Everyone has a goal to enjoy a quiet and peaceful retired life. But, a goal without a plan is just a wish. To enjoy a stress free retired life, you must have a strong financial plan backed with proper investments. In order to plan out a perfect investment strategy here is the checklist of investment schemes that provide exceptional benefits for senior citizens.
Senior Citizen Savings Scheme (SCSS)
The government backed SCSS scheme generates high returns at a rate of 8.3 %. Available exclusively for citizens above the age of 60 years, this scheme gives quarterly returns. With a maximum amount of 15 lakhs, the maturity period of SCSS is of 5 years. Then again, this period can be extended to a further period of three years if required. With the exceptional benefits SCSS, serves as a perfect scheme for those retirees who want periodic income. However, a TDS of 10% is applicable if interest pay-out is more than Rs. 10,000 and charges are applicable on premature withdrawal.
National Pension Scheme
National Pension Scheme (NPS) is a tax saving scheme launched by government for non-salaried or self-employed citizens working in unorganised sectors. Providing a complete protection on your capital the NPS has no maximum limit of investment. You can choose and invest in any asset allocations between equity and debt. Though you can enjoy periodic income through NPS, the rate of interest is not guaranteed and you have to contribute a minimum sum of 6000 annually to keep the account live.
Senior Citizen Fixed Deposits
As much as fixed deposits are beneficial as the safest investment for any individual, they bring even more benefits for senior citizens. Banks provide 1 to 1.5% higher interest rate on senior citizen fixed deposits. Non-Banking institutes like Bajaj Finance provide even higher senior citizen fixed deposit interest rate. Bajaj Finance offers several pre-approved offers as well that help you avail your money easily in 3 clicks. Know more about these offers here.
Adding to the advantages of high interest rates, senior citizens also enjoy a tax-free interest amount up to Rs. 50,000 according Section 80C. The process of investment in FDs is even simpler than the SCSS and NPS investment. If you want to open an FD account sitting at home you can do that easily through online account options of Bajaj Finance.
With flexible liquidity, mutual funds are investments that generate higher revenues in short term as compared to other schemes. Investment in equity backed funds is beneficial as they offer higher inflation adjusted returns. You can also invest in debt mutual funds as they offer taxation benefits if you come under the highest tax bracket. If the debt fund investment is held for 3 years or more, the amount of return gets taxed after indexation.
Fixed Maturity Plans (FMP)
The Fixed Maturity Plans involve bond and fund investments, but unlike mutual funds it has a fixed maturity period. This is a close-ended scheme where the maturity period is aligned to the tenor of investment. With an interest rate of 8.4% FMP involves investment in certificates of deposit (CDs), commercial papers (CPs), money market instruments and corporate bonds. Looking at the interest rate it may seem that FMPs deliver higher returns, but as there are fund fees and different charges involved the final return is similar to that of FDs.
Life and Health Insurance Policies
Investment in insurance policies for senior citizen involves multiple benefits like no tax deduction on insurance premiums up to Rs. 25,000 and mediclaim benefits of 1 to 2 lakhs for senior and super senior citizens. Investments in life and health insurance policies provide you cover against different medical expenses. Many of the insurance companies provide specific benefits and ease of procedure to the senior citizen like instant approval, no medical check-ups and special premium discounts.
Tax Free Bonds
Tax free bonds issued by government organisations are long term investment schemes. The minimum maturity period of such bond is 10 years. The bonds are tax free and there is no tax deducted on the interest as well. With better interest rates and tax savings, tax free bonds are low risk investment for long terms. These options form the ideal checklist for investments for senior citizens.