If you are looking to get monthly returns, then a Monthly Income Plan (MIP) in mutual funds can be a great option. The scheme is ideal for those investors who want to generate regular returns with low risk and offers higher returns than fixed deposits. These funds are debt-oriented and give dividends. This option can work well for individuals who need money on a regular basis for any expenses or commitments. Many investors also prefer a systematic plan for taking care of their planned needs so they can have better control over their investments and withdrawals.
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Returns from MIPs:
MIPs are debt mutual fund schemes which invest a small portion of the funds in equities for capital appreciation. From the remaining part, the scheme provides a regular income to the investor (monthly, quarterly or half-yearly) via dividend payouts. The type of equities the funds will invest in vary. Some funds focus primarily on small, medium, or large-sized companies, while others take a mixed approach. The returns in MIPs may fluctuate between 8 per cent and 10 per cent.
Even though these funds are termed Monthly Income Plans, they do not guarantee monthly income. Investors can expect a steady return when the market is strong but can see a downturn when the market is bearish. As per Investopedia, MIPs are significantly popular among investors in India.
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How to get started with mutual funds:
There are several good platforms available for making investments in mutual funds, such as Groww, Kuvera, and Coin by Zerodha. You can simply create a Demat account on any of these online platforms and begin your investment journey. The good part is that the verification process on these platforms is paperless. You will just have to submit your KYC details like basic personal information and add a bank account. It usually takes minutes to open a Demat account on these platforms.
