There are two options by which one can make money. First is you work and earn money and second is where your asset works for you and get you money. The first one is common and everyone does that. But after a certain age you can’t work, you retire. Retirement limits the income of a person. Some organisations provide pension where as some don’t. It is always better to plan everything from now onwards and start working towards a better and secure future.

Investment can help you create an alternate stream of regular income. Your invested asset (money) works for you and provides you more money. When you keep your money in a bank account or even in your back pocket it doesn’t work for you. Its value will be same as it was. Whereas when you invest your money it adds on to its actual value. One can simply say that investment is that tool with which your money can grow without making any effort with respect to time.

7 Ways to Invest Your Money to Get Best Returns

There are many investment options available by which one can grow their money easily. Let us have a look at some of the investment channels which can create an alternate stream of income for you.

Investments for Second Income

Fixed Deposits

Fixed Deposits are the most popular and most common investment option which at no risk at all. FDs provide you a fixed rate of interest on your money when fixed for a particular period of time. The interest you get from a FD can be yearly, quarterly or it can be even monthly. The interest rate fixed by most of the popular banks in India varies from 8% to 9% per annum.

The interest you get from a FD is taxable. Banks generally deduct 10 percent TDS on the interest earned. This is in the case where the interest earn for a year exceeds INR 10,000.

Fixed Deposits v/s Savings Accounts v/s RD Accounts

Post Office MIS

Post Office MIS is a monthly income scheme where one can invest his/ her money and can have a fixed monthly income. The monthly income from the Post Office MIS totally depends on your invested amount.

A Post Office MIS allows you to invest up to INR 4.5 lakhs from an individual account and INR 9 lakhs from a joint account. The time period for this scheme is 5 years. The interest you get here is 8% annually and you get a bonus of 5% at the end.

Let’s understand this with an example- Mr. Krishnan invested 4 lakh rupees in the post office MIS. Here he will get 8% interest annually which is INR 2,666 till 5 years and at the end he will get INR 20,000 as a bonus too.

Senior Citizen Savings Scheme   

This Scheme is only for the Senior Citizens. Under this scheme a person who is above 60 years can invest in it and can get an interest of 9% annually. The lock in period for this scheme is 5 years which can be increased by 3 years again. The interest earned can be claimed after 3 months.

Under this scheme an investment up to INR 15 lakhs can be made. This scheme also allows to invest those person who are 50 or 55 and has taken a voluntary retirement or the one who got retired from the defence.

The deposits made under this scheme is tax exempted but the interest earned from this is not tax exempted.

How Much Do You Need to Save for Retirement?

Pradhan Mantri Vaya Vandana Yojana (PMVVY)

This scheme was launched by government of India for the individuals who are above 60. This scheme is operated by Life Insurance Corporation of India. The scheme was launched in 2017.

This scheme provides maturity benefit along with the death benefit.   

Policy Term: 10 years

Minimum Pension: INR. 1,000/- per month
                                    INR. 3,000/- per quarter

                                    INR. 6,000/- per half-year
                                    INR. 12,000/- per year                                                                  

Maximum Pension: INR. 5,000/- per month
                                    INR. 15,000/- per quarter
                                    INR. 30,000/- per half-year
                                    INR. 60,000/- per year

In the Budget 2018 the investment limit in PMVVY has been increased to INR 15 lakhs from INR 7.5 lakhs. And the scheme has also been extended till March 2020.

Monthly Income Plan of Mutual Funds

Monthly income plan of mutual funds is also known as MIP this is more or less similar to MIS. But the returns in MIP is not 100% guaranteed. One can get up to 8% to 9% interest in MIP.

SWP with Mutual Funds

SWP is Systematic Withdrawal Plan of Mutual Funds. This provides investors with a specific amount of payout at a predetermined time intervals which can be monthly, quarterly, half-yearly or annually.

5 Thumb Rules of Investment

SIP with Mutual Funds

SIP is Systematic Investment Plan. It is considered to be the best plan of mutual fund to get money for long term. It allows you to invest a predetermined amount for a fixed period of time which can be weekly, monthly, quarterly and yearly.  

One can start a SIP with mutual funds even with a low amount of INR 500. The investment is made for a fixed period of time which start from 4 years to 35 years. Here returns depend on the mutual fund you choose and the tenure for which you plan to invest. Different mutual funds have different risk profiles and hence different returns. Hence it is important to do your research before you finalize any particular fund(s).

Guide to Building the Ideal Annual Investment Portfolio

These are just a few options which can help you create an additional monthly income. None of these weigh heavy on pocket and almost all salaried employees can opt for either or all of these. Those with higher income and higher risk appetite can also go for other investment methods like a second home, or a commercial building to earn monthly rentals.Ultimately it all come down to the income of the person and the amount that they are willing to invest every month or year and the severity of risk they are willing to take to earn returns on their investment.