While there are several investment options available for senior citizens, most do not offer high returns. Usually, senior citizens opt for safe avenues for parking their life-long earnings.
Industry experts say currently, not many investment options are offering rates of interest that can help retired individuals sustain their household expenses. Because of this senior citizens look for investment options that will not only help them keep their funds safe but also fetch high returns.
– Investment Returns: Bank FDs, Post Office Monthly Income Scheme (POMIS), Senior Citizen Saving Scheme (SCSS), Pradhan Mantri Vaya Vandana Yojana (PMVVY), etc. are some of the popular senior citizen investment options with regular income payments. Experts say, before zeroing down, one should compare the interest rates and then decide.
– Fund Allocation: Usually seen senior citizens invest in a staggered manner. However, experts say senior citizens should look at allocation-based strategy, in the current situation.
For instance, one can invest most of one’s corpus in short-medium duration investment options that range from 6 months to 3 years. At the same time, in the current situation, senior citizens could avoid investing in long-duration investment options such as bank fixed deposits as the rate of interest is quite low.
– Equity allocation: Even though it is not generally suggested, experts say senior citizens should have a small allocation in the equity market. This equity allocation usually helps one to generate additional returns. Industry experts say senior citizens should remain invested in equity investments by exposing some part of their retirement corpus. At the early stage of retirement, with money that will not be needed in the near future, one can make small allocations for a period of 6-7 years.
– Tax benefits: Senior citizens should invest keeping in mind their own tax slabs, as the interest rate on many of the investments is fully taxable, which if invested will be added to the income of a retired investor. Having said that, there are also options such as SCSS and 5-year tax-saving bank FDs that provide Section 80C tax benefit on investment.