Post Office Monthly Income Scheme || FY 2020-21

Last Updated on November 18, 2020 by FinTuts
Reading Time: Around 6 minutes

In this article, FinTuts will share its views or ideas about Post Office Monthly Income Scheme, so that you can take a self-decision on your investment or wealth creation journey and can be financially literate and atmanirbhar.

Post Office Monthly Income Scheme is one of the popular investment options in India among seasoned investors, a scheme where-in an investor can invest a certain amount of money and can earn a fixed interest amount each month. 
It is strung with the benefit of the sovereign guarantee, meaning the investment is government-backed, under the purview of the Finance Ministry. 
Therefore, it is a safer investment, highly reliable, low risk, and a steady income option as compared to equity shares and other different fixed-income options available in the market.

Account Opening Process of POMIS

Opening a POMIS is not a tedious task but a hassle-free process:

  • If you do not have a savings account at the post office, open it nearby any post office branch.
  • Take a POMIS application form from your post office branch.
  • Apply with the filled application form along with a photocopy or a xerox of your ID proof, residential proof, and 2 passport-size photos at the post office branch. Do carry the same original documents with you for verification.
  • Get the signatures of witness or nominee(s) for your application.
  • Invest the capital amount via cash or cheque. The cheque date will be considered as the account opening date if you write a post-dated cheque.

Features & Benefits of POMIS

  • Capital protection is the major benefit regarding the invested amount as the money is safe until maturity due to a government-backed scheme.
  • The lock-in tenure is 5 years. An investor can withdraw the invested amount when the scheme matures or can reinvest the same.
  • The invested amount is not subject to market risks and is a very Low-risk investment.
  • An investor can start by investing Rs 1,000, up to Rs 4.5 lakh individually and Rs 9 lakh jointly( up to a maximum of three adult holders).
  • POMIS account can be opened by only a resident Indian and NRIs cannot enjoy the benefits of the POMIS. An investor can open a minor account, provided the age of his/her is 10 or above and can invest maximum up to Rs 3 lakh.
  • The invested amount can be moved the funds to an RD(recurring deposit) at no extra cost.
  • An investor can earn guaranteed returns in the form of interest every month. Definitely that the returns do not beat inflation but are higher as compared to the other fixed-income investments.
  • Investments do not come under Section 80C of the Income Tax and the income or payout is subjected to the taxation, but it has no TDS deduction to eat away investor’s capital.

Interest Rate History of POMIS

POMIS Calculator by FinTuts

Download the MS Excel based Post Office Monthly Income Scheme calculator 

Calculation of POMIS

The POMIS calculation is really easy to calculate using the simple formula. Please take a look at the illustration of how the POMIS calculation works.
Calculation Formula: Invested Amount * Interest Rate / 12 = POMIS monthly payout
Let’s suppose that an investor has invested an amount of ₹ 1 Lakh at the interest rate of 6.6% for 5 years. Now, Multiply the invested amount with the interest rate and divide the sum by 12.
Hence, ₹ 1,00,000 (Invested amount) * 6.6% (Interest rate) / 12 = ₹ 550 (monthly payout). If you face any difficulty in calculating the monthly payout of POMIS, please use the Post Office Monthly Income Scheme calculator made by FinTuts.

Verdict of POMIS

In short, POMIS(Post Office Monthly Income Scheme) is surely an effective investment scheme that efficiently generates guaranteed monthly returns throughout the investment period. Moreover, the scheme is backed by the government, the Finance Ministry. FinTuts definitely recommend POMIS as an all-time favorite among old aged or retired people as a risk-averse investment option.

We hope that this article might have surely helped you to understand in general about POMIS.
If you liked reading about this article, then please do visit our list of other Mutual Fund or Passive Income related reviews.
Besides, should you have any concerns, please feel free to comment below or do reach out to us. FinTuts will be happy to help. #HappyInvesting.

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