It is important to secure your financial independence post-retirement. When you invest, consider options that help you to build a retirement corpus and give you regular income during these years so that you can easily meet all your expenses. Here are three investment options for senior citizens that provide assured earnings.
- Deposits
Fixed deposits (FDs) and recurring deposits (RDs) are popular investment options for senior citizens. Most banks and non-banking financial companies (NBFCs) offer a higher interest rate to senior citizens, making these deposits an attractive option. Moreover, under Section 80TTB of the Income Tax Act, 1961, an interest income of up to INR 50,000 per year is tax-free for senior citizens. You may also opt for the Post Office Monthly Income Scheme (POMIS) to earn a guaranteed income every month.
- Senior citizen savings scheme (SCSS)
SCSS is a great option for long-term investment offered by most banks and post offices. Compared to the savings account and fixed deposit interest rates, SCSS provides higher returns. Additionally, an investment of up to INR 1.5 lakh per year is tax-deductible under Section 80C of the Income Tax Act, 1961. The scheme has a maturity period of five years with the option to extend it for three additional years.
- Pradhan Mantri Vaya Vandana Yojana (PMVVY)
Operated by the Life Corporation of India (LIC), this scheme has a tenure of ten years. Senior citizens aged 60 years and above can make a lump-sum investment of up to INR 15 lakh in this scheme. However, the interest earned on PMVVY is taxable, which reduces the effective returns.
If you want to grow your investments, you may consider the following options.
- National Pension System (NPS)
If you are between 18 and 65 years old, you can invest in an NPS. An investment of up to INR 1.5 lakh is eligible for tax deduction under Section 80C and an additional amount of up to INR 50,000 is tax-deductible under Section 80CCD of the Income Tax Act, 1961. You can invest in different asset classes, which include debt, equity, and government securities. Although the returns can be higher, these are not secure and are subject to market risks.
- Mutual funds (MFs)
With MFs, you can build wealth over the long term. When you invest in equity-linked savings schemes (ELSS), investments up to INR 1.5 lakh are eligible for tax benefits under Section 80C of the Income Tax Act, 1961.
Wondering which option to choose from? Well, lower risk and higher returns for senior citizens make FDs a popular investment option. Moreover, you can choose from different tenures as per your needs and easily invest in fixed deposits online. Non-cumulative deposits also give you interest payouts at periodic intervals, which help you meet your regular expenses.
In addition to banks, NBFCs like Mahindra Finance offer such deposits at attractive rates. Visit their website to check the FD eligibility criteria for senior citizens and invest today.