Every individual yearns to have financial security and peace of mind post-retirement, and usually, works towards that all their lives. However, when you are aged 60 or above, you are also much more prone to illnesses and ailments that come with old age. Funding treatments for these illnesses can become very challenging, especially considering the fact that the regular inflow of salary income stops post-retirement. As a senior citizen, choosing the right investments can ensure that you never run short of funds for important expenses.
While Fixed Deposit for Senior Citizens is usually one of the most preferred options, here are some of the safest investment options available for senior citizens in India:
Senior Citizen Savings Scheme (SCSS)
One of the options frequently considered by senior citizens in India, the Senior Citizen Savings Scheme is an investment scheme that can be availed from the post office or banks. SCSS is created especially for early retirees or senior citizens, offering many benefits during your retirement. Under this scheme, you can invest up to 15 lakhs for a tenure of 5 years, extendable by three more years if needed. The principal amount, as well as the interest payout, has a sovereign guarantee and the interest rate fixed at the beginning remains the same for the rest of the tenure.
Fixed Deposits are one of the more popular investment schemes in India, due to the low risks and definite returns associated with them. Most banks and NBFCs provide flexibility in tenures, which offers the additional benefit of laddering, wherein the investor can spread the investment amount in multiple FDs. If you compare FD rates between banks and NBFCs like Bajaj Finance, you would find that the latter offers much higher interest rates, especially when it comes to Fixed Deposits for Senior Citizens. It is recommended that you plan your Fixed Deposits, by calculating the exact returns that you are likely to get at the end of your tenure, using the Fixed Deposit calculator available on most websites of banks and financial companies. When you choose Fixed Deposits, you can also avail of tax benefits under Section 80C of the Income Tax Act.
Many government-backed institutions offer tax-free bonds which usually carry a high safety rating. Since these are listed securities, one can also buy and sell them on the stock exchange. This investment option is, however, a long-term investment instrument, as the tenure is usually 10, 15, or 20 years. Due to this, one of the main aspects you should consider if you are looking to invest in a tax-free bond is that the liquidity would remain low in such investments as it is usually listed as an exit route for investors. The interest that is levied on these bonds is tax-free offering an extra benefit to the investors. Usually, such bonds have annual payouts as opposed to monthly payouts offered in many other investment options.
Post Office Monthly Income Scheme (POMIS)
Another lucrative investment option is the Post Office Monthly Income Scheme, wherein you can invest up to a maximum of 9 lakhs if you are applying for joint ownership. Under single ownership, you can invest up to a maximum of 4.5 lakhs. One of the best features of the scheme is that the interest rate is set every quarter, giving you an opportunity to get higher returns. However, should be noted that the interest income under POMIS, is fully taxable and does not entail any kind of tax benefit. POMIS is also an easy scheme to manage, as you can opt to automatically transfer the income to your savings account.
While all the above investment options are safe to invest in, for senior citizens, Term Deposits for Senior Citizens can be the ideal option considering the operational ease and guaranteed returns. Reputed companies like Bajaj Finance even offer higher interest rates to senior citizens along with an entire suite of solutions that can make the investment more beneficial. By opting for periodic interest payouts, you can also choose to get returns monthly, quarterly, or annually, thus ensuring that you can manage your finances easily.