Best Investment Options for Senior Citizens

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Investment Plans
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Best Investment Options for Senior Citizens
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Introduction

• Todays senior citizens definitely have more
  savings and investments compared to their
  parents, when they were retired, but the cost of
  living has multiplied manifold. Many of todays
  retirees, unlike their parents, do not want to be
  financially dependent on their childrens
  earnings. While lifespan has increased, sky
  rocketing healthcare costs are also a serious
  concern for senior citizens. For senior citizens
  the four main investment considerations are-
• Protection of capital
• Liquidity of investments
• Reducing income tax
• Keeping up with inflation
• In this article we will discuss investment
  options for senior citizens keeping in these key
  investment considerations.

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Senior Citizens Savings Scheme (SCSS) This is
one of best risk free investment schemes for
Senior Citizen. The minimum investment limit in
this scheme is ? 1,000 and the maximum limit
is ? 15 lacs. This investment qualifies for
deduction under Section 80C of the IT Act. From a
liquidity perspective, the scheme has a period of
5 years and carries an interest rate of 9, one
the highest applicable rates for similar
instruments. A penalty of 1.5 per cent is levied
on the amount deposited, in case the deposit is
withdrawn before 2 years and 1 if the amount is
withdrawn after 2 years, but before the expiry of
the term of the investment. While the returns of
SCSS are taxable, if the returns from this
instrument do not exceed the basic exemption
limit of ? 3 lacs, seniors stand to earn tax-free
returns. Seniors who have their immediate
liquidity concerns addressed though other
instruments, should try to maximise investments
under this scheme using their surplus funds,
since this offers attractive returns and capital
safety. Post Office Monthly Income Scheme
(POMIS)  This has been a popular investment
option with senior citizens for many years. POMIS
offers guaranteed 8.5 annualized returns to
investors. The maturity period of these schemes
is five years. Premature withdrawals are subject
to a deduction of 2 of the amount invested if
such a withdrawal happens within three years of
Investment Plans . After three years, the amount
of deduction is 1 of the amount invested. The
maximum investment limit in POMIS is only ? 4.5
lacs in one account in POMIS or ? 9 lacs if the
investor is investing in a joint account. There
is no Section 80C benefit for POMIS investment.
The interest income from POMIS is taxed as per
the income tax slab of the investor. With rising
cost of living seniors cannot rely on solely
POMIS for their income needs. Nevertheless POMIS
remains a good risk free investment option for
senior citizens
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Bank and Company Fixed Deposits  Bank Fixed
Deposits have always been seen as offering with
safety and convenience. Currently the interest
rate is in the range of 8 to 9.1. However, the
interest rates are likely to go down in the
future as Reserve Bank India implements monetary
policy easing. Investors should enquire about
interest rates from multiple banks because it
differs from bank to bank and can make a
significant difference to the final return to the
investor. Interest earned by FDs is fully taxable
at the applicable slab rate and tax is deducted
at source. Fixed deposit issues from various
companies offer higher interest rates than bank
fixed deposits. However, such issues are limited
and investors should note that they carry credit
risk. Investors should check the credit rating of
the companies before investing in the company
FDs. Fixed deposits from companies rated AA and
above are pretty safe and carry low default risk.
Investors should be on the look for such issues,
as these are good investment options. Post
Office Time Deposits  Post Office time deposit
is in many ways similar to Bank Fixed Deposits.
The current annual interest rate for the five
year time deposit is 8.4. Minimum investment
is ? 200, and there is no upper limit. Post
Office Time Deposit qualifies for Section 80C
deduction under Income Tax Act. The interest on
Post Office Time Deposit is however fully
taxable, as per the income tax slab of the
investor
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Conclusion
we have discussed Investment Plans options for
senior citizens. A one size fits all investment
solution does not work, because the financial
situation and investment objectives of every
individual investor is different. Senior citizens
should consult with their financial advisors to
discuss the best investment options that are
suited to their specific needs.
Sourcehttp//bit.ly/2doYeVt
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