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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  do not  offer better returns . Â
One avenue for investment is  financial instruments like bank deposits , post office deposits, mutual funds , and shares . Other avenue is to invest in commodities , gold and real investment . While the first option  has better liquidity , the second  avenue may yield higher return with restricted liquidity .  This article explores only the financial investments . Further it suggests only low risk options and stock market investment  which carry high risks is not suggested for the senior citizens . Risk-free Investments ?
There is no 100 % risk free investment . Even keeping cash in your house also carries risk . But Bank deposits  , especially with public sector banks  are considered safest  .Â
But episodes involving banks like PMC Bank , Yes Bank , Lakshmi Vilas Banks  have also proved that even bank deposits are not foolproof .  During recent years , 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 had to wait for refunds . It all proves that no investment is 100 %  safe . As we cannot avoid risks , it's better to spread risks across various assets . ​ 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 . ​Now let us look in to various low risk  investment avenues available to us  and  returns we get on them . 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 under the old tax regime  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 : ​FOR 5 YEAR DEPOSITS ​A.  Public sector banks pay between 6.50 % to 7.50 % for senior citizens B. Private sector banks pay between 6.25 % to 8.00 % for senior citizens  . ​​  C. Small finance banks pay  between 6.75 % to 8.75 % for 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 30 lakhs  in the scheme  . Maturity after 5 years  with an interest of 8.20 %   quarterly compounded and interest payable quarterly  .   ​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 7.70 %  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 7.50  %  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 7.4  % 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 7.5 %  pa and payable only on maturity . ​ ​  TO HAVE FULL DETAILS OF ALL FIXED INCOME PLANS  , CLICK HERE ​
TAX PLANNING FOR FY 2023-24 ( AY 2024-25 )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  9.10  % for the seniors for a  deposit for 5 years . The amount deposited in these companies will not carry DICGC guarantee . ​ 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 . Few of the capital protected funds  have yielded earlier up to 13 % annually , but many have failed to yield any returns on their  investment  . Some of the top ranked  debt mutual funds had also yielded around 8% pa to 13 % pa in last five years years ​ . But 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
 Old tax regime alone carries tax rebates for the  investments made by the senior citizens . 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 .
  ​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 |