What is an MIP? | Are the MIPs safe? | How will be MIP income?

May 25th, 2010| Uncategorized.

What is an MIP? | Are the MIPs safe? | How will be MIP income?

Savings is the major basic point to go through the life in feature without any problems.  Regarding the financial the schemes and the plans that are introduced by various banks like Fixed Banks, Monthly income policies and the insurance policies helps us to save the money for the future.  The monthly income plans (MIP) which are introduced by the Mutual funds are more profitable and useful when compared to the fixed deposits that are offered by the banks.  If there is a mental strength to bare the financial losses to some extent, it is better choose the MIPs which in return get more income than any other refundable.

What is an MIP?

In general, the Monthly Income Plans are something where we get income without any fail and this is the version of most of the people.  Though MIPs come under the same as other monthly income policies, they are different from the other.  The difference lies in the benefits where the other policies going to give and the other difference is these plans invest most of our savings in bonds and have to savings in the shares where they do not exceed 20%.  Importance will be given more to the permanent investments and bonds and the remaining is allotted for the income through shares. The main idea of this plan is to give the dividend without any fail.  One of the important thing to keep in mind is the notification of the dividend depends on the mutual fund company and on the income that is observed.

The MIPs save the money of the investors in the commercial papers, certificate of deposits, government securities, and treasury bills and so on to give the interest to the investors on monthly basis. The debt plans give the income steadily without any fail. There is less scope of loss and the main idea behind investing in the equities is to get the refund and income in return.

Are the MIPs safe?

The MIP’s are the debt-based plans. No one can say that they are completely safe and they are loss. Each plan will have a side corner of loss in them. Here are some of the points that are to be observed. They are as follows:

-          Interest rates: there is a chance of having the differences in the interest rates depending on the financial institution. It is during that time, the NAV’s of the MIP will have ups and downs.

-          Normally, if the interest rates are decreasing, the NAV of the MIP;s will increase because the rate of the bonds will increase. As the interest rates are increasing, the NIV rates will decrease. During that time, the percentage of the amount in the equities will be increased so that the income will not be reduced.

-          The rates and the differences in the income and the interest rates depend on the market also. The position of the debt and the equity rates are not known to anyone. Therefore, these are less when compared to that of the balanced funds and more than the full debt and income funds. In case of severe conditions, there is a chance of not informing the dividend.

How will be MIP income?

Just like the other mutual funds, the income of the MIP’s depends on the status of the market. There is no security either for the actual amount or the income. The status of the bonds will be constant as far as the interest rates are decreased. It is difficult if the interest rates are increasing and the share rates are decreasing. So withdraw the idea if any is there to invest the complete retire amount in the MIP’s. In case if you are interested, then invest very small amount where even in the future if any loss occur, there will be no much risk.

-          Considering the time of the last three years, most of the MIP has had given 12-13% and above income only.

-          Some of the MIP’s invest up to 30% in the MIP’s. Even the shares are of the same kind and if the value of the company is more, the income from the shares will be more and in case if there are losses and less value for the shares, the income will be in loss.

MIP Duration:

The MIP’s are more profitable for the people who invest for a period of two to three years.