INVESTMENTS FOR PEACEFUL RETIRED LIFE
Normally a retiree , who is dependent on the income derived from his retirement benefits , looks for a safe and secure investment . If he / she draws pension , the investment return will be an additional income . Otherwise it will be his / her sole income . Naturally they look for safe and secure investment avenues , avoiding risky investments , even if they are offered better returns .
EDITOR'S NOTE dated 29.08.2022 : . Since our last note dated 03.03.2022 , RBI has hiked its Repo Rates three times with a total hike of 1.4 % and presently Repo rate is at 5.4 % . The growth of Indian economy which was slowing down in the last year , has picked up now . As a consequence of these hikes , all financial institutions are also hiking their interest rates for their deposits . The hike has caught up with all types of banks and NBFC Fixed Deposits . However government is yet to hike small savings interest rates ( post office deposits ) . To know about the latest interest rates offered , continue to read the articles
EDITOR'S NOTE dated 03.03.2022 : . During 2022, RBI has not changed Repo Rate which is at 4 % . The growth of Indian economy which was slowing down in the last year , has picked up now . With a war raging between Russia & Ukraine , it looks inflation is catching the world along with India . Along with prices , it's afraid that interest rates may flare up in coming days . Hence possibility of getting higher interest rate from fixed income plans like Bank Deposits in the coming times is looking more possible . Already four Indian Banks are paying 7 % or more for 5 year deposits .
EDITOR'S NOTE dated 18.01.2022 : This blog article is updated after 12 months . During the period Repo Rate has steadied at 4 % without any change . The growth of Indian economy which was slowing down in the last year , has picked up now . . With the advent pandemic COVID -19 problem , Indian economy has gone into recession along with global economy . However economy is bouncing back . But possibility of getting any higher interest rate from fixed income plans like Bank Deposits in the current year is still looking remote .
EDITOR'S NOTE dated 04.01.2021 : This blog article is updated after 7 months . During the period Repo Rate has steadied at 4 % . The growth of Indian economy was slowing down in the last year . With the advent pandemic COVID -19 problem , Indian economy has gone into recession along with global economy . However economy is showing signs of possible recovery in coming months . Anyhow possibility of getting any higher interest rate from fixed income plans like Bank Deposits in the current year has become remote .
EDITOR'S NOTE dated 29.05.2020 : This blog article is updated almost after a year . During the year Repo Rate has come down continuously with every RBI MPC meeting . Now it is 4 % . The growth of Indian economy was slowing down in the last year . With the advent pandemic COVID -19 problem , Indian economy is on the verge of recession along with global economy . Possibility of getting any higher interest rate from fixed income plans like Bank Deposits in the current year has become remote . Actually many experts are hinting of interest rates travelling south in further policy statements of RBI .
Hence it would be prudent to check available interest rates now and act if one wants to go for risk free investments EDITOR'S NOTE dated 29.05.2020 : This blog article is updated almost after a year . During the year Repo Rate has come down continuously with every RBI MPC meeting . Now it is 4 % . The growth of Indian economy was slowing down in the last year . With the advent pandemic COVID -19 problem , Indian economy is on the verge of recession along with global economy . Possibility of getting any higher interest rate from fixed income plans like Bank Deposits in the current year has become remote . Actually many experts are hinting of interest rates travelling south in further policy statements of RBI . Hence it would be prudent to check available interest rates now and act if one wants to go for risk free investments 
BEST INVESTMENT PLANS FOR SENIOR CITIZENS
BANK FIXED DEPOSITS
Bank deposits are most popular investment plans as they assure good returns with safety of investment . But in the last 10 years , the deposit interest rates of the banks have shown decline but for the last three months where we are seeing raise .
Up to Rs 50,000 of bank interest is tax free for senior citizens and additional interest earned will be added to taxable income of the deposit holder . Bank deposits are guaranteed by DICGC up to Rs 5.00 lakhs now . Present Interest rates for Bank Deposits for 5 years maturity are : A. Public sector banks pay between 5.25 % to 5.75 % for 5 year term deposits ( 5.75 % to 6.45 % for senior citizens ) . Union Bank of India & Canara Bank are paying highest interest rate of 5.75 % for the public and State Bank of India is paying highest interest rate @ 6.45 % for the senior citizens B. Private sector banks pay between 5.40 % to 6.75 % for 5 year term deposits ( 5.90 % to 7.50 % for senior citizens ) . Indusind Bank and Yes Bank are paying highest interest rate of 6.50 % for the public and i @ 7. 50 % for the senior citizens . C. Small finance banks pay between 5.50 % to 7.50 % for public and 6.00 % to 8.25 % for senior citizens . Utkarsh SF Bank pay highest of 7.50 % for the public and 8.25 % for the senior citizens . There are NBFC companies , co-operative societies and corporates who pay higher interest rates , but have higher risk weight-ages . SPECIAL DEPOSITS FOR SENIOR CITIZENS Some banks have introduced special deposit schemes for senior citizens and are offering additional interest rates for deposits of period above 5 years Senior citizens also have option of investing in Government backed investment schemes , NBFC / Corporate bonds and debt Mutual funds, which we explore below For latest bank interest rates , CLICK HERE
Compare Fixed Deposit Interest rates offered by various banks before investing
VISIT : LATEST BANK DEPOSIT INTEREST RATES - A COMPARISON FOR NEWS ON INTEREST RATE CHANGES , CLICK HERE
GOVERNMENT BACKED INVESTMENT AVENUES
SENIOR CITIZEN SAVINGS SCHEME ( SCSS ) :
The scheme is operated by Indian post and available in post offices throughout India . The scheme is also operated through Public sector banks and selected private sector banks . A senior citizen can invest a maximum of Rs 15 lakhs in the scheme . Maturity after 5 years with an interest of 7.4 % quarterly compounded and interest payable quarterly . For the details of the scheme , CLICK HERE LIC PRADHANA MANTRI VAYA VANDANA YOJANA The scheme is operated by Life Insurance Corporation of India . The scheme is for 10 years and fetches interest rate of 7.4 % pa . Interest in form of pension is payable monthly . A maximum amount of Rs 15 lakhs can be invested by senior citizens . For the details of the scheme , CLICK HERE GOI FLOATING RATE SAVINGS ( TAXABLE ) BOND The bonds issued by Reserve Bank of India and are sold through SBI , Nationalised Banks and few private sector banks like ICICI , HDFC etc . Bond is issued for a period of 7 years . Interest (Floating) – The interest on the bonds will be payable at half yearly intervals on Jan 1st and July 1st every year. There is no option to pay interest on cumulative basis. The coupon rate will be linked/pegged with prevailing National Saving Certificate (NSC) rate with a spread of (+) 35 bps over the respective NSC rate. Presently the rate works out 7.15 % . For the details of the scheme ,CLICK HERE NATIONAL SAVINGS CERTIFICATE : The scheme is operated by Indian post and available in post offices throughout India . Investment in the scheme gets tax rebate under 80 c of the income tax act . Scheme is for 5 years . Interest at 6.8 % pa and payable only on maturity . TIME DEPOSIT ACCOUNT WITH POST OFFICE : One can deposit any amount and a deposit of 5 years fetches interest of 6.7 % with annual payment of interest MONTHLY INCOME SCHEME OF INDIAN POST ( MIS ) The scheme is operated by Indian post and available in post offices throughout India . One can invest a maximum of Rs 4.5 lakhs in the scheme . Maturity after 5 years with an interest of 6.6 % pa with monthly payment of interest . KISAN VIKAS PATRA ( KVP ) The scheme is operated by Indian post and available in post offices throughout India . The scheme is for 115 months and fetches 6.9 % pa and payable only on maturity . TO HAVE FULL DETAILS OF ALL FIXED INCOME PLANS , CLICK HERE
TAX PLANNING FOR FY 2022-23 ( AY 2023-24 )
Comprehensive Article on Income tax changes in Rules, Rates , Slabs , Rebates and Estimation CLICK HERE TO READ HEALTH INSURANCE PLANS FOR SENIOR CITIZENS WITH OR WITHOUT ENTRY AGE RESTRICTION TO READ THE ARTICLE CLICK HERE
NBFC / CORPORATE DEPOSITS :
Some of the reputed Non- Banking Finance companies like Shriram transport finance , Bajaj Finance , Mahindra & Mahindra Finance are offering up to 8 .75 % for the seniors for a deposit for 5 years . For details , CLICK HERE
DEBT MUTUAL FUNDS :
Mutual Funds do not guarantee any fixed return or safety of capital , unless they are capital protected funds . Any how return is not guaranteed . Some of the capital protected funds have yielded earlier around 6 % to 7 % . Some of the top ranked debt mutual funds had also yielded around 7 % pa to 9 % pa in last five years years . But recent episode with Leading Mutual Fund M/S Franklin Templeton Mutual funds has shaken the investors' faith out from debt mutual funds also . The mutual fund house decided to wind up some Mutual Fund schemes prematurely and investors waiting for the release of their invested funds .
PLAN FOR CONTINGENCIES CLICK HERE TO READ
TAX REBATES TO SENIOR CITIZENS ON INTEREST EARNING
INVESTMENT & INCOME TAX :
Income tax for Senior Citizens are exempted up to Rs 50,000 interest income from banks / post offices under Section 80 TTB of Income Tax Act . Rebate under 8OC can be availed for Investment made in insurance premium / PPF / NSC etc for an amount up to Rs 1,50,000 . Long Term Capital gain from Debt MF held for more than 3 years taxed at 10 % and Profit from Debt MF held less than 3 years will be added to the taxable income of the holder .
INVESTMENT DECISION YOU HAVE TO TAKE
Before making any investment , please study your requirement of safety , liquidity and return . A corporate bond may yield higher return , but it may not have liquidity . You may not be able to encash in case of need . Bank deposit may be secure and offer liquidity , but yield may be less .
Episodes involving banks like PMC Bank , Yes Bank , Lakshmi Vilas Banks has also proved that even bank deposits are not foolproof . During the last one year , many events took place in India that shattered the confidence of investors . PMC Bank was put on moratorium by RBI and investors are still waiting for the return of their deposits . Yes Bank was put under moratorium and restarted with new management . Lakshmi Vilas bank administration was handed over to Singapore based DBS Bank . Karvy securities were banned by SEBI and customers dealing with them are suffering . M/S Franklin Templeton Mutual funds decided to wind up some funds prematurely and investors are waiting for refund . It all proves that no investment is 100 % safe . If you are a tax payer , tax rebates are available to senior So you chose your investments according to your needs . Any how do not put all eggs in one basket and try to diversify in to three or four investment channels . If you have penchant for taking risks , limit your such investments in equities / mutual funds to certain percentage of your investments . HAPPY INVESTING
TO KNOW ABOUT TAX ON RETIREMENT BENEFITS , CLICK HERE
TO KNOW ALL ABOUT IT RETURNS , CLICK HERE HOW TO LINK AADHAR TO PAN ? CLICK HERE PLAN YOUR FINANCE PRUDENTLY . For Financial Planning , CLICK HERE FIXED INCOME PLANS PRECAUTIONS WHILE INVESTING IN STOCK MARKET FOR LATEST INCOME TAX NEWS CLICK HERE FOR NEWS ON INTEREST RATES CLICK HERE
DISCLAIMER :
No content on this blog should be construed to be investment advice. You should consult a qualified financial advisor prior to making any actual investment or trading decisions. All information is a points of view of the author , and is for educational and informational use only. The author accepts no liability for any interpretation of articles or comments on this blog being used for actual investments. Point of view expressed by the author is solely of the author and not of the website .
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MANJUNATHAN BELLURDGM ( RETD ), INDIAN OVERSEAS BANK |
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