Investment Options for Senior Citizens

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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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