Once you retire, managing your finances can get challenging, especially because you have access to limited funds for the rest of your days. These funds, however, can be maximized if you invest in the right investment scheme. Here are a few that are considered as the best investment schemes for senior citizens considering their features and benefits:
Pradhan Mantri Vaya Vandana Yojana (PMVVY)
This scheme is introduced by the government for senior citizens from the age of 60 and above. They will avail 8% of returns for 10 years, and the scheme is not included in the goods and service tax. The investment amount has been increased from 7.5 Lakhs to 15 lakhs. The scheme’s investing period has been extended up to 31st March 2020 from 4th March 2018 seeing that 58,152 policies were already sold during its soft launch. The investment limit has cut down to per citizen instead of per family. By this husband and wife in one family can invest up to 15 lakhs each and can avail the interest on these amounts. The policy amount is paid after the survival of the policyholder at 10 years of policy completion as per the period decided of monthly, quarterly, or yearly by the pensioner.
Fixed Deposits (FD)
Fixed Deposit is one of the safest savings options for senior citizens. The interest rate offered to senior citizens is higher than the rates provided to others. It is between 4% and 7.5%. The tenure offered is from seven days, 15 days, and 45 days till one year and can go up to ten years. FD’s provide easy liquidity as the amount can be withdrawn any time at in the tenure. The scheme is safe for senior citizens as it is not affected by the market rates, and thus the interest rates remain the same even when withdrawn immediately after the fluctuation in the market. The cumulative period is choosing from monthly to quarterly income, and non- cumulative is receiving the amount after its matured. These flexible options attract senior citizens as it provides them with easy liquidity and better benefits than other schemes. One such Non-Banking Financial Corporation is Bajaj Finance which offers tenure of 12 months to 60 months with a 9% interest rate for senior citizens.
Public Provident Fund (PPF)
The scheme was established in 1968 for the all by the government but is providing better options for the senior citizens. The tenure of the scheme is 15 years but can be invested in every five years to complete the 15 years. The interest rates are revisited by the government from time to time, and the interest rates appointed to the scheme are tax-free. The benefits that can be availed on the taxes come under Section 80C of the IT ACT. The income that is received under the interest is not counted in the Income Tax payable amount. The amount required to invest in this scheme is Rs. 500 going up till Rs. 1,50,000. The closing of the premature account is not allowed in this scheme. The scheme can be purchased from the banks and post offices. It is recommended for senior citizens to invest in tax exemption schemes or in tax controlling schemes keeping in mind the requirements of the senior citizens.
Senior Citizen Savings Scheme (SCSS)
The scheme is made for senior citizens from the age of 65 years and above. They have recently passed the permission to include the retirees from the age or 55years; those who take early retirement. The method of starting an account can be done by cash if the amount is below 1 lakhs and if above, then by cheque. An individual can hold more than one account in the scheme, but the amount in total should not exceed 15 lakhs. They are also liable to open a joint account, and the individual depositing will be the first investor of the account. The interest rate of the scheme is 8.5% currently and will increase quarterly. The tenure of five years can be extended to three years ahead upon the maturity of the account. The tax benefits are included in the scheme from the time invested under Section 80C. Also, the amount that will be withdrawn prematurely will not be covered under the tax-saving scheme 80C.
Based on all the features and benefits that the investment options mentioned above, Fixed Deposits and the Senior Citizen Savings Scheme are considered as the top choices for safety and quantum of returns.