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  • Investment Avenues for Senior Citizens

    Senior citizens are those who have crossed a certain age, most notably in India, above the age of 60 who may or may not be retired. Most senior citizens receive higher interest rates when it comes to deposits and other types of accounts. But investment avenues for senior citizens don’t end at preferential interest rates. Senior citizens especially those who have retired will require some form of supplemental income to make their lives comfortable and to beat the rising inflation costs. Below are investment avenues that offer senior citizens the best returns on their investments

    Fixed Deposits

    These type of investments are a staple in any senior citizen’s portfolio as they offer guaranteed returns with no risk involved. These type of investments also don’t require the investors to constantly monitor them. They are self-earning deposits which senior citizens can invest one time and receive the guaranteed returns upon maturity. Most banks also offer senior citizens an added interest rate of anywhere from 0.25% to 0.50% on top of the existing interest rates offered for a fixed deposit. Not only are the invested amounts safe in a fixed deposit, it can be broken at low penalty rates if the investor requires the cash for an emergency. Fixed deposits also have the option of providing the investor with regular income through interest earnings. Current fixed deposit interest rates range from 9% to

    10.75% with varying minimum deposit amounts and tenures

    SCSS: Senior Citizens Savings Scheme

    This comprehensive package offers retired investors a perfect avenue for investment. It provides a long list of benefits ranging from tax exemptions to regular pay-outs and even offers safety on the capital invested. The minimum age for this is 60 years but if the investor has opted for voluntary retirement then the minimum age is 55 years only if they opt for this scheme within a month from receiving their retirement benefits. With an investment ceiling of Rs 15 Lakh, the SCSS can be opted from any of the 24 PSU Banks and ICICI Bank

    The tenure of this scheme is 5 years but if the investor forecloses the account prior to completing two years a penalty amount of 1.5% is charged and if the account is closed after two years but before maturity the penalty amount is 1%. The investments under this scheme are eligible for tax deduction under section 80C of the income tax act of 1961. The SCSS has an interest rate that is market linked and pays out at around 9.3% p.a. on a quarterly basis. The fact that the interest does not get compounded is offset with regular quarterly payments that serve as a source of income

    Post Office Time Deposits (POTD)

    This type of investment is another long running scheme from the Postal department which offers investment options that require a very low minimum investment amount. The minimum amount that can be invested is Rs 200 and there is no upper limit to the amount invested but should be in multiples of Rs 200. The interest offered on this scheme is between 8.2% and 8.5% depending on the tenure of investment chosen. The interest although compounded quarterly is payable only once a year. Investment tenures for this type of investment range from 1 year to 5 years with an early or premature withdrawal attracting a penalty charge of 2 percent

    Post Office Monthly Income Scheme (POMIS)

    Yet another low risk scheme, the POMIS or Post Office Monthly Income Scheme as the name suggests offers a regular source of income and have maximum investment ceiling amounts of Rs 4,50,000 for single accounts and Rs 9,00,000 for joint accounts. The minimum investment amount is Rs 1500 and further investment amounts should be made in multiples of Rs 1500

    The investment tenure of this scheme is 5 years. This tenure of 5 years earns a monthly interest which is paid out at 8.5% per annum. The scheme offers low risk on the invested capital but does charge a slightly higher penalty fee for early or premature withdrawals. The penalty for premature withdrawal is 2% if funds are withdrawn before the scheme completes 3 years and 1% if the money is withdrawn after the scheme competes 3 years.

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