A comparison of Mutual Fund Monthly Income Plans against the Post Office Monthly Income Scheme.
Tejas Shah
Proprietor of Silicon One and Silicon Systems, AMFI-registered Mutual Fund Distributor since 2004, based in Vadodara.
Post Office MIS will give you guaranteed returns. But the disadvantage of MIS is that fixed income investments are unable to beat inflation by themselves, and the gains from your MIS investments will be added to your taxable income. On the other hand, a mutual fund MIP will get inflation-beating returns, with market-related ups and downs that are worth taking that extra risk for.
MIP returns as on 18th May 2015 (selected schemes, 1/3/5-year)
Birla Sun Life MIP II Wealth 25: 22.79% / 15.96% / 11.45%. HDFC MIP LTP: 15.29% / 12.94% / 9.97%. ICICI Prudential MIP 25: 19.37% / 13.84% / 10.65%. Reliance MIP: 19.16% / 12.81% / 10.21%.
If you're a die-hard conservative investor looking for better returns than bank FDs, Mutual Fund MIPs could be a good option — provided you have a time horizon of more than three years. MIP offers inflation-adjusted superior returns, no TDS, and flexibility in investments as well as withdrawals.
