INVESTMENTS FOR PEACEFUL RETIRED LIFE
Empowering readers with tips on managing finances and investing surplus finances.
INVESTMENTS FOR PEACEFUL RETIRED LIFE
Normally a retiree , who is dependent on the income derived from his retirement benefits , looks for a safe and secure investment . If he / she draws pension , the investment return will be an additional income . Otherwise it will be his / her sole income . Naturally they look for safe and secure investment avenues , avoiding risky investments , even if they do not offer better returns .
One avenue for investment is financial instruments like bank deposits , post office deposits, mutual funds , and shares . Other avenue is to invest in commodities , gold and real investment .
While the first option has better liquidity , the second avenue may yield higher return with restricted liquidity . This article explores only the financial investments . Further it suggests only low risk options and stock market investment which carry high risks is not suggested for the senior citizens .
Risk-free Investments ?
There is no 100 % risk free investment . Even keeping cash in your house also carries risk . But Bank deposits , especially with public sector banks are considered safest .
But episodes involving banks like PMC Bank , Yes Bank , Lakshmi Vilas Banks have also proved that even bank deposits are not foolproof . During recent years , many events took place in India that shattered the confidence of investors . PMC Bank was put on moratorium by RBI and investors are still waiting for the return of their deposits . Yes Bank was put under moratorium and restarted with new management . Lakshmi Vilas bank administration was handed over to Singapore based DBS Bank . Karvy securities were banned by SEBI and customers dealing with them are suffering . M/S Franklin Templeton Mutual funds decided to wind up some funds prematurely and investors had to wait for refunds . It all proves that no investment is 100 % safe . As we cannot avoid risks , it’s better to spread risks across various assets .
So you chose your investments according to your needs . Any how do not put all eggs in one basket and try to diversify in to three or four investment channels . If you have penchant for taking risks , limit your such investments in equities / mutual funds to certain percentage of your investments .
Now let us look in to various low risk investment avenues available to us and returns we get on them .
BEST INVESTMENT PLANS FOR SENIOR CITIZENS
BANK FIXED DEPOSITS
Bank deposits are most popular investment plans as they assure good returns with safety of investment . But in the last 10 years , the deposit interest rates of the banks have shown decline but for the last three months where we are seeing raise .
Up to Rs 50,000 of bank interest is tax free for senior citizens under the old tax regime and additional interest earned will be added to taxable income of the deposit holder . Bank deposits are guaranteed by DICGC up to Rs 5.00 lakhs now .
GOVERNMENT BACKED INVESTMENT AVENUES
1. SENIOR CITIZEN SAVINGS SCHEME ( SCSS )
2. NATIONAL SAVINGS CERTIFICATE :
3. TIME DEPOSIT ACCOUNT WITH POST OFFICE
INTEREST RATES FOR BANK DEPOSITS :
Present Interest rates for Bank Deposits for 5 years maturity are :
FOR 5 YEAR DEPOSITS
A. Public sector banks pay between 6.50 % to 7.50 % for senior citizens
B. Private sector banks pay between 6.25 % to 8.00 % for senior citizens .
C. Small finance banks pay between 6.75 % to 8.75 % for senior citizens .
There are NBFC companies , co-operative societies and corporates who pay higher interest rates , but have higher risk weight-ages .
SPECIAL DEPOSITS FOR SENIOR CITIZENS
Some banks have introduced special deposit schemes for senior citizens and are offering additional interest rates for deposits of period above 5 years
Senior citizens also have option of investing in Government backed investment schemes , NBFC / Corporate bonds and debt Mutual funds, which we explore below
For latest bank interest rates , CLICK HERE
SENIOR CITIZEN SAVINGS SCHEME ( SCSS ) :
The scheme is operated by Indian post and available in post offices throughout India . The scheme is also operated through Public sector banks and selected private sector banks . A senior citizen can invest a maximum of Rs 30 lakhs in the scheme . Maturity after 5 years with an interest of 8.20 % quarterly compounded and interest payable quarterly .
For the details of the scheme , CLICK HERE
NATIONAL SAVINGS CERTIFICATE :
The scheme is operated by Indian post and available in post offices throughout India . Investment in the scheme gets tax rebate under 80 c of the income tax act . Scheme is for 5 years . Interest at
7.70 % pa and payable only on maturity .
TIME DEPOSIT ACCOUNT WITH POST OFFICE :
One can deposit any amount and a deposit of 5 years fetches interest of 7.50 % with annual payment of interest
MONTHLY INCOME SCHEME OF INDIAN POST ( MIS )
The scheme is operated by Indian post and available in post offices throughout India . One can invest a maximum of Rs 4.5 lakhs in the scheme . Maturity after 5 years with an interest of 7.4 % pa with monthly payment of interest .
KISAN VIKAS PATRA ( KVP )
The scheme is operated by Indian post and available in post offices throughout India . The scheme is for 115 months and fetches 7.5 % pa and payable only on maturity .
TO HAVE FULL DETAILS OF ALL FIXED INCOME PLANS , CLICK HERE
NBFC / CORPORATE DEPOSITS :
Some of the reputed Non- Banking Finance companies like Shriram transport finance , Bajaj Finance , Mahindra & Mahindra Finance are offering up to 9.10 % for the seniors for a deposit for 5 years . The amount deposited in these companies will not carry DICGC guarantee .
For details , CLICK HERE
DEBT MUTUAL FUNDS : Mutual Funds do not guarantee any fixed return or safety of capital , unless they are capital protected funds . Any how return is not guaranteed . Few of the capital protected funds have yielded earlier up to 13 % annually , but many have failed to yield any returns on their investment . Some of the top ranked debt mutual funds had also yielded around 8% pa to 13 % pa in last five years years . But episode with Leading Mutual Fund M/S Franklin Templeton Mutual funds has shaken the investors’ faith out from debt mutual funds also . The mutual fund house decided to wind up some Mutual Fund schemes prematurely and investors waiting for the release of their invested funds .
TAX REBATES TO SENIOR CITIZENS ON INTEREST EARNING :
INVESTMENT & INCOME TAX :
Old tax regime alone carries tax rebates for the investments made by the senior citizens . Income tax for Senior Citizens are exempted up to Rs 50,000 interest income from banks / post offices under Section 80 TTB of Income Tax Act . Rebate under 8OC can be availed for Investment made in insurance premium / PPF / NSC etc for an amount up to Rs 1,50,000 . Long Term Capital gain from Debt MF held for more than 3 years taxed at 10 % and Profit from Debt MF held less than 3 years will be added to the taxable income of the holder .
Before making any investment , please study your requirement of safety , liquidity and return . A corporate bond may yield higher return , but it may not have liquidity . You may not be able to encash in case of need . Bank deposit may be secure and offer liquidity , but yield may be less .
HAPPY INVESTING
