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INVESTMENTS FOR PEACEFUL RETIRED LIFE
Normally  a retiree , who is dependent  on the income derived  from his  retireme​nt 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 .Â
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 articlesÂ
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 .Â
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 .Â
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 . Â
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 .Â
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 .Â
 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 HEREÂ
Compare Fixed Deposit Interest rates offered by various banks before investing Â
​ VISIT :   LATEST BANK DEPOSIT INTEREST RATES - A  COMPARISON ​ FOR NEWS ON INTEREST RATE CHANGES , CLICK HERE ​
GOVERNMENT BACKED  INVESTMENT AVENUES  ​
SENIOR CITIZEN SAVINGS SCHEME Â Â ( SCSS )Â Â :Â
​ 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 )Â
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 DEPOSITSÂ Â :Â
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 FUNDSÂ Â :Â
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 TAXÂ Â Â :Â
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 .Â
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 HEREÂ
​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 ​
DISCLAIMERÂ Â :
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 BELLURÂDGM ( RETD ), INDIAN OVERSEAS BANKÂ |