As a demographic, senior citizens have unique money challenges, investment objectives, and risk appetite. There are several schemes customized for the needs of senior citizen investors.
Take a look at 5 attractive investment options for senior citizens:
Senior Citizen Savings Scheme (SCSS)
- Investment option only for individuals above the age of 60 years. However, it can also be availed by investors between the age of 55 and 60 who’ve taken VRS or have super-annuated, or for retired defence personnel above the age of 50
- Invest can be done for a tenure of up to 5 years and can be extended by 3 years thereafter
- Current interest on SCSS is 8.3% p.a, payable quarterly. This remains fixed till maturity.
- Investment in SCSS is eligible for the tax benefit u/s 80(C) up to Rs 1.5 lakh ceiling
- Maximum investment allowed in this scheme is Rs 15 lakh.
Bank FD For Senior Citizens
- Among the most attractive investment options for Senior citizens
- It is a low risk investment option with assured returns
- Senior citizens get 25% to 0.50% higher interest as compared to normal investors.
- Senior citizens get tax exemption benefit under Section 80TTB if total interest income earned during the financial year is upto Rs 50,000.
- Bank deposits are flexible in terms of tenure so you can spread the amount across different maturities, instead of keeping it parked for a particular duration. This will provide liquidity to funds.
Post Office Monthly Income Scheme (POMIS)
- This option is good for investor looking for a monthly interest by investing a lump-sum amount
- It is a five-year investment with a maximum cap of Rs. 9 lakhs under joint ownership and Rs. 4.5 lakhs under single ownership
- The interest rate is set every quarter
- No tax benefit is allowed under POMIS
Monthly Income Plan (MIP) Mutual Fund
- This is a debt-oriented safe plan that offers a low-risk investment option with moderately high returns.
- While anyone can invest in MIPs, senior citizens can especially make good gains.
- MIPs invest primarily in debt securities while 10-30% of their portfolio is exposed to equity. This provides high safety of capital and high long-term returns from equity.
- This investment option is subject to tax as per the rule applicable on debt fund for short or long-term capital gain
Pradhan Mantri Vaya Vandana Yojana (PMVVY)
- Investment of up to Rs 15 lakh can be done by senior citizens in PMVVY and can get an assured return of 8% p.a.
- Investor gets a fixed pension income every month for 10 years tenure.
- If you invest Rs 15 lakh, you would be eligible to get an income of Rs 10,000 per month.
The writer is CEO, BankBazaar.