MIPs from MFs: The alternative for monthly income

Every time inflation breaks double digit, we look for alternatives sources of income. The post office MIP give you 8%pa; Banks FD schemes give you 6-7.5%pa; The GOI bonds earn something from 5.6% to 8%pa depending upon the term.



The MIPs from the Mutual Funds though do not offer guranteed rate of return, they help manage something more than the inflation at times.



The Fixed Income portfolio thus needs allocation to MIPs to certain extent. But to what extent? Base minimum allocation always remains with the guaranteed instruments. Here the concerns are bare existence and regular payment needs. Once you study the nature of these payments, you will understand some are seasonal payments; some have daily-weekly-monthly-bimonthly-quarterlyor half yearly or even annual payments. This understanding will help you to bifurcate your allocation into sure- not so-sure among these frequencies of the intervals. Slowly you will develop an expertise to allocate investments that will generate cash flows just enough to cover such expenses.

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