In most cases, when people retire, they tend to adopt a different approach towards life. Some of retirees use their savings to take a world tour while some spend the available time on their hobbies like social work, gardening, and others. At the same time, there are many who want to invest their savings in high profit generating avenues. The reason behind this step is not to waste their hard-earned money and use it to grow their wealth.
Another purpose behind doing this kind of investment is to put their money at a place from where they can get regular income apart from their pension. In a majority of cases, retiree people love to put their money in post office banks where they get to choose from various pension schemes. But, very few of them know that there are lots of other options too for them to choose from. Preferably, they look for investment options that give good returns, stability, and contain low risk. This is why fixed deposits are considered the best choice. However, below are some of the popular investment options available for pensioners and senior citizens.
Popular Investment Options for Pensions and Senior Citizens
According to the best stock broker in India, one promising way to keep your money growing is to maintain a mixed portfolio of investment channels. So, here are the most popular investment options for pensions and senior citizens.
1. Fixed Deposits
The most widely preferred choice among retired people, FDs are considered extremely secure investments. Since FDs work on their own, they are known to have zero market risks and offer widespread time horizons to pick from, considering one’s individual needs.
Irrespective of the chosen financial institution, senior citizens are usually provided a higher fixed interest rate than what is being given to the public. In addition, the government has sanctioned tax-free interest income for senior people out of fixed deposits. Interest income of up to INR 50,000 is known to be exempted from income tax deduction under section 80 TTB of the Income Tax Act. This makes it a great choice for retirees.
2. Senior Citizen Savings Scheme (SCSS)
Keeping in mind the point that you have already crossed 60 years of age, the senior citizen's savings schemes (SCSS) is something you must include in your portfolio. An investment in such schemes can be done by any person of age 60 and above from the nearest bank or post office.
In the case, if you retired before the age of 60, you can still choose to invest in the SCSS given that you invest within a period of 1 month of getting your corpus. The maximum limit for investment is Rs.15 lakhs and has a period of 5 years, which can be further extended by a period of3 years. The SCSS is known to givea lucrative interest rate of 8.6% which is paid out ona quarterly basis, therefore-increasing
the actual return to 8.88%. The investment channel comes with a sovereign guarantee and that makes it detached from default risk. If you are accountable for tax payments, you can decide to claim benefits under Section 80C in the investment year. Partial withdrawal is also allowed.
3. Debt mutual funds
Mutual funds are primarily known for their high level of flexibility, which is of immense use for senior citizens, particularly in times of emergency. As per the top brokers in India, the investors can rest assured about the option to invest and withdraw their money anytime. For example, they can withdraw at any particular date, either the complete value or only the principal or the interest.
The overall returns from Debt mutual funds are a bit on the lower end. But they don’t reveal your investments to the instability of equity markets and therefore match perfectly in the ‘low-risk principles of senior citizens.
Investing in debt funds is quite easy. The best thing is that you can even start a systematic investment plan (SIP) with an amount as little as INR 500. In addition, there are lots of plans to choose from.
However, make sure to check the investments done by the fund hub in a debt scheme. For example, if a debt fund puts money in AT1 bonds, corporate bonds, or commercial paper, then you may want to rework your investment decisions. On the other side, if the scheme deals in Government bonds or T-bills, as it carries lesser risk.
4. Post Office Monthly Income Scheme
Another safer investment avenue for senior citizens is Post Office Monthly Income Scheme. The best thing about this scheme is that there are no risks related to non-repayment since it comes under the purview of the Finance Ministry.
When it comes to investing in this scheme, you can visit the nearest post office and open your Post Office Monthly Income Scheme. It can be a single account or a joint account with a maximum limit of 3 people. The minimum investment requirement of INR 1500 while you can invest a maximum sum of IN R4.5 lakhs. The scheme comes with a tenure of 5 years, and as per the latest data available till June month of 2021, it paid nearly 6.6% of interest to the investors every month.
If the investor gets deceased before maturity, the investment is moved to the legal successors of nominees along with interest. The investors are provided an opportunity to further reactivate the plan for a period of 5 years.
The returns related to this post office scheme might not lure an investor as it hardly overcomes inflation. But given its zero risk and monthly income, POMIS is considered a safer option for senior citizens.
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