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A Checklist of Investment Options for Senior Citizens

Senior citizen has multiple puzzles to solve after retirements. At one end, they have to ensure regular income to meet daily expenses. At the other end, they have to make investment decision of lumpsum money they received as their retirement proceeds. As future income is primarily based on this corpus, one has to plan and evaluate investment options carefully.

Investment Strategy Checklist

There are three pillars of strategy for senior citizens:

First- Safety of Capital

Second- Guaranteed regular income

Third- Readiness of Emergency

If any one of the three pillars is weak, the financial planning of retirement life will be disturbed significantly.

Safety of Capital

In anyone's life, income is earned either by the investment of time or money. While in older age, the opportunity to generate money by devoting time is insufficient, the majority of income depends solely on return from existing investment. Hence, one must choose safe and secure investment option.

Guaranteed Regular Income

With the same logic as above, the senior citizen cannot compromise loss of income due to fluctuations in the market. The only source of income after retirement must ensure predictable regular income.

Emergency Fund

One may encounter an emergency anytime, and it requires an enormous amount at once to meet an emergency. Many government investment schemes provide secure and regular income, but there is certain lock-in period or pre-condition before you can withdraw money prematurely. Moreover, even if such withdrawals are allowed, it will affect future regular income. Hence, Senior Citizens should have a flexible fixed deposit, which can earn the regular income and they can withdraw money at their disposal.

Investment Options CheckList

Based on the above investment strategy checklist, you can review the checklist of options available and their features.

Fixed Deposit

All the above schemes are good options to generate regular income. However, they are not ideal when it comes to an emergency; it is not a good option to break your monthly income earning investments. Not only it attracts a penalty, but also your future income gets affected. Hence, it is necessary to open a Senior citizen Fixed Deposit, which you can use in an emergency without affecting your routine life. Reputed NBFCs like Bajaj Finance offers good security grade AAA Fixed deposits, with interest rate as high for senior citizens. You have the option to receive interest periodically or lump sum as per your convenience.

Pradhan Mantri Vay Vandna Yojna(PMVVY)

Today this scheme is one of the most popular investment options among senior citizens. The key features are as below:

Maximum Investment Amount: Rs. 15 Lacs

Age: Above 60 years

Scheme Period: 10 Years

Interest Rate: 8.3% per annum

Early Withdrawal: Allowed after one year with a small penalty

How to approach: Connect with any branch or authorized agent of LIC

Senior Citizen Savings Scheme (SCSS)

This scheme is also launched by Government of India. The key features are as below:

Maximum Investment Amount: Rs. 15 Lacs

Age: Above 58 years with proof of retirement or above 60 years without any proof

Scheme Period: 5 Years and can be extended for three more years

Interest Rate: 8.3% per annum, payable quarterly

Early Withdrawal: Allowed after one year with a small penalty

How to approach: Connect to designated branch of nationalized banks or post office

Post Office Monthly Income Scheme (POMIS)

Those who have exhausted the limit under PMVVY and SCSS can invest in POMIS.

Maximum Investment Amount: Rs. 4.5 Lacs

Age: Any Individual above 18 years. Any minor, above ten years, can also open and operate the account.

Scheme Period: 5 Years

Interest Rate: 7.3% per annum, payable quarterly

Early Withdrawal: Allowed after one year with a small penalty

How to approach: Connect to branches or agents of the post office

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