What is the best investment option for fixed income, know the opinion of experts
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Long Term Investment Plans: Fixed income investment has always been the choice of investors who expect a stable return without taking any risk. Based on the financial goal of an investor, the investment strategy can be divided into 3 categories short term, medium term and long term. Each category has its own advantages and disadvantages, but generally investors prefer to go for long-term investments, as it reduces the effect of volatility, giving you a better chance of earning dividends. Long term investments can enable you to earn market-based returns or fixed income depending on your risk tolerance.
Pure equity schemes should be avoided for regular income!
According to a Mint report, according to Sharekhan super investor Gautam Kalia, investors who depend on regular income from their investments generally have a low risk appetite. Hence one should not go with pure equity schemes for regular income. Investors should invest in dynamic asset allocation category schemes. The schemes in this category invest in equity and debt instruments and vary the net equity exposure, as per the market scenario. Since these are hybrid schemes investing in equity and debt instruments, the investor starts earning regular income from these schemes after 1.5 years.
Know what is the better option for regular monthly income
Whereas, according to S Ravi, Founder and Managing Partner, Ravi Rajan & Co, some options in the financial markets can generate regular monthly income as a long-term investment strategy.
1. Dividend-paying stocks: Investing in shares of companies with a history of consistent dividend pay-outs can provide a regular monthly income stream. Dividend yield and the financial health of the company are important factors to consider when selecting stocks.
2. Bonds: Government bonds or corporate bonds can provide regular monthly income with a fixed interest rate. To reduce the credit risk it is necessary to invest in high rated bonds.
3. Real Estate Investment Trusts (REITs): REITs invest in income generating properties and distribute income to investors. Investing in REITs can provide a steady monthly income stream.
4. Peer-to-Peer Lending: Investing in peer-to-peer lending platforms that connect borrowers with investors can generate monthly income in the form of interest payments.
Note: As an investor, you should carefully assess your risk appetite, financial goals and market conditions before choosing any investment option. The size of the investment also plays a big role and investments made from borrowed funds can give negative returns.
What is the option for those with regular monthly salary?
According to Abhinav Angirish, Founder, Investonline.in, considering that different types of investment plans have been designed keeping in mind the needs and preferences of different types of investors. It is important to understand the benefits associated with different types of investment strategies, people who are employed and get a regular monthly salary should invest in investments that lay emphasis on growth and capital appreciation strategy.
Some of the options available for regular monthly income are Senior Citizen Savings Scheme, Monthly Income Plan, Post Office Monthly Income Plan, Fixed Deposit, and Systematic Withdrawal Plan (SWP).
– Each investor has different amount available for investment, risk appetite, expected return and planned holding period. Some people make one big investment, while others make smaller, more frequent investments through SIPs (Systematic Investment Plans).
Fund houses offer a wide range of resources and services to meet the return and income requirements of different types of investors. Systematic Withdrawal Plan (SWP) is a facility where investors get consistent returns on their investments.
– SWP (Systematic Withdrawal Plan) is a facility provided by mutual funds that allows an investor to withdraw a fixed amount from his mutual fund investments at regular intervals (monthly, quarterly, etc.).
How does SWP work?
An account is set up with the fund house after the investor has chosen a mutual fund to invest in.
– The investor can decide whether to invest in mutual funds on a regular basis or in a single payment.
– Investor chooses the SWP option and sets the amount and timing of the withdrawal.
– To meet the withdrawal request of the investor, the mutual fund sells the units of the fund, and the investor receives the money in his account.
– Until the investor cancels the SWP or the investment value falls to zero, the mutual fund continues to sell units at pre-determined intervals to meet the withdrawal request.
– A portfolio of assets for income generation and a portfolio of investments for capital growth are very different. While income generating investments may not be in favor with the vast majority of investors as they do not offer high returns, they guarantee a steady income in the future.
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