Recently, a news headline stated that “Indian startups fired more than 16,000 employees this year.” Not only in India, layoffs are also common in other economies. For example, more than 85,000 tech workers lost their jobs in the U.S. in 2022.

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Decreasing job security coupled with ever-rising inflation made us think on a deeper level.

Is it really safe to rely only on a single income source? Absolutely no, considering the current economic state. Hence, we must acknowledge the need for an alternative income stream(s) over our primary one.

This article will tell you exactly how to get monthly income from investments in India.

Five Ways to Earn Monthly Income Through Investment in India

Investment plans offering monthly income are typically debt-oriented mutual funds or government schemes. The income generated through these plans can be in the form of fixed interest rates or dividend payouts. They vary in maturity term, risk level, interest rate, etc.

Below are India’s top five financial products to earn monthly or recurring income. 

1. Fixed deposits monthly income schemes

A fixed deposit monthly income scheme is similar to regular bank FDs added with a monthly payout facility. The plan offers guaranteed monthly returns, irrespective of market condition, making it suitable for risk-averse investors. It allows investors to withdraw money anytime, with no lock-in period.

The investment tenure ranges from seven days to 10 years. The annual interest rate is 2.5 to 6.25% depending on the tenure.

There is no account creation charge, processing fee, or management fee. The only applicable cost is the withdrawal fee which is less than 1% of the capital invested. Thus, it is cheaper than other monthly income plans.

Bank deducts a 10% TDS if the monthly return is more than INR 40,000 in a financial year. For senior citizens, 10% TDS is deducted if the monthly return exceeds INR 50,000 in a financial year.

2. Pradhan Mantri Vaya Vandana Yojana

Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a pension plan from LIC. The policy is designed for senior citizens to offer them financial security after retirement. Hence, only people aged 60 years or above can invest in this policy. It provides a fixed income to its policyholders, and the current interest rate is 7.4% per annum.

The policy tenure is ten years, and the investment amount ranges from INR 1.5 lakh to INR 15 lakh, which has to be a lump-sum payment. The policyholders can choose the frequency of pension payout from monthly to yearly basis. Upon maturity, the initial capital and the final pension installment will be returned to the policyholders.

LIC will return the policy value to the assigned nominee in case of the death of policyholders. Other benefits include loan facilities and premature exit options during certain exceptional events.

Income tax benefits are available for PMVVY on premium payments under Section 80C.

3. Post office senior citizen savings scheme

Senior Citizen Savings Scheme (SCSS) is a government-backed pension program for senior citizens. People over 60 years of age are eligible to opt for this scheme. Individuals between 55 and 60 can also purchase this scheme, provided they are under any voluntary retirement program.

The maturity period of SCSS is five years, and after maturity, it can be extended up to three years. One can open an SCSS account by making a minimum deposit of INR 1,000 and can increase it up to INR 15 lakh in a single installment. The current interest rate under this scheme is 7.4% per annum.

Premature closure of the scheme after one or two years attracts a deduction of 1.5% and 1% of the deposited amount, respectively.

The investments in this scheme are eligible for tax exemption under section 80C. TDS is applicable if the interest income is more than INR 10,000 per annum.

4. Mutual funds with monthly income plans

Monthly Income Plans (MIP) are debt-oriented, with 70 to 80% of the funds invested in debt and money market instruments. The remaining goes into stocks. It’s suitable for investors unwilling to take too much risk but want to earn a good return. MIPs are highly liquid as there is no lock-in period.

The returns are generally higher than 100% debt-focused funds. MIP is linked to market performance, and the payouts are based on profits. Hence, it doesn’t guarantee any fixed return. The plan also allows the investor to opt out of the monthly payment and choose the growth option.

It is recommended to invest in MIPs when the economy is in the growth phase. It is when the interest rates are high, leading to a drop in the fund’s unit price or Net Asset Value (NAV).

The taxation rules for MIPs are similar to that of the debt funds. Profits made within 36 months of purchase are called Short-Term Capital Gains or STCG. It is added to your taxable income and taxed as per your income tax slab. Profits made after 36 months are called Long-Term Capital Gains or LTCG. LTCG is taxed at 20% with indexation benefits. Indexation means the purchase price is adjusted to reflect the inflation rate. In the case of dividend income, the fund house pays the dividend distribution tax of 25% before disbursing it to the investors. 

5. Stocks that pay dividends

This plan is a 100% equity-based investment.

Several stocks pay dividends to their investors. Dividends are payments made to shareholders by companies out of their earnings from time to time. It is a good sign suggesting that the company is financially strong.

Blue-chip profit-making companies typically announce dividend payouts if they foresee their stock prices remaining stagnant. In such cases, dividends can satisfy existing shareholders and attract future investors. Some companies disburse dividends more than once a year.

Below is the list of companies and the respective dividend yield in the past 12 months.

  • Indian Oil Corporation = 16.8%
  • REC Limited = 16%
  • Power Finance Corporation = 11.33%
  • National Mineral Development Corporation = 11.1%
  • Steel Authority of India = 10.6%

But, this option consists of market risk. The share price can decrease due to unfavorable market conditions, impacting the dividend amount.

The Importance of Monthly Income-Generating Schemes

Monthly income schemes have many advantages for investors.

1. Portfolio diversification

Monthly payout schemes must be an essential component of a well-diversified portfolio. Long-term investments help to achieve goals after seven to ten years. Whereas monthly income plans help in handling day-to-day expenses.

2. Protection against inflation

Inflation is a silent killer as it erodes the value of your money. As of October 2022, India’s Consumer Price Index (CPI) is at 6.77%. The returns from monthly income plans can help tackle inflation.

3. Lower expenses

Monthly income plans typically have a lower expense ratio as these are not actively managed.

4. Lower risks

Most monthly income plans invest the funds in high-quality debt instruments, reducing the overall risk. These securities include government bonds, corporate bonds, treasury bills, etc.

5. Better returns

Without taking much risk, one can earn between 6 to 7.5% per annum through investment options like fixed deposits and post office schemes. With some level of equity exposure, the return potential can increase up to 10%.

5 Ways to Earn from Cryptocurrencies (Bonus Section)

The above-mentioned investment plans are more debt-focused.

But if you want to explore cryptocurrencies to create a passive income stream, we have some bonus tips for you.

1. Locking crypto for interest income

There is one fundamental similarity between banks and crypto platforms. It’s the provision to earn interest income by locking funds.

Traditional banks offer savings interest on your capital. But it lags far behind the inflation rate. On the other hand, crypto platforms, like Aave, provide attractive interest rates for locking cryptocurrencies with the platform. Typically, Stablecoins offer lower yields, and the interest rates increase for cryptocurrencies with high-risk factors.

2. Staking

In blockchain networks, you can lock your cryptos as a ‘stake’ to earn rewards. It is particularly true in Proof-of-Stake (PoS) based networks. Staking implies that users are willing to take the responsibility of safeguarding network integrity, in return for which they are rewarded. 

Users must stake their cryptos to get the rights to validate transactions in the PoS system. After successful validation, the validator nodes will receive crypto rewards.

Staking is possible on blockchain networks like Solana, Cardano, etc.

3. Yield farming

Yield Farming might sound fancy, but it’s just the process of earning interest on your investment. There are different methods to perform yield farming.

  • Borrowing and lending: You can borrow loans from crypto platforms and lend them at a higher interest rate. You might think, what if I run away with the loan? To avoid such scenarios, platforms only offer overcollateralized loans. For instance, if you borrow $100 worth of crypto (say BAT token), you must deposit $120 worth of crypto (say ETH) as collateral. If the price of your collateral fall below a certain threshold, the collateral is sold to recover the fund.
  • Liquidity provider: You can earn money by providing liquidity to decentralized exchanges (DEX). DEXs maintain a pool of crypto funds (called the ‘liquidity pool’) to be able to offer lending services. A liquidity pool consists of two or more cryptos (say ETH and USDC) at equal proportions in terms of value. It allows traders and investors to access the fund for a fee. You can become a liquidity provider by offering crypto assets to these pools in equal proportion. In return, you can earn trading fees as a reward. You can provide liquidity to DEXs like UniSwap and PancakeSwap.
  • LP tokens: In addition to the trading fees, liquidity providers get Liquidity Provider tokens from the DEX platforms. Some platforms allow users to stake these tokens to earn staking rewards.

4. Play2Earn gaming

Play2Earn (P2E) gaming combines two critical drivers of human beings: Entertainment and Money.

The gaming industry witnessed many trends, from first-person shooters (FPS) to multiplayer online battle arena (MOBA) games. The P2E gaming model is a new addition to the list and has helped to increase cryptocurrency adoption. P2E is a business model where users can play a game and earn cryptocurrency while playing.

By participating in the game, players create value for other players and developers in the ecosystem. In return, they receive potentially appreciating in-game assets such as playable characters, skin, tools, and cryptocurrencies.

5. Buying and selling NFTs

Many folks earn regular income by flipping NFTs in the market. Flipping NFTs is nothing but buying the NFTs at a lower price and selling them at a higher price.

While it sounds simple, it requires significant research to find promising NFTs. There are millions of NFTs floating around, but not everything is valuable. The intrinsic value of an NFT depends on its rarity and community. The NFT will likely appreciate if a community supports and holds on to it. For example, Crypto punks and Bored Ape Yacht Club are some of the top NFT projects because of the community around them.

But the ongoing crypto winter has significantly mellowed down the NFT market. It will mostly revive once the crypto market recovers.

Congratulations if you have reached this far. We have one more option if you want to earn regular income through cryptocurrencies – Mudrex Vault. It is a fixed-income product offering 10% returns annually, with interest credited daily!


Living with a single income source is not too different from walking on a tightrope without a safety net.

Hence, building multiple ‘regular’ income streams is crucial for financial security. It helps us handle monthly expenses and enables us to tackle emergencies.

Luckily, several investment options are available to help create those income streams. It’s up to us to choose suitable investment plans to secure our future depending on our financial goals and risk appetite.


1. Can a person simultaneously invest in numerous monthly income plans?

Yes. You can invest in any number of these monthly income plans. The only condition is you have to be eligible to opt for these plans.

For example, suppose a person is 30 years old. They can invest in options like monthly income fixed deposits, mutual funds with monthly payout, and dividend stocks. They can’t invest in schemes like Pradhan Mantri Vaya Vandana Yojana or Senior Citizen Savings Scheme, as the age requirement doesn’t match.

2. What are the required documents for investing in the PMVVY scheme?

Below are the documents required to invest in the Pradhan Mantri Vaya Vandana Yojana (PMVVY).

  • Proof of address (such as Passport or Aadhaar Card).
  • Permanent Account Number (PAN) Card.
  • A copy of the cheque leaf or the first page of the bank passbook.

3. Is any income tax rebate/exemption allowed for SCSS?

Yes, the investments in Senior Citizen Savings Scheme (SCSS) are eligible for tax exemption under section 80C. The maximum cap allowed under Section 80C is INR 1.5 lakh. But, TDS is applicable if the interest income is over INR 10,000 per annum.

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