Investments are vital in the long run. However, the crux of choosing an investment lies in the balancing act between goals and risk appetite. With the purposes of a regular income and wealth creation, senior citizens should choose an investment tool that best synchronizes with their goals.
As we progress along with the article, we will look into the three best investment options for senior citizens.
Investment for senior citizens: 3 safe options in India
- Fixed deposits
Fixed deposits are the hassle-free investment options that can be open with any lender. Although the FD rates in India have been falling due to the current slashes in the repo rate; it is one of the lower risk instruments. Lenders such as PNB housing offers interest rates up to 8.0%
Senior citizens receive 0.25% to 0.75 % higher interest than regular deposits. Lenders such as PNB, Senior citizens are eligible for 0.25% higher interest.
FD Interest rates for FD deposits vary as per cumulative and non-cumulative options.
- In the Cumulative option, the interest is compounded quarterly or yearly and paid at the time of maturity.
- In Non-Cumulative FD, interest is paid quarterly, half-yearly, or annually depending on the investor’s choice.
- PPF Account
Senior citizens can deposit a significant portion of the retirement income in a PPF account. As there are no upper limits prescribed by the government for opening PPF accounts, it is easy to open. However, the applicant should ensure that the existing PPF account is closed before opening a new account.
The features of opening a PPF account are:
- The minimum deposit limit is Rs.500. The maximum limit is Rs.1,50,000.
- The interest rate for PPF is announced by the government.
- Investors can choose to opt for a 12-month instalment or lump sum annually.
- SCSS (Senior Citizens Saving Scheme)
The SCSS is a government-backed scheme specifically designed for senior citizens.
- As per the scheme, the maturity period of an SCSS scheme is after five years. Applicants can choose to extend it for another three years.
- The applicant can open an individual or joint account and make a maximum deposit upto Rs. 15 lakhs.
- The current interest rates for SCSS stands at 7.4%.
- It is also a tax saving instrument.
Every investment should be made after careful scrutinization of one’s goals and risk appetite. Since several investment tools are dependent on market conditions, they could prove risky for an applicant looking for a regular income. Ideally, an investment that provides a senior applicant with the advantages of wealth creation and stability would be a better choice. The investment tools, as mentioned above, are some of the options that give a senior citizen the dual advantages of wealth creation and regular income like fixed deposit.