As you grow older, your responsibilities keep increasing. You need more funds to keep up with the inflationary pressure. The problem compounds as you can no more work as hard as you could a few years ago.
Hence, your savings become paramount during the golden years of your life. Luckily, there are numerous investment options in India for people like you. However, choosing the best investment option among so many financial instruments may become tricky.
Read this article to discover some inflation-beating investment options for senior citizens to choose the best for you.
1. Fixed Deposit
Fixed deposits have forever been the most preferred investment option for most senior investors. Fixed deposits provide you with assured returns. You can invest for any duration between one year and ten years. Moreover, you may choose cumulative or non-cumulative fixed deposits. Some investors divide their investment into both types of FD accounts, as it helps them strike the right balance between capital appreciation and liquidity. In case you need money urgently, you can apply for a loan against a fixed deposit or withdraw the entire amount prematurely. Housing finance companies like PNB Housing Finance offers fixed deposit interest rates of up to 6.95% for senior citizens.
2. PMVVY
PMVVY or Pradhan Mantri Vaya Vandana Yojana is offered by the Life Insurance Corporation of India (LICI) for senior citizens. It offers an interest rate of 7.4%, and the amount remains locked until maturity. However, if the investor needs money to treat critical illnesses of self or spouse, they may withdraw up to 98% of the investment amount. Unlike fixed deposits, the minimum amount you need to invest in PMVVY is INR 1.5 lakh, and the maximum amount is INR 15 lakh.
3. SCSS
SCSS or Senior Citizen Saving Scheme is offered by several scheduled commercial banks and the Post Office. At 7.4% per annum, the interest rate is much higher than the prevailing fixed deposit interest rates. However, the maximum amount you can invest in this scheme is capped at INR 15 lakh. The amount remains locked until maturity, which is usually five (5) years. You may also extend the term by another three (3) years. Unlike fixed deposits, SCSS is illiquid and pays interest quarterly.
4. Stock Market
The stock market is notorious for generating gravity-defying profits in a short while. However, no one can guarantee that you will be as successful as reputed full-time traders and investors. If your research is time-tested, you might make a fortune from the capital markets. However, it is wise not to invest more than 20% of your net portfolio in the stock market.
5. Post Office Monthly Income Scheme
The Post Office Monthly Income Scheme is as popular as fixed deposits. Crores of Indian investors invest in P.O.MIS for getting a fixed income every month. Presently, MIS interest rates are hovering around 6.6% per annum. Unlike fixed deposits, which have no upper limit, P.O.MIS accepts only up to INR 4.5 lakh from a single account holder and INR 9 lakh from a joint account holder.
Check: FD Interest Rates
Conclusion
By now, it must have become reasonably clear that very few financial instruments match the flexibility of a fixed deposit. This is the primary reason why every senior citizen invests a significant portion of their investment corpus in fixed deposits. As an intelligent investor, you may go one step ahead and allocate a specific percentage of your investment corpus in all the financial instruments mentioned above.
