Monday, October 10, 2011

Monthly Income Fund

What is Monthly Income Fund
As all we know, the bank will pay interest for our deposits on monthly basis.Likewise the Monthly Income Funds also pays interest to its investor on monthly basis.These funds are suited for the people who are looking for additional income.
As its name tells it is a monthly scheme but there is no guarantee that they will pay on monthly .This is because they are investing the money in Market.If they get income from there investment they will pay the interest. If they don't get they wont pay us. There is big drawback in this scheme.
Where They Are Investing Our Money
Mostly they are investing 75% our money in Company Deposits,bank Deposits etc and only 25% of the money is invested in equity market.So the returns are somewhat high as compare to bank deposits.The income varies between 10% to 14%.
What are the Options
1)Monthly Dividend
2)Quarterly Dividend
3)Annual Dividend
4)Growth option
For whom it will Suit
* People looking for more interest then bank interest.
* People who can take less risk.
* For Senior Citizen .

Regarding Tax
Investors have to pay the Tax for Dividend .But the mutual fund company itself pay the tax for dividend.So no need to pay the tax for dividend separately.

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