS or opt for the dividend option of a mutual fund? Is there any other option apart from these that I can go for?
-Ajay
MIS will give you guaranteed returns, even when you go in for a renewal after maturity in 5-6 years, your principle will remain constant and you will keep getting regular income. But the disadvantage of MIS is that fixed income investments are unable to beat inflation by themselves, and the gains from your MIS investments will be added to your taxable income. On the other hand, a mutual fund MIP will get inflation-beating returns, but you will witness market related ups & downs. We would suggest that if you can't reconcile with market fluctuations, then go for the guaranteed returns that a post office MIP will give you.
This article was originally published on February 23, 2012.
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