You can only build wealth over a generation if you manage to earn, save, and invest in the right instruments in a diligent and systematic manner over a fairly long span of time. When it comes to senior citizens over 60 years old, who usually have a significant amount of savings accumulated over the years, investing it into sound instruments would be all the more important. This could actually help senior citizens safeguard their golden years by creating a sizeable retirement fund.
While there are several safe and secure investment options available in the market, here are some of the popular ones for senior citizens in 2023
Senior Citizen Fixed Deposit: Fixed deposits (FDs) are traditional, low-risk, and stable investment tools that offer fixed returns. Senior citizens typically prefer FDs as their preferred mode of investment. The minimum and maximum investment for FDs vary with each bank. The FD interest rate ranges between three and seven per cent.
Senior citizens get up to 0.5 per cent additional rate on their FDs. Senior citizens can opt for interest payments at the time of maturity or get it regularly in a monthly, quarterly, half-yearly or annual mode.
Besides, there is tax deduction for FDs under Section 80C of the Income-tax Act, 1961. There is also a premature withdrawal facility available with FDs, which comes with a penalty.
Senior Citizens’ Savings Scheme: SCSS can be availed by any individual above the age of 60 years. They are effective savings options for the long-term and offer attractive features and unmatched security.
“SCSS provides senior citizens tax benefits, safe investment options, and reduced interest rate of eight per cent per annum. It also offers premature withdrawal, with a penalty. The minimum investment for SCSS is Rs 1,000 and the maximum investment is Rs 30 lakh. The lock-in period for SCSS is around five years. The interest income is taxable, and tax is deducted at source if the interest is more than Rs 50,000,” says Anup Bansal, chief business officer, Scripbox, a wealth management firm.
Post Office Monthly Income Scheme: The monthly income scheme (MIS) is offered by India Post or the Department of Post (DoP). This is a government of India-backed savings scheme. This is a safe and stable scheme that offers regular monthly income to the depositors in interest payments, and it is a low-risk investment option.
The minimum investment required for this is Rs 1,000. While the maximum investment is Rs 9 lakh per individual, for a joint account, it is Rs 15 lakh. The rate of interest is 7.10 per cent per annum. The lock-in period is five years and it does not qualify for tax deduction. There is no TDS. This scheme allows premature withdrawal after a year of account opening, but, with a penalty. Also, the MIS account can be transferred from one post office to another.
Pradhan Mantri Vaya Vandana Yojana: PMVVY is a social security scheme that is designed to give out a monthly, quarterly, half-yearly, or annual pension. Introduced by the Government of India, it is run by the LIC of India. The scheme offers an interest of 7.4 per cent per annum. While the minimum investment required for this is Rs 1.5 lakh, the maximum investment is Rs 15 lakh. There is no lock-in period, but it has a policy term of 10 years. While an investor can avail of a loan against their PMVVY deposits, a loan of up to 75 per cent of the purchase price can be taken after three years.