The Reserve Bank of India (RBI) left the benchmark rates unchanged for six consecutive times when it met for the Monetary Policy Committee Meeting in February this year. However, markets may start cutting the rates later this year as inflation has decreased significantly.

According to economists polled by Reuters, RBI may keep the interest rates unchanged until July, a bit longer than the US central bank, on strong growth and still-elevated inflation. RBI has kept the repo rate at 6.5 per cent, while the current inflation is pegged at nearly 5 per cent.

In a reduced rate scenario, fixed-income instruments become unattractive; hence, booking them before the RBI rate cuts start could be ideal. Senior citizens can explore some investment instruments in a reduced-rate environment.

Also Read: 7 Investment Options For Senior Citizens To Diversify Their Portfolio

Gilt Funds

Gilt funds are debt mutual funds that invest in government securities. Investors can keep a portion of their corpus in medium to long-term debt funds, which provide stable returns with minimal risks. Gilt funds also help in portfolio diversification. These funds have the lowest expense ratio, unlike equity mutual fund schemes, which may involve higher costs.

Long-Term Bonds

Medium to long-term government bonds can be another investing option before the low-interest rate regime starts. If you buy them now at a higher rate, you can continue receiving higher returns when the rates come down or sell the bonds in the secondary market at a higher price later. Investing in government bonds will allow you to earn stable, risk-free returns while helping diversify your investment portfolio.

Also Read: How Can Seniors Benefit From Pradhan Mantri Vaya Vandana Yojana?

Long Term FDs

One can also invest in long-term fixed deposits (FDs) before the rates decrease. Investors can adopt the FD laddering strategy to invest in these instruments and earn regular income. The approach lets you space out the returns at fixed intervals so you don’t run out of cash. Additionally, the FDs will provide you with a cushion against financial emergencies.