Invest 20 Lakhs for Monthly Income

Any investment should be done as per your goals. This will help you decide the kinds of returns you want from your investment. If you want your 20 lakhs to grow to a larger sum, it would be wise to invest it in ULIPs, or the equity market. However, if you are averse to risks, you can look at traditional savings plans or pension plans to ensure a guaranteed monthly income for life.

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Investing a huge sum such as Rs. 20 lakhs is no simple matter. There are different things to consider such as the goal of investment, your expected income, your expenses, inflation, etc. Your goal could be child education, retirement, or simply to add an additional income stream.

The choice also depends on how much risk you are willing to take on your money. If you are in your 20s or 30s, you may want to risk your savings in equity schemes because they offer high returns in the long term. If not, you have safer options such as NPS, savings plans, FD, etc.

Another option would be to split the Rs. 20 lakhs for monthly income into a mix of high and low-risk investments. If you are already in your 50s, you have the option to invest in short-term funds that offer more conservative and safer returns.

Investment Options to Invest 20 Lakhs for Monthly Income

There are several ways to invest Rs 20 lakhs for a monthly income.

You can invest the 20 lakhs in a pension plan. Based on the type of annuity option chosen by you, you will start receiving monthly income when you hit retirement age.
You can invest the sum in traditional savings plans that offer guaranteed income along with life cover.
Another option would be to park the money in a fixed deposit. When the account matures, you can use it to create a source of income for yourself and the family.
ULIPs or unit-linked insurance plans can also give you high returns based on market performance. You can choose the receive the fund value in monthly installments at the time of maturity.

Let’s look at each of these options in more detail.

ULIPs

ULIPs also participate in market-linked funds, however, come with the additional benefit of insurance protection. If you invest Rs. 20 lakhs for monthly income in a ULIP, the money will be used towards a life cover and the remaining will be invested in money market instruments. The life cover gives your dependents financial backing following your unfortunate demise. The investment component will help you maximize your savings.

Let’s assume an example to help you understand the returns better. If you invest Rs. 20 Lakhs in a one-time payment towards a ULIP and stay invested for 20 years. Assuming 8% as the expected rate of return, your fund value after 20 years can potentially be around Rs. 93.2 Lakhs.

The proceeds from ULIPs can be paid out in monthly installments at the end of the investment period. This creates a regular income source that can help finance your needs.
Pension Plans

Pension plans can be traditional annuity cum insurance plans or ULIPs. Both types ensure life insurance protection to help your family support themselves in your absence. The key difference lies in the returns and risk profile of the investment. The former comes with zero risk and gives you guaranteed monthly annuities upon your retirement. The 20 lakhs that you will invest for monthly income will likely remain constant unless the addition of a bonus by the insurer.

On the other hand, retirement ULIPs have the potential to earn you high returns per the market performance of the funds invested in. However, the risk of investment is high and there is no guarantee that the amount of investment and returns remain consistent.

Proceeds from both types of pension plans can be used as monthly income after retirement.

Let’s help you understand the monthly income from a traditional annuity plan. Assuming that you are 40 years old and invested the whole of Rs. 20 Lakhs in an annuity plan. If you want your pension to start after 15 years, your estimated annual payout will fall around Rs. 1.9 Lakhs. This means that you will have a monthly income of Rs. 16,000 once you turn 55 years of age.
Guaranteed Income Plans

These are endowment-based insurance plans that offer a death benefit on your demise and a maturity benefit after the end of the policy term. With an investment of Rs. 20 Lakhs in guaranteed income plans you can ensure a regular income for yourself for up to 30 years. Most insurers also offer loyalty additions if you stay invested for over 10 years. The income benefits are guaranteed and therefore, such plans fall under the low-risk category.
Fixed Deposit

A fixed deposit of Rs. 20 lakhs can earn you interest anywhere between 5-6%. The interest rate is usually higher for senior citizens. The amount continues to accrue returns till the end of the tenure. From the accumulated sum at maturity, you can withdraw a fixed amount regularly to serve as monthly income.

Assuming the rate of interest to be 5.75% on your deposit of Rs. 20 Lakhs, you will earn a total of Rs. 15.4 Lakhs over a period of 10 years. This takes the maturity value to Rs 35.4 Lakhs.

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Past 10 Years' annualised returns as on 01-04-2025

^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.

Tax benefit is subject to changes in tax laws. Standard T&C Apply
++Source - Google Review Rating available on:- http://bit.ly/3J20bXZ

^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

#The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CARG 8%; ₹50,45,591 @ CAGR 4%

¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.

**Returns are based on past 10 years’ fund performance data (Fund Data Source: Value Research).

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