We all want to enhance our financial security, particularly when it comes to building our investment portfolios. When it comes to enabling a steady income stream that you can depend on to meet your future requirements, enabling regular payouts is a must. This is vital for long-term stability, particularly if you can ensure income that is predictable and minimises volatility or fluctuations. Let us look at how you can diversify and build your portfolio to create steady cash flows and gain mental peace.
How to Get Regular Payouts from Your Investments?
You can get regular payouts from multiple investments with relatively low market-related risks or volatility. After all, building passive income streams is the key towards achieving future financial stability and replacing your income after retirement if possible. You can also use the passive income to reinvest and build up a sizable corpus that will help you in your sunset years. There are various options that you can choose in this regard. Let us look at some of them.
1.Guaranteed Return Insurance Plans
These are some of the most popular policies, enabling good life coverage throughout the policy tenure (which keeps your family financially secure from your untimely demise in this period) and also guaranteed returns. These are typically offered either as a lump sum at maturity or as periodic income payouts, after a deferral period, depending on the plan chosen. They are fixed in advance and come with minimal market-related risks. You can use them not only to replace your income but also to meet your future objectives flexibly. From adding riders to getting special bonuses, these plans have several benefits worth noting.
2.Rental Income
It is advisable to consider a secure real estate investment (if you have adequate capital) during your working years. However, keep in mind that rental yields in India are usually low, averaging around 2-3%. You can give out this property for rent (buy a unit that is viable for this purpose) in a strategic location. After deducting maintenance costs, property taxes, and other expenses, the net profits can be used for reinvestments and future income when you are retired.
3.Fixed Deposits
FDs are low-risk and give you regular payouts if you want (monthly, quarterly, yearly, etc., as per your preferences). However, they are not completely risk-free, as premature withdrawals incur penalties, and returns may not always beat inflation. It is advisable to reinvest the returns in a new FD manually to grow your savings. Thereafter, you can use the FD to give you regular income payouts that are fixed and not subject to market-linked fluctuations.
4.Dividends and Stocks
You can invest in dividend-paying company stocks to build a source of passive income in the future. Do this in your working years when you can absorb the risk, and later on, you can reinvest the dividend income to generate regular payouts for your post-retirement years. Note that dividends in India are taxable as per your income tax slab rate, which can impact your overall returns. Of course, there are risks of market volatility and uncertainty, although starting early during your working years and staying invested for a longer period will reduce some risks. You should also diversify your portfolio across various kinds of stocks, bonds, and mutual funds.
It’s not enough to just invest in instruments that give you regular payouts. You should regularly track your portfolio and optimise it to safeguard your returns and maximise the gains while keeping an eye out for tax efficiency.
