- Date : 07/02/2023
- Read: 4 mins
A look at some of the popular investment options for senior citizens
Reducing the risk exposure with age is a universally accepted rule of thumb. Going by this, a youth is better placed to hold high-risk investments in his or her portfolio, while a senior citizen is likely to have more and more risk-free investments with age. It is a good time to be a senior citizen, particularly in the wake of the recent budget announcements.
Also Read: Best rates for bank fixed deposits to invest in India
Budget 2023 has been particularly generous towards senior citizens who wish to invest in risk-free investments. Finance Minister Ms Nirmala Sitharaman made positive changes to existing schemes like Senior Citizen Savings Scheme (SCSS) and Post Office Monthly Income Scheme (POMIS). Senior citizens also have the option of investing in the Pradhan Mantri Vaya Vandana Yojana (PMVVY). Additionally, the Finance Minister launched another savings scheme for women of all ages, including senior citizens. The Mahila Samman Savings Scheme offers a short-term and low investment option.
Also Read: 8 key differences between bonds and debentures
Invest More, Earn More
With the recent changes and introduction of the scheme, senior citizens can now invest more in risk-free instruments and earn more assured returns. If you are a senior citizen, this is how you can invest more in safe instruments.
- The budget has increased the investment limit in Senior Citizen Savings Scheme from Rs 15 lakhs to Rs 30 lakhs. Thus, now a senior citizen couple can invest up to Rs 60 lakhs in SCSS. SCSS can be opened in the post office and commercial banks. This scheme is presently offering an interest income of 8% which is paid quarterly. SCSS has a tenure of five years, which can be further extended by another three years.
Rs 60 lakhs can generate an annual income of Rs 4.8 lakhs at the present rate of interest, which is a monthly income of Rs 40,000.
- The budget also increased the investment limit in the Post Office Monthly Income Scheme. Now you can invest Rs 9 lakhs instead of the earlier limit of Rs 4.5 lakhs. Investment in POMIS of up to Rs 18 lakhs can be made by a couple. POMIS generates an interest income of 7.1% for five years. While POMIS is open to all age groups, its monthly income feature makes it an attractive investment among senior citizens.
The maximum investment in POMIS at the current rate of interest will generate an annual income of Rs 127,800, which is a monthly income of Rs 10,650.
- The Pradhan Mantri Vaya Vandana Yojana has remained unchanged in this year’s budget. It allows a maximum deposit of Rs 15 lakhs and offers income at an interest rate of 7.4%.
A senior citizen couple can invest up to Rs 30 lakhs, earning an annual interest income of Rs 222,000 and a monthly average of Rs 18,500.
- Senior citizen women can now also invest in the Mahila Samman Savings Certificate, a scheme open for women of all age groups. A maximum investment of Rs 2 lakhs can be made for a period of up to 2 years. The scheme will generate a fixed interest income at the rate of 7.5% per annum. That amounts to a monthly average interest income of Rs 1,250, excluding compounding benefits.
Also Read: All you need to know about PPF account
Thus, against a total investment of Rs 1.1 crore, a senior citizen couple can get an average monthly return of at least Rs 70,400. These are some of the easy-to-understand and safe investments available at the moment. Investments in SCSS also earn you tax savings under section 80C. Lastly, keep the interest payout rules of these investments in mind, as well as the taxability of the interest income and the lock-in period of the investments.
Reducing the risk exposure with age is a universally accepted rule of thumb. Going by this, a youth is better placed to hold high-risk investments in his or her portfolio, while a senior citizen is likely to have more and more risk-free investments with age. It is a good time to be a senior citizen, particularly in the wake of the recent budget announcements.
Also Read: Best rates for bank fixed deposits to invest in India
Budget 2023 has been particularly generous towards senior citizens who wish to invest in risk-free investments. Finance Minister Ms Nirmala Sitharaman made positive changes to existing schemes like Senior Citizen Savings Scheme (SCSS) and Post Office Monthly Income Scheme (POMIS). Senior citizens also have the option of investing in the Pradhan Mantri Vaya Vandana Yojana (PMVVY). Additionally, the Finance Minister launched another savings scheme for women of all ages, including senior citizens. The Mahila Samman Savings Scheme offers a short-term and low investment option.
Also Read: 8 key differences between bonds and debentures
Invest More, Earn More
With the recent changes and introduction of the scheme, senior citizens can now invest more in risk-free instruments and earn more assured returns. If you are a senior citizen, this is how you can invest more in safe instruments.
- The budget has increased the investment limit in Senior Citizen Savings Scheme from Rs 15 lakhs to Rs 30 lakhs. Thus, now a senior citizen couple can invest up to Rs 60 lakhs in SCSS. SCSS can be opened in the post office and commercial banks. This scheme is presently offering an interest income of 8% which is paid quarterly. SCSS has a tenure of five years, which can be further extended by another three years.
Rs 60 lakhs can generate an annual income of Rs 4.8 lakhs at the present rate of interest, which is a monthly income of Rs 40,000.
- The budget also increased the investment limit in the Post Office Monthly Income Scheme. Now you can invest Rs 9 lakhs instead of the earlier limit of Rs 4.5 lakhs. Investment in POMIS of up to Rs 18 lakhs can be made by a couple. POMIS generates an interest income of 7.1% for five years. While POMIS is open to all age groups, its monthly income feature makes it an attractive investment among senior citizens.
The maximum investment in POMIS at the current rate of interest will generate an annual income of Rs 127,800, which is a monthly income of Rs 10,650.
- The Pradhan Mantri Vaya Vandana Yojana has remained unchanged in this year’s budget. It allows a maximum deposit of Rs 15 lakhs and offers income at an interest rate of 7.4%.
A senior citizen couple can invest up to Rs 30 lakhs, earning an annual interest income of Rs 222,000 and a monthly average of Rs 18,500.
- Senior citizen women can now also invest in the Mahila Samman Savings Certificate, a scheme open for women of all age groups. A maximum investment of Rs 2 lakhs can be made for a period of up to 2 years. The scheme will generate a fixed interest income at the rate of 7.5% per annum. That amounts to a monthly average interest income of Rs 1,250, excluding compounding benefits.
Also Read: All you need to know about PPF account
Thus, against a total investment of Rs 1.1 crore, a senior citizen couple can get an average monthly return of at least Rs 70,400. These are some of the easy-to-understand and safe investments available at the moment. Investments in SCSS also earn you tax savings under section 80C. Lastly, keep the interest payout rules of these investments in mind, as well as the taxability of the interest income and the lock-in period of the investments.
