How To Generate Regular Income From Fixed Deposit

Fixed deposit is a great tool whether you want to protect your portfolio, grow your money, earn regular income or do a combination of everything. If you are a senior citizen or recently retired person, you might have created large corpus by saving through your EPF or PPF account and other retirement benefits. It is advisable to plan your large corpus to take care of future expenses and inflation into account. Although it is a wise idea to generate regular income from your fixed deposit, it is equally important to create an additional emergency fund for sustainable regular income. However, you can calculate the returns of your fixed deposit using the Online FD maturity calculator to manage your funds efficiently.

How to Invest My FD Maturity Amount to Get a Fixed Amount Every Month

Invest in Non-Cumulative Fixed Deposit

Fixed deposit is the most flexible way to generate monthly income from your investment. You can opt for Non-cumulative fixed deposit of any bank or financial institute. You will have an option to avail the FD rates at monthly, quarterly, six monthly or yearly basis. You can select the appropriate option as per your need. To avail a higher interest amount every month, without compromising safety, you can opt for FD from AAA rated NBFCs like Bajaj Finance. It has AAA rating from India’s two independent rating agencies like CRISIL and ICRA. You can choose from several FDs as per your need. If you are a senior citizen, you can also avail additional interest rate over regular interest rate. The key benefit of parking your money in the fixed deposit is access to your fund in an emergency. You can break your FD, or you can avail a loan against FD with minimal paperwork.  Make sure to book the FD equivalent to your one-year expenses as an emergency fund before you invest in any other financial instrument.


Pradhan Mantri Vay Vandna Yojna (PMVVY)

If you are a senior citizen of age 60 years or above, you can invest in PMVVY. The scheme is from the central Government and implemented through LIC of India. You can invest any amount up to Rs. 15 lacs and avail monthly pension amount up to Rs. 10,000. The effective interest rate in this scheme is 8.3% per annum. The key drawback of this scheme is that your money is blocked for ten years. You cannot avail the advantage of higher interest in the future. If you withdraw money in between, there is a small penalty based on the duration in which money remained invested. If you have already created your emergency fixed deposit, you can invest some amount in this scheme to avail regular income.

Senior Citizen Savings Scheme (SCSS)

SCSS is also popular option for citizens above 60 years. You can invest an amount upto Rs. 15 Lacs per senior citizen in your family. The interest is payable every quarter. Hence, money will be credited in your savings bank account on the last day of March, June, September,and December. The duration of the scheme is for five years, that can be further extended for more three years. You can also avail tax benefit under section 80 C against the amount invested in this scheme. Before you invest in this scheme, make sure to book FD for your emergency need. If you don’t do so, you have to break your SCSS in between, that will stop your regular income in the following months.

SWP (Systematic Withdrawal Plan) of mutual fund

If you can take some risk of the equity market, you can invest in equity mutual fund and start SWP (Systematic Withdrawal Plan). According to your SWP mandate, every month fixed amount will be withdrawn from your fund and credited to your bank account. If you can afford to wait for one year, it is better to start SWP after one year. The reason for the same is, your entire amount will be tax-free if you withdraw from equity mutual fund after one year. If you cannot take the high risk of an equity fund, you can also select a balanced mutual fund (combination of equity and debt) and avail similar tax benefit for withdrawal after one year. Risk-averse investors should not use SWP route to generate regular income from their lump sum amount. Any adverse market fluctuation can affect your overall return.