5 Best Investment Options for Senior Citizens in India in 2021
Mr Avinash (58-year-old) is a retired person who lives in Ahmedabad with his family. He is a GM from a reputed private company and is approaching his retirement age. His son is married and properly settled and is not dependent on him financially. To make his retired life enjoyable and secure, Mr Avinash wants to invest in the best senior citizen investment plans that are available in the market. But he got confused while choosing the best investment plans for seniors because the options are quite good. Moreover, he doesn’t have proper finance knowledge to make his investment-worthy. Here, we are going to discuss some of the best investment options for seniors. These investment options are quite beneficial for people like Mr Avinash.
Senior citizens are looking for high-return investment options to add a layer of security to themselves as well as their family members. The best investment options for senior citizens are the plans that offer adequate returns without compromising safety and security. Senior citizens require the best investment plans in India that allow them to enjoy the luxuries of retired life. But, most post-retirement senior citizen investment options are not convincing and lucrative, though they offer stability in one’s life. Thus, they want low to medium risk investment schemes for senior citizens to earn sufficient and protect their capital.
5 Best Investment Options for Senior Citizens in India in 2021
Let’s discuss some of the 5 best investment options for seniors in India post-retirement as mentioned below:-
- National Pension Scheme (NPS)
- Senior Citizen Savings Scheme (SCSS)
- Pradhan Mantri Vaya Vandana Yojana (PMVVY)
- Post Office Monthly Income Scheme
- Mutual Funds
1. National Pension Scheme (NPS)
If you are looking for the best saving scheme for senior citizens, this plan could be your ideal choice. This pension scheme is designed by the Pension Fund Regulatory and Development Authority (PFRDA) and is an ideal investment product for seniors. Some features of this plan are,
- Though it is available for all senior citizens still, it’s mandatory for government employees.
- With this investment option for senior citizens, you can invest till 60 years of age. After that, you will get an annuity from the life insurance company on 40 percent of the entirety.
- As this plan depends on the dormant assets, including corporate bonds, government bonds, equity, etc., you will neither get pension nor returns during the deferment period.
- Though your pension is taxable, the National Pension System (NPS) offers a tax advantage on your invested amount.
2. Senior Citizen Savings Scheme (SCSS)
If you are looking for government investment schemes for senior citizens, then you must consider this plan. The Government of India has endorsed this insurance plan since August 2004. Some salient features of this plan are,
- This plan is applicable for all senior citizens in India (60 years and above)
- The rate of interest for this plan is 7.4%. The rates are revised every quarter
- Under this scheme, you can invest up to Rs. 15 Lakh and the minimum is Rs.1000. You are free to invest a lump sum amount individually or jointly.
- Though the maximum tenure period is 5 years, you can extend it 3 more years
- After 3 years, you can close your account without any penalty. Moreover, you can transfer your account anywhere in India.
- This scheme comes under the ETT category (Exempt-Taxed-Taxed). This means you are exempted from taxation on the investment amount. But you need to pay taxes for the interest amount as per your income-tax slab. Moreover, your maturity amount is also taxed under section 80C.
3. Pradhan Mantri Vaya Vandana Yojana (PMVVY)
Are you looking for the best after retirement investment options? Then why don’t you consider this retirement cum pension scheme plan which was introduced in 2017? LIC manages this plan and regularly offers you a fixed sum once you have invested a humongous amount in this scheme. Some prominent features of this plan are,
- This is specially designed for all senior citizens (60 years and above)
- The range of the rate of interest is 8% to 8.3% per annum
- The maximum investment amount is Rs. 15 lakh
- The pension amount is fixed under this plan, irrespective of your age.
- You can get a loan of up to 75% of your purchase price after completion of 3 years under this plan
- The policy tenure period is 10 years
- This scheme also comes under the ETT category (Exempt-Taxed-Taxed). This means you are exempted from taxation on the investment amount. But you need to pay taxes for the interest amount as per your income-tax slab.
4. Post Office Monthly Income Scheme
This low-risk scheme offers a fixed monthly interest to seniors. This is indubitably one of the best investment opportunities for senior citizens in India. Some features are,
- This scheme is available for all Indian citizens who are above 10 years
- The rate of interest is 6.6% p.a. as of June 2021, and it changes every quarter
- This plan offers a maximum investment of up to Rs. 4 lakh under a single name and Rs 9 lakh under a joint account
- The policy tenure period is 5 years
- In the case of an urgent financial condition, you can withdraw your scheme after the completion of 1 year. But you will be penalized for that.
- This scheme also falls under the ETT category (Exempt-Taxed-Taxed). This means you are exempted from taxation on the investment amount. But you need to pay taxes for the interest amount as per your income-tax slab.
5. Mutual Funds
Your risk appetite lessens after your retirement. Thus, the safety of the capital is your priority. Thus, it is recommended that you can invest in Debt Mutual Funds or Hybrid Mutual Funds with little or no equity exposure. Based on your risk appetite and upcoming financial plans, you can choose the best option. You should consider the following parameters before choosing a mutual fund investment.
- Return: Mutual fund returns are market-dependent; hence they are not fixed. Debt Funds can offer better returns than a bank FD.
- Investment: both plans encourage you to invest monthly (on a SIP basis) or a lump sum amount. Most SIPs start with a minimum of Rs. 500 per month.
- Tax: For debt and hybrid funds (for 3years), gains can be calculated as per your income tax slab. After 3 years, gains can be considered as long-term capital gains tax (LTCG). You need to pay 20% tax on LTCG after indexation.
These are some of the best investment options in India for senior citizens. The markets are flooded with many investment plans for seniors, so you should combine pension plans rather than rely on just one. The prime purpose of these pension plans is to support you monetarily so that you can lead a wholesome life during your non-working phase.