How To Earn 50K Per Month With Low-Risk Investments? Unleash The Secret!

Money has become a critical part of our lives. In an era of rising inflation, maintaining and growing the purchasing power of an individual can be a tough task. However, a well-curated set of investments can potentially help combat the issue. Diversifying the desired set of investments can help answer the query of how to earn INR 50,000 a month.

Some of the investments can work similar to how monthly income schemes function. Striking a balance between these investments and diversifying asset allocation can help investors earn INR 50,000 per month. However, we focus on diversification because an investment may accompany risk and managing it with low-risk investments can help retain the value of money in the long run.

Therefore, a combination of low-risk and fixed-income investments like fixed deposits, dividend-paying stocks, corporate bonds, securitised debt instruments, many more, can help investors earn the desired amount from an investment.

Passive Income Generation

Actively managing investments can require a lot of effort and diligence, which may not be available to every investor. However, this shouldn’t be a hurdle in achieving one’s desired financial goals. Investors can allocate their funds to some monthly income schemes. It can potentially provide them freedom at an early age.

Moreover, in this volatile job market, relying on salary can restrict your financial journey. Passive investments can potentially reduce this dependency and provide investors with financial support and mental comfort in dire need.

Top Investment Options For Monthly Income

Let’s explore some of the best investment plans for monthly income, which are a sweet amalgamation of traditional and modern alternatives to diversify your portfolio.

1. Corporate Bonds

Debt instruments are usually not understood thoroughly in a traditional investment space. However, they can be part of a rewarding monthly income plan for investors. One of the most famous debt instruments are corporate bonds. These are issued by public and private companies/organisations. 

These entities raise money from common investors as a debt. The investors receive interest from the instrument at fixed intervals and receive the full amount at the end of maturity. In India, except for the pandemic years, corporate bond listings have been gaining momentum every year. The below chart shows that the total number of public issuances of corporate bonds has increased continuously for the last 3 years¹.

Advantages of Investing In Corporate Bonds

Along with a regular income source, the instrument can provide some significant benefits to investors.

• They are backed by the company's credibility to repay the debt and are rated accordingly by credit rating agencies, which reduces their risk levels.
• The listed corporate bonds offer the opportunity to sell the investment in the market, even before maturity.
• Its interest rate is usually high compared to other traditional investment options.
• It aims to safeguard the principal amount up to the redemption of the instruments.

Key Considerations While Investing In Corporate Bonds

1. Type of bond and other specifications
2. Rating of a corporate bond
3. The payout frequency
4. Maturity period and redemption procedure
5. Change in interest rate for listed bonds

Let’s Understand With An Example

An investor invests in 10% 20-year bonds with INR 60 lakhs with a monthly interest payment facility. 

INR 60 lakhs*10% = INR 6 lakhs

INR 6 lakhs/12 months = INR 50,000

Here, investors will get INR 6 lakhs per annum and can earn INR 50K per month.

2. Securitised Debt Instruments (SDIs)

It is a modern investment alternative to regular market instruments. As the name suggests, Securitised Debt Instruments are attached to market security. 

One of the most famous SDIs is mortgage-backed securities. They pool different assets into a fixed-income instrument. Investors can explore regulated, listed, and credit-rated SDI products like LeaseX, LoanX, BondX, and InvoiceX at Grip Invest.  

Advantages Of Investing In SDIs

This unique investment avenue offers some cutting-edge advantages to the investors as follows:

• The direct risk of the underlying asset is reduced to an extent due to securitisation.
• Income at regular intervals for the investors. It can act as an alternative to traditional monthly income schemes.
• The listed Securitised Debt Instruments allows liquidity for the investment.

Key Considerations While Investing In SDIs

1. The underlying asset for SDI and its features
2. Credit rating for the underlying instrument and SDI
3. Redemption process
4. Market conditions

Let’s Understand With An Example

An investor invests in mortgage-backed securities. Investors can potentially earn INR 50,000 per month with the below-illustrated investment strategy.

3. Fixed Deposits (FDs)

It is one of the most used and traditional monthly income schemes in India. It started with the inception of the banking industry. However, it gained momentum after the nationalisation of the Reserve Bank of India in 1949. It is one of the core reasons that inculcates a disciplined saving habit. 

Banks and financial institutions offer Fixed Deposits as an account to save an amount for a fixed period. Due to growing facilities, one can opt for monthly interest.

Advantages Of Investing In FDs

Most traditional generations in the country advise investing in FDs as they offer varied advantages to investors.

• The instrument has low risk and offers guaranteed interest at regular intervals.
• Some tax-saving fixed deposits also provide tax deductions under section 80C of the Income Tax Act, 1961.
• One can avail loan facility against fixed deposits.
• There are several types of investment based on the investor’s needs.

Key Considerations While Investing In FDs

1. Interest rate offered by bank and interest payment frequency
2. Premature withdrawal attracts a fine or can reduce interest payment
3. Banks or financial institutions, offering the scheme should be reliable
4. Determine between options like auto-renewal or withdrawal

Let’s Understand With An Example

An individual invests INR 75 lakhs in a 5-year bank FD that offers interest at 8% per annum. It has a monthly interest payment facility. 

INR 75 lakhs*8% = INR 6 lakhs

INR 6 lakhs/12 month = INR 50,000

Therefore, investors will earn INR 6 lakhs per year and INR 50K per month.

4. Dividend-Paying Stocks

Dividends are the part of a company's profit offered to its equity shareholders. It is an investment that can generate monthly income and offer capital appreciation benefits, owing to stock market conditions. Investors can create a diverse mix of stocks as an alternative to traditional monthly income schemes. 

Some of the stocks, as per Screener as of 19 September 2024, from NIFTY 50 with dividend yields are as follows²:

The risk of market exposure is an inherent part of this investment. However, diversification can help spread the risk and returns. Dividends are not assured income and are distributed at the company’s discretion.

Advantages Of Investing In Dividend Paying Stocks 

Some of the key benefits of dividend-paying stocks are as follows:

• One can benefit from dividend income and capital appreciation simultaneously.
• The dividend is a positive mark of a company's profit-generating capabilities.
• It offers diversification opportunities for investor’s portfolios.

Key Considerations While Investing In Dividend-Paying Stocks

1. Market conditions
2. Tax implications
3. Dividend payout history
4. Proper diversification based on monthly income generation
5. Stock market risk
6. Keep an eye on the record date for dividends

Let’s Understand With An Example

An investor curates a portfolio of diverse dividend-paying stocks that offers a 6.53%* dividend yield. If this individual invests approximately INR 91.88 lakhs, one can earn 50K per month.

INR 91.88 lakhs * 6.53% = INR 6 lakhs approximately

INR 6 lakhs/ 12 months - INR 50,000

*6.53% rate is the average of the top 5 high dividend-yield stocks, mentioned above.

Keep This In Mind!

The issue of ‘how to earn INR 50000 per month’ can potentially be solved by investing in the given instruments or diversifying into different instruments. However, investors need to keep some details in mind while opting for any of these solutions.

• Identify your financial goals, risk appetite and investment capacity.
• Diversify your investments.
• Always thoroughly research before selecting any investment option.
• Avoid decisions based on emotions.
• Assess the market conditions. If required, consult a financial advisor.

Takeaway

Disciplined investments are a crucial step to reach the desired financial goals. Investors willing to earn regular income with a monthly income plan can invest in different market instruments such as corporate bonds, securitised debt instruments, fixed deposits, dividend-paying stocks, and many more. Such passive investment can help investors reduce dependency on salary income and diversify their portfolios.

So, are you ready to dive deep into the world of unique financial investment options? Login to Grip Invest today and start your investment journey!

Frequently Asked Questions On How To Earn 50K Per Month

1. Can I earn INR 50k per month by trading?

Stock market trading is a risky venture owing to market volatility. Therefore, generating INR 50K per month can be potentially a tough task. Investors can rather buy high dividend-yielding stocks and diversify their investments. It can help them earn 50K per month.

2. What should you keep in mind while investing in dividend-paying stocks?

While investing in dividend-paying stocks investors need to assess the market conditions, dividend payout history, company financials, tax implications, market risk, and other considerations.

3. Can corporate bonds generate regular monthly income?

Corporate bonds are debt instruments issued by public and private companies. Some bonds offer a monthly rollout of interest. However, investors should check the interest rates and credit rating for the instrument.

References:

1. SEBI, Accessed from: https://www.sebi.gov.in/statistics/corporate-bonds/publicissuedata.html
2. Screener, Accessed from: https://www.screener.in/screens/93745/nifty-50-with-high-dividend/

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