GUIDESINVESTMENTS
GUIDES
Building a retirement corpus is critical to comfortable and worry-free golden years. Choosing the best investment for senior citizens in India is relatively simple because of the many options available. Whether you want to generate regular income or grow your retirement corpus, you can choose a conducive investment option for senior citizens to meet your needs.
Government-backed SCSS is one of the best investment plans for seniors over 60. Seniors can invest between Rs. 1,000 to Rs. 30 Lakhs in the scheme and earn a predetermined quarterly interest. Other benefits of this reliable scheme include a 5-tenure (with a 3-year extension option), partial withdrawals, and Section 80(C) tax benefits.
Fixed deposits are one of India's most popular guaranteed return investment products. Senior citizen FDs are immune from market risks and offer relatively higher interest rates than those applicable to the general public. Moreover, with a non-cumulative FD, you can have a regular source of income to manage your expenses.
Seniors with a moderate yield expectation and low-risk appetite can invest in debt, hybrid, and liquid funds. The minimum risk exposure of these funds allows you to tap into market gains without risking heavy losses from market volatility.
Offered by India Post, POTD is a reliable investment option for senior citizens. They can start the scheme with a minimum investment of Rs. 1,000 and choose flexibly from 1,2,3, and 5-year tenures. The interest on the account is calculated quarterly and credited annually.
POMIS is another safe fixed-interest investment option for senior citizens looking to secure a monthly income without shouldering market-linked risks. You can invest up to Rs. 9 Lakhs in individual accounts and up to Rs. 15 Lakhs in joint accounts. However, POMIS does not bring you any tax incentives during its 5-year tenure.
Much like FDs, the recurring deposit interest rate for seniors is about 0.25%-0.75% higher than the regular ROI. With tenures varying from 6 months to 10 years and one penalty-free premature withdrawal clause, seniors can enjoy liquidity without compromising on earnings.
These fixed-income securities are issued by government enterprises like the NHAI, NTPC Limited, and others to raise capital for projects. Typically, these bonds are issued for ten years or more and bring you a fixed, tax-free interest for a long duration. The government-sponsored nature of these bonds makes them low-risk investment avenues for seniors.
Real estate investments are preferred options, given their potential for capital appreciation. Investing in properties located in up-and-coming neighbourhoods can help you capitalise on this steady price rise. Until then, you can generate a steady rental income from the property to maintain your lifestyle post-retirement.
The regular dividend payout from these stocks can ensure a steady income flow for seniors in their golden years while ensuring capital appreciation. However, investors must carefully research the company and evaluate their risk appetite before investing.
Regulatory Authority floating bonds are low-risk investment options for seniors with probable premature withdrawal needs. While these bonds come with a 7-year lock-in period, seniors above 70 enjoy more relaxed withdrawal terms.
Lump-sum investment in annuity schemes brings you a steady monthly income stream in your retirement years. Depending on the type of scheme, you can also opt for a whole-life annuity option to enjoy guaranteed payouts throughout your lifespan.
Under the revised joining rules, seniors up to 70 can open an NPS account. So, if you choose to invest in NPS, you can allocate funds under the auto and active choice options. Moreover, if you are a seasoned investor, you can allocate up to 50% of funds in equity under the active choice option.
While these are some of the best investment options for senior citizens, the final decision rests on your post-retirement expenses, financial goals, and risk tolerance levels. While low-risk investors looking for a stable monthly income can rely on FDs and RDs, those who wish to earn higher returns can opt for mutual funds and stocks.
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Dividend-paying stocks offer regular payouts from the company’s profits ensuring a steady income for senior citizens.
A reverse mortgage helps seniors earn from their self-owned properties. Seniors can pledge their property with the bank by opting for a reverse mortgage loan. In this case, the bank pays the individual monthly instalments on the sanctioned property value (usually 80%). In the event of the individual’s demise, the property is transferred to the bank.
These funds are designed to cater to the financial goals of seniors. Debt and liquid funds help maintain flexibility and diversity, earn moderately high returns, and ensure low-risk exposures.
Health insurance policies cover the medical expenses of senior citizens who are more prone to ill health given their age. They also offer tax benefits u/s 80D of the IT Act.
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