While senior citizen thinks of investment options, there are two criteria on a top priority: Protection of Capital and Higher Rate of Interest. These two factors ensure regular income to meet daily needs and the possibility of growth of portfolio due to higher Return on Investment (ROI).
Best Options for Investment for Senior Citizens
There are many options for senior citizens which can ensure the safety of capital invested and guarantee of regular income. The return is also higher by 0.5 to 1% than market rate when investment is made in the name of Senior citizens.
Senior Citizen Fixed Deposit is a true friend for retirement life. It provides complete flexibility for investment amount, tenure to choose and to withdraw money. While in any other scheme, withdrawal is only allowed in an emergency case, no question is asked when you want to break your Fixed Deposit. In the rising interest rate scenario, you can invest for short maturity period, and at maturity, you can reinvest in high maturity period to take maximum advantage of higher ROI.
You can use online FD calculator to know your ROI in advance. Moreover, Fixed Deposits offered by reputed NBFCs like Bajaj Finance provides a higher interest rate with AAA grade safety for your investment.
Pradhan Mantri Vay Vandna Yojna (PMVVY)
Pradhan Mantri Vay Vandna Yojna was explicitly launched for senior citizen in 2017 by the central government. The ROI is 8.3% for this scheme. Not only that, the ROI is protected for ten years. It means, irrespective of any market fluctuations; senior citizens are guaranteed to get this amount under this scheme. It also has the option to avail income proceeds on a monthly, quarterly, half-yearly or yearly basis, as per the choice of investor. However, the highest ROI is available under annual option. The investment limit is Rs. 15 lacs per senior citizen in this scheme.
Senior Citizen Savings Scheme (SCSS)
This scheme is also aimed at higher ROI to senior citizens. In the recent past, ROI was 0.5 to 1.5% higher as compared to traditional investment options. The current ROI is 8.3% per annum. The interest is credited quarterly in the savings bank account of the depositor. Similar to PMVVY, investment limit is Rs. 15 lacs per senior citizen. However, tenure is only five years, and extendable up to another three years. In this way, flexibility is higher in case of SCSS.
There are many reputed Mutual Fund Houses who offers regular income payout from investment schemes. In the recent past, Equity Mutual Funds have provided higher ROI. There are also debt mutual funds with monthly income scheme. However, if the return is not sufficient, the shortfall amount is debited from principle. As mutual fund's ROI is linked to market risks, the senior citizen should only invest a minimal amount of his overall portfolio into mutual funds. After all, it is a high risk, high return scheme.
Post Office Monthly Income Scheme (POMIS)
The POMIS Scheme is meant explicitly for monthly income. Although the interest rate is not as high as PMVVY and SCSS, it is better for senior citizens who want to make a safe investment beyond the limit of Rs. 15 lacs invested in both these schemes. One can invest up to Rs. 4.5 lacs in this scheme.