Like companies, MF schemes also pay dividend to unit-holders out of the profit/growth generated by the schemes. The interest received is also taxable in the hands of the investors, so may not be lucrative for people in higher tax bracket. So, a couple may get maximum monthly interest of Rs 5,700 by investing Rs 9 lakh jointly in Post Office MIP. However, in case of Post Office MIP, the maximum investment limit is Rs 9 lakh jointly and the current rate of interest is 7.6 per cent per annum, payable monthly. As MIPs are not market linked, the principal invested doesn’t fluctuate and in case of Post Office MIP, the principal invested also enjoys sovereign guarantee. So, the return is guaranteed, but MIPs carry reinvestment risk, as the rate may get changed when the principal is reinvested at the end of the term of the existing MIP. Like FD, MIPs also have a specific investment period, in which the rate of interest remains fixed. So, MIPs give a feeling of regular income, like that of monthly salary, to which salaried people are used to. However, in FD, the minimum duration to get interest payout is on a quarterly basis, whereas in case of MIP, the interest payout is on a monthly basis. MIPs are like Fixed Deposits (FDs) or Time Deposits, where an investor has to invest in lump sum. 7th Pay Commission: No Dearness Allowance (DA) hike for Central Govt Employees approved yet – Latest Update Monthly Income Plan (MIP)
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