5 Investment Options For The Retired
The age of retirement poses a lot of challenges, challenge to manage daily expenses, challenge to meet the requirement of funds for emergency and challenge to save a portion for their future as well. With the end of the earning period, it becomes a daunting task to manage all these expenses. However, making investments in a fixed income instrument and market- based instruments can help to get good returns on the investments. The key to maximizing profits is planning the mix of these investment schemes. Thereby, making use of a fixed deposit calculator can turn out to be helpful. Here are some investment schemes where senior citizens can pool their funds.
5 Investment Options For The Retired:
- Senior Citizens Saving Scheme: These investment schemes are specially designed for senior citizens above the age of 60 years. Senior Citizens can invest in this scheme for a lock-in period of 5 years which can further be extended up to 3 years. Presently, the rate of interest on SCSS for this quarter is 7.8% Under Sec 80 C of the Income Tax Act; you can get tax deductions up to Rs 1.5 Lakhs on your investments. Investing in SCSS is easy and can be done through banks or post offices.
- Post Office Monthly Income Scheme (POMIS) Account: It is also a government-backed scheme in which citizens above the age of 10 can invest their funds for small savings every month. As the interest is credited every month, it is mostly for people like pensioners who want to earn regular income without any market risks. The maximum cap for investing in POMIS for individual and joint accounts is Rs 4.5 Lakhs and Rs 9 Lakhs. A maximum of 3 individuals can invest in this scheme jointly. The rate of interest on this scheme gets revised every quarter, and presently it is 6.60%. There are, however, no tax benefits under this scheme.
- Fixed deposits: Senior Citizens can also invest their funds in fixed deposits schemes for senior citizens. A fixed deposit scheme by the bank allows you to invest your funds for a fixed period from 7 days to 10 years. You cannot withdraw your funds before the end of the maturity period. However, the tenure for Senior Citizens Fixed Deposit schemes is flexible. Senior Citizens can also invest in Tax-saving fixed deposits for a fixed period of 5 years. The advantage of investing in these fixed deposits is that you can earn tax benefits up to Rs. 1.5 Lakhs on your investments. However, for these instruments, you have to make lump-sum payment and cannot withdraw your funds before the lock-in period.
- Mutual Funds: Liquid funds like commercial papers, treasury bills, mutual funds are also a good option for investment in retirement age. These investment instruments provide high liquidity, and you can also earn higher rates as per market conditions. If you invest in debt mutual funds, there is also the advantage of getting tax benefits as the tax is not paid as per Income Tax Rates. Equity mutual funds are also an excellent choice to earn capital gains through interest and dividends.
- Tax-free bonds: As the name suggests, you can receive tax exemptions on these investment instruments. Like a fixed deposit, you can also get returns at a fixed rate of interest, and thus they are not subject to market risks. Individuals who fall under a high-income tax slab rate must invest in tax-free bonds. Also, the tenure for tax-free bonds is usually longer, and people like pensioners can invest in it to get fixed regular income.
Conclusion: Thus, a mix of these investment plans can help to get regular income with good returns if you carefully make your investment decisions.