You are retired and are looking forward to living a relaxed life. From now, you want to spend your time to do the things that you would love to do. This can be achieved by smart financial planning to give you the financial security needed in old age.
If you are wondering where to invest, here are some excellent investment options for you.
- Senior Citizens Savings Scheme (SCSS): This is a savings scheme launched by the Indian government particularly for senior citizens. All seniors above the age of 60 years can invest in this scheme. Those who are above 55 years of age are also eligible to invest in this scheme but are subject to certain conditions. The scheme has a lower limit of Rs 1,000 and an upper limit of Rs 15,00,000. The scheme has a period of 5 years and carries an interest rate of 9 per cent. A penalty of 1.5 per cent is applicable on the amount deposited in case the deposit is withdrawn before 2 years and 1 per cent if the amount is withdrawn after 2 years but before the expiry of the term.
- Post Office Monthly Income Scheme (POMIS): Are you looking for a guaranteed monthly income? Then monthly income scheme (MIS) offered by various post offices in the country is best suitable for you. You can invest a minimum of Rs 1,000 and a maximum of Rs 3,00,000 singly or Rs 6,00,000 jointly in this scheme. You earn an 8 per cent interest on your deposit and 10 per bonus after the end of tenure, which is 6 years. If you withdraw after a year, a penalty of 5 per cent of the amount deposited is applicable. However, there is no penalty after 3 years.
- Post Office Time Deposit (POTD): This is similar to the term deposit offered by banks. The minimum amount to be deposited in this scheme is Rs 200 and there is no limit on the maximum amount than can be deposited. The period for the deposit ranges from 1 year to 5 years and the interest rate ranges from 6.25 to 7 per cent, compounded quarterly.
- Fixed Deposits (FD): Offered by various banks and companies, you are better off opting for the fixed/bank deposits. Though the interest rates on the bank deposits are lower than the interest rates on company deposits, bank deposits are safer. Always choose deposits with AAA rating, as they are the safest from amongst all the deposits.
- Monthly Income Plans (MIP): If you are looking for higher returns, then these options are suitable for you. These are market linked investment options offered by mutual funds. MIPs are a type of balanced funds with 15-20 per cent of their assets in equities. The dividends you get here are tax-free but you have to bear market risks.
As a senior citizen, while safety of capital is paramount, don't forget to take into account the tax factor. Taxes can actually erode the value of your returns. Also another black hole to watch out for is inflation. Many seniors opt for the security of assured returns and end up finding that the value of their investment has eroded due to inflation.
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