5 Best Investment Plans for Senior Citizens
14 June, 2024
Synopsis
Investing is must to have a good retirement corpus to lead a happy old-age life
Post Office Senior Citizen Scheme allows you to securely invest against fixed interest income
Other avenues include PPF, Mutual Funds, FDs or Gold Funds
After having lived the prime years of life, you might be willing to live a calm and peaceful life without any worldly stress. Having achieved financial independence during your sunset years is in itself an achievement during these inflationary times. Further, maintaining your finances during your retirement years such that you don’t have to rely on anyone for finances is another challenge.
In this regard, the Post Office Senior Citizen Scheme is often a popular option. However, besides this, there are also others which can give substantial returns to assist you in your retirement years. To help you make an informed decision, we have listed out the 5 best-recommended investment schemes for senior citizens. Let’s take a look.
5 best-recommended investment schemes for senior citizens
Here are the top 5 investment schemes that senior citizens can invest in:
1) Public Provident Fund
Also known as PPF, it is one of the most popular investment products amongst Indians. If you are a risk-averse investor who wishes to invest in a good return-generating asset class with a long-term investment horizon, then you can start investing in Public Provident Fund online with HDFC Bank. It offers you an attractive interest rate of 7.1% that is fully exempt from tax under Section 80C of the Income Tax Act, 1961. The investment horizon goes up to 15 years, but you may opt for premature withdrawal. You can also extend your account for a 5-year slab after maturity.
2) Fixed Deposits
HDFC Bank Fixed Deposits present another great option for senior citizens to park their excess funds. It comes with a lock-in period of 5 years that makes it eligible for tax deduction under Section 80C of the Income Tax Act, 1961. The amount of deduction available is up to ₹1.50 Lakh for each financial year. You can opt for a monthly or even quarterly payout of interest. In case you opt for longer tenures of 35 and 55 months, then you can earn a higher interest rate.
3) Mutual Funds
Mutual funds have always remained a popular investment option amongst investors. With a plethora of fund options available, there is always a scheme that suits each investor’s needs and preferences. If you are in your prime years and accumulating corpus for your retirement years, you can go for moderate to high-risk mutual funds like small caps. However, if you are already retired and looking to park funds to continue earning returns, then you can opt for low- or medium-risk mutual funds, per your risk appetite.
4) Gold Funds
Gold has inherent values that make it a popular investment instrument for investors. People have been investing in gold for ages and even today, it has not lost its shine. In fact, now you don’t have to buy physical gold from any jeweller to invest in it. You can opt for digital gold, gold ETFs or gold funds as well to invest in digital gold in the comfort of your home. Online investing allows you to buy and sell gold anytime anywhere in just a few clicks.
5) Government Schemes
There are various government schemes, especially for the senior citizens (sr. citizens) that allow you to save as well as earn decent returns to support your retirement years. The Post Office Senior Citizens Savings Scheme (SCSS) is one such scheme that allows you to earn a fixed interest for a predetermined tenure of investment. If you have attained the age of 60 years or above, then you can invest in SCSS. You can either close the account after 5 years or further extend it by 3 years. The amount you invest in the Post Office Senior Citizen Savings Scheme is eligible for deduction under Section 80C of the Income Tax Act, 1961. The deduction eligible is up to ₹1.50 Lakh for each financial year.
Why should senior citizens invest?
Being a senior citizen, investing is core to your financial well-being. Here’s why you should begin or stay invested before and after your retirement:
Tackle inflation: Inflation reduces the purchasing power of money over time. Staying invested allows you to outpace inflation by growing your money at a rate equal to or more than the inflation rate. Thus, you should strive to earn returns that beat the rate of inflation.
Generate income: As a sr. citizen (senior citizen), your active income might come to a halt. However, it doesn’t mean that you can’t have any income. Through investments, you can continue earning passive income. If you manage to invest enough corpus, your passive income from investments will beat your cost of living, thus allowing you to continue growing your investment portfolio.
Medical expenses: The risk of medical issues increases during your sunset years. Therefore, it is important to have adequate corpus at your disposal to meet any sudden medical emergencies. This ensures that you are able to receive the best treatment while avoiding any financial burden on your loved ones.
Legacy planning: Every parent desires to leave an inheritance for their descendants. Good financial planning and execution can ensure that you leave a legacy for the next generation.
Tax efficiency: To encourage savings and investments, the government has introduced certain beneficial provisions under the Income Tax Act, 1961 that allow you tax deductions in case you invest in certain specified avenues. This includes investments in ELSS funds, tax saver deposits, insurance schemes, Post Office Senior Citizen Scheme etc. You can invest in these avenues and save a lot in taxes.
In a nutshell
Investing is a crucial aspect for any senior citizen. It helps you lead a financially independent and peaceful retirement life. The government also promotes savings among sr. citizens by allowing various tax deductions. Further, financial institutions like HDFC Bank provide a higher interest to senior citizens in savings instruments like Fixed Deposits. A well-balanced investment portfolio can provide you the much much-needed financial security and enhance the overall quality of retirement life. If you wish to invest in Fixed Deposits, visit HDFC Bank now!
To contribute to the Public Provident Fund, click here!
*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. You are recommended to obtain specific professional advice from before you take any/refrain from any action. Tax benefits are subject to changes in tax laws. Please contact your tax consultant for an exact calculation of your tax liabilities.
