Investment Options for Senior Citizens
As we enter the retirement
phase, our means of income shrink. That coupled with maintaining the
pre-retirement lifestyle takes a toll on our savings. Therefore it’s important
to know which savings or investment instruments you can look at in your golden years
to help you earn a bit on the side.
1. Fixed
Deposits: FDs are seen as time-tested investment
instruments. You can opt for an FD for as less as 7 days to as high as 10
years. There are two aspects to keep in mind when investing in FD: a) the
government revises interest rates every year, and b) interest earned is fully
taxable.
2. Senior
Citizen Saving Scheme: This is similar to a
savings account, just that it is operated by India Post. The advantage here is
you benefit from an interest rate of 9.3% while normal bank savings accounts
fetch 6-7%.
3. Post
Office Term Deposit (POTD) scheme: This is a small
saving scheme, with tenure of 1 to 5 years. Under this scheme, interest is
compounded quarterly though paid annually.
4. National
Savings Certificate: NSCs are issued by post
offices across India and are seen as one of the safest investment options
around.
5. Equity-linked
Savings Scheme: ELSS is a flexible investment option to go
for with regard to the amount and tenure of investment. Additionally, you don’t
have to pay tax on maturity or when withdrawing your investment after the
lock-in period of 3 years.
6. Pension
plans: It’s important to have at least one pension plan in your portfolio
as they offer a regular source of income. These plans are available for people
up to the age of 80 years. Pension plans work in two ways. First, you can
deposit a lump sum amount and later receive monthly payouts inclusive of
interest earned. Second, you can deposit money quarterly which will then be
given to either as lump sum or monthly, depending on your choice.
Always keep a diversified
portfolio and avoid putting all eggs in one basket. Build a portfolio
consisting of a healthy mix of conservative schemes offering long-term
stability and aggressive products that offer high returns on investment.
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