Who Should Invest in the Post Office Monthly Income Scheme? Pros, Cons & Suitability
If you’re someone who values safety, steady income, and simplicity in your investments, the Post Office Monthly Income Scheme (POMIS) may be worth considering.
Especially popular among retirees and conservative savers, POMIS offers guaranteed monthly payouts, making it a dependable addition to any pension plan or income-focused portfolio.
In this blog, we’ll explore who should consider investing in POMIS, its pros and cons, and how tools like the MIS calculator can help you make an informed decision.
What Is the Post Office Monthly Income Scheme (POMIS)?
POMIS is a government-backed small savings scheme offered by India Post. It allows investors to deposit a lump sum for 5 years and earn fixed monthly interest throughout the tenure.
Key features:
- 5-year lock-in period
- Monthly interest payouts
- Minimum investment: ₹1,000
- Maximum investment: ₹9 lakh (individual), ₹15 lakh (joint account)
- Current interest rate: Approximately 7.4% (subject to periodic revision)
It’s a low-risk product designed for people who prioritise regular income over high returns.
Who Should Consider Investing in POMIS?
POMIS is not for everyone, but it’s ideal for certain types of investors:
1. Retirees Looking for Monthly Income
If you’ve recently retired and are looking to supplement your pension or provident fund payouts, POMIS can help you create a reliable income stream.
- Interest is credited monthly, perfect for covering regular expenses
- Capital remains safe
- Can be used alongside your pension plan or annuity
2. Conservative Investors
If you prefer guaranteed returns and are not comfortable with market-linked products like mutual funds or stocks, POMIS is a suitable option.
- Government-backed = very low risk
- No market volatility
- Ideal for capital preservation
3. Early Retirees or Homemakers
POMIS is open to all resident individuals, not just senior citizens.
So if you’re:
- Taking a voluntary retirement
- A homemaker with a lump sum saved from family income
- Looking for a low-risk product to create predictable monthly income
…this scheme offers an accessible way to earn without market exposure.
4. Parents Planning for Fixed Future Expenses
Want to invest for your child’s school fees or a dependent’s monthly medical needs?
You can:
- Open a minor account under POMIS in your child’s name
- Use the monthly payouts for structured expenses over a 5-year period
Pros of POMIS
Monthly Income with Capital Safety
The biggest draw of POMIS is consistent monthly interest, with your initial investment returned at maturity.
Low Entry Barrier
Start with as little as ₹1,000, making it accessible to small savers as well.
No Market Risk
Returns are unaffected by market movements, great for stress-free investing.
No TDS
Although the interest is taxable, there’s no TDS deduction, giving you more control over your tax planning.
Joint Accounts Allowed
You can open joint accounts (up to 3 adults) and invest up to ₹15 lakh, useful for couples managing joint retirement savings.
Cons of POMIS
Interest Is Taxable
All interest earned is added to your taxable income. There are no tax deductions under Section 80C for POMIS investments.
Fixed Returns
While safety is a benefit, the fixed interest may not beat inflation over time, especially if you’re relying on it as your sole income source.
No Compounding
The interest earned is paid out monthly, it doesn’t compound like it does in PPF or NSC.
Limited Investment Ceiling
With a maximum limit of ₹9 lakh (individual), you may not be able to invest your entire retirement corpus here.
How to Use an MIS Calculator
Before investing, it’s helpful to know how much monthly income you can expect. A MIS calculator helps you:
- Input your planned investment amount
- Check the current interest rate
- View your expected monthly payout
Example:
If you invest ₹6 lakh at 7.4% interest:
- Annual interest = ₹44,400
- Monthly income ≈ ₹3,700
This helps you plan your household budget more accurately, especially if you’re combining POMIS with other income sources like a pension plan.
Is POMIS Right for You?
Choose POMIS if:
- You are retired or planning early retirement
- You prefer fixed monthly income over market-based returns
- You want low-risk options to park a part of your savings
- You’re building a laddered retirement income strategy alongside other instruments
Avoid POMIS if:
- You’re seeking high growth or inflation-beating returns
- Your goal is long-term wealth creation through compounding
- You fall under a high tax bracket and want tax-efficient options
Pro Tip: Combine POMIS with Other Instruments
POMIS works best when it’s part of a larger retirement plan, not the entire plan.
You can:
- Use POMIS for short-term income needs
- Rely on mutual funds or NPS for long-term growth
- Include life insurance or annuity plans for guaranteed income and protection
This gives you the best of both worlds, stability today and security tomorrow.
Final Thoughts
The Post Office Monthly Income Scheme is one of the most trusted savings tools for people who want regular income with zero market risk. It may not offer high returns, but what it does offer, peace of mind, is just as valuable, especially in retirement.
By using a MIS calculator to plan your investment and aligning it with your overall pension plan, you can create a strategy that’s simple, steady, and truly stress-free.
