If you are a senior citizen who gets a pension from the previous organization or through EPS (Employees Pension Scheme), you are in a better position to invest in lucrative investment instruments to multiply your savings.
As a senior, you cannot afford to take risks regarding the safety of your capital amount. This is because you have to meet your daily expenses along with ensuring the growth of your investment. For example, you can invest in bank fixed deposits, recurring deposits, SCSS, etc. that are risk-free instruments and provide fixed returns.
There is no one ideal senior citizen scheme as it depends on whether you are looking for growth, a monthly income source, or both. Also, you can invest in multiple avenues to balance the risk-return ratio if you have accumulated a large corpus until retirement.
These are the 5 best senior citizen investment options in 2020:
- Senior Citizen Savings Scheme i.e. SCSS is a safe investment option as it is backed by the government. An interest rate of 7.4% is applicable on SCSS at present. The SCSS interest rate gets revised quarterly.
- The tenor of five years is fixed but it can be extended by 3 years if required. However, the accrued interest is paid only after every 3 months as the option of monthly, bi-annual, and annual interest payouts are not offered by this instrument.
- Post Office Monthly Income Scheme i.e. POMIS is an investment scheme through which you can either deposit a lump sum amount in a single account or else you can deposit a fixed amount every month.
- Each deposit will be linked to a separate account but the invested capital cannot exceed Rs. 4.5 lakhs even if you open multiple accounts in different post offices. A maximum investment of Rs. 9 lakhs can be done by opening a joint account.
- Currently, an interest rate of 6.6% is offered on this scheme. Moreover, it is a risk-free investment option since it is backed by the government. The interest payouts are done every month and the entire amount can be withdrawn after 5 years.
- You can invest in a PPF (Public Provident Fund) even after retirement. However, you will need to close your previous account before opening a new PPF account.
- An interest rate of 7.1% is offered on PPF currently and the interest that you earn through it is tax-free as well. However, the annual contribution cannot exceed Rs. 1.5 lakhs and the option of monthly payout is also not available with PPF.
- As a senior citizen, you can also invest in NSC (National Savings Certificate) since there is no age restriction for buying its certificates. The initial investment can be as small as Rs. 100 and subsequently, certificates of the higher denomination can be purchased in the multiples of 100.
- NSC comes with a maturity period of 5 years. However, premature withdrawal is only allowed if certain criteria are met. Also, its interest rate has been reduced to 6.8% after the Indian government decided to cut down the interest rates of small savings schemes.
- Among the risk-free investment instruments, fixed deposits have always been a better choice because of the high-interest rates they offer. If you are not sure what is fixed deposit, you can think of it as an investment option that provides high returns on depositing a fixed amount for a fixed tenor.
- Investing in a fixed deposit is one of the better alternatives it allows you to earn at a high interest rate without exposing your investments to market risks. Moreover, the FD interest rate is fixed and the deposited amount can be withdrawn prematurely.
- You can book an FD with an NBFC that offers a high interest rate even during adverse economic conditions. For instance, senior citizens get fixed deposit rates up to 7.85% with Bajaj Finance FD. The option of monthly, quarterly, bi-annual, and annual interest payouts can also be availed by investing in a non-cumulative FD.
The monthly interest payout can be used for covering regular expenses and paying bills. The FD account can be accessed online and the option of opening a fixed deposit account by filling an online FD form is also available now. These features make it one of the best online investments for senior citizens.
Moreover, your invested capital is safe as these fixed deposits are highly rated for their stability and safety by third-party organizations like CRISIL and ICRA.