The people aged above 60 years are categorized as senior citizens. Now we all know investments are very important and are also significant contributors to an individual’s wealth or income. There are quite a few investment options available for senior citizens such as fixed deposit, recurring deposits, post office FD and RDs, National Pension System (NPS), Life Insurance Premiums, Pradhan Mantri Vaya Vandana Yojana (PMVVY), mutual funds, etc.
Fixed deposits, recurring deposits, post office FD, and RDs are considered being low-risk fixed return options as compared to mutual funds, which have high risks but also high returns. In order to earn and secure a steady, stable flow of wealth creation and income, senior citizens must opt for investments that maintain a good balance between risks and returns. A combination of these high-risk high-returns and low-risk fixed return investments under their name will help stabilize their income and wealth creation process.
That being said, it is important to consider that different people have different needs and priorities and it is entirely up to them to decide what kind of investments they should make.
What is the best investment portfolio for senior citizens?
The best possible investment portfolio for senior citizens is the ones that promise to deliver a good balance between steady income and growth. This may not be the case for everyone, for example, senior citizens who receive a pension from their employers may not require a source of steady income, so they are more inclined to invest in growth delivering mutual funds. Whereas, people who worked in the unorganized sector or were self-employed and did not receive any such pensions are more likely to make regular income-oriented investments.
Monthly income-oriented Investments:
- Bank Fixed Deposits and Recurring Deposits
- Post Office Fixed Deposits and Recurring Deposits
Senior citizens are allowed higher interest rates as compared to regular citizens on these fixed deposits and recurring deposits, interest rates are at least 0.5% higher than standard rates. As per the Section 80 TTB of the Income Tax Act 1961, the annual Interest income up to Rs 50,000 is free of taxation for senior citizens. This interest income consists of the interest in bank fixed deposits and recurring deposits, as well as a post office, fixed deposits, and recurring deposits and savings accounts.
- Senior Citizens Savings Scheme
Senior Citizens Savings Scheme (SCSS) is a savings scheme that is backed up by the Indian Government. It is comparatively more secure than fixed deposits and has a tenure of five years, which can be extended for another three years. A tax deduction facility is applicable after a certain amount.
- Pradhan Mantri Vaya Vandana Yojana (PMVVY)
PMVVY is a typical example of a fixed deposit but is called a pension because of certain marketing reasons with LIC (Life Insurance Corporation) which offers a rate of interest of eight percent and is for a tenure of 10 years.
Growth-oriented investments:
- National Pension System
The eligible age limit to invest in NPS ranges from 18 to 65, meaning that senior citizens can opt for this investment. An NPS account is permitted to be extended until the investor reaches the age of 70.\
- Insurance Premiums and Mutual Funds
There are many different types of Insurance Premiums and Mutual Fund investments to choose from. The terms and conditions applicable to these investments are subject to change based on various determinants. These investments promise to bring an element of growth and high wealth creation in the investment portfolio of senior citizens, the potential investors are recommended to be extremely cautious while investing in such schemes and policies. They must research the market and then pick the most reliable investment option with the lowest charges.
