Summary
Senior citizens should invest in products where risk is bare minimum, so that a regular stream of income can take care of their monthly expenditure, including medical expenses.
For short- and medium-term financial requirements, you can invest in these Schemes:
1. Senior Citizens Saving Scheme (SCSS):
o Minimum investment = Rs 1,000,
o Maximum investment = Rs 15,00,000.
o Rate of interest is 7.4% (may change from time to time)
o Duration is 5 years.
If your spouse is above 60 years, he / she can also invest in the scheme.
https://www.nsiindia.gov.in/InternalPage.aspx?Id_Pk=168
- Pradhan Mantri Vaya Vandana Yojana (PMVVY): Only for Senior Citizens.
o Minimum investment = Rs 1,000,
o Maximum investment = Rs 15,00,000.
o Rate of interest is 7.4% (may change from time to time)
o Duration is 5 years.
If your spouse is above 60 years, he / she can also invest in the scheme.
https://licindia.in/Products/Pension-Plans/Pradhan-Mantri-Vaya-Vandana-Yojana1
3. Post Office: National Savings Monthly Income Account (MIS) (no age limit)
https://www.indiapost.gov.in/Financial/pages/content/post-office-saving-schemes.aspx
4. RBI floating rate taxable bonds
5. **RBI Retail Direct: on this website you can invest in Government Securities **
https://rbiretaildirect.org.in/#/FaqRbiRetailDirect
For medium and long term financial requirements, you can invest in:
6. Target Maturity Funds: Funds will be invested only in Government security and state government development bonds. Some risk is involved in this scheme, but it has certain tax benefits (indexation benefit) .
Suppose the fund scheme gives you 8% return for three years suppose, so after three years, the total return becomes 24 % and during this period if the inflation rate has been 5% every year, then the inflation rate multiplied by 3 will be 15 %. Therefore, your tax liability will not be on 24%. return, it will be reduced to 24 % minus 15 % inflation, your net tax liability will be on 9% only. That is why they are tax efficient and senior citizens should think of investing some of their money in these funds.
- As shared by Mr Surya Kant Sharma, Senior Consultant – AMFI (Ex DGM SEBI) at a webinar entitled “Investment Avenues for Senior Citizens” held on Sept 27, 2022 for Vayah Vikas members