Best Investment Schemes For Senior Citizens: Mutual funds investment plans, deposits, and more

Save & Invest

Everyone faces challenges during their years at work. But what we all aspire for is a peaceful retirement life. The thought of lying on a couch, enjoying a movie with your partner, or travelling the world sounds relieving.

If you also have similar dreams, the first step is to plan your retirement. It is only possible by making suitable investments. Investing thoughtfully will vouch for stability and allow you to turn those dreams into reality.

Be it a mutual fund scheme, a government bond, or a bank deposit; we will consider it all today. Feel free to go through what each offers and make an informed decision.   

Investing For a Secured Retire Life: Should You Care? 

Your salary gives you financial security during your active life. Similarly, returns on your investments aid you financially after retirement. They provide you with the power to tick your bucket list that you are worked hard for all this while. 

Early investors can benefit from a reduction in taxes and enjoy a constant side income. Investments also promote financial discipline.  

Some of the best investment schemes for senior citizens in 2022

We’ll walk you through some of the most fruitful government plans and the best mutual funds to invest in India for retirement:

Senior Citizen Savings Scheme (SCSS)

A Senior Citizen Savings Scheme can be a lucrative option if you don’t prefer going for mutual funds investment plans. It is a special initiative by the Indian government launched in 2004.

SCSS ensures a stable income for individuals for at least five years after retirement. Unlike market-linked investment avenues with fewer risks, this is a zero-risk option. Furthermore, it gives higher returns to Indian citizens aged 60 years and above.

Non-resident Indians or HUFs are not allowed to apply for this. However, citizens going for Superannuation or Voluntary Retirement Schemes, and defence personnel aged 50-60 years are most welcome.

The interest rate for this is 7.4% currently. 

With that said, the investment amount for this scheme is a minimum of Rs. 1000. The maximum you can invest is Rs. 15 lakh. The investment amount is exempt from tax, but the maturity and interest incomes will be taxed accordingly. 

Pradhan Mantri Vaya Vandana Yojana (PMVVY)

While mutual funds investment plans may carry some risk, government initiatives like the PMVV Yojana offer stability. It is a retirement cum pension program operated by the Life Insurance Corporation (LIC). Launched in 2017, it is open to senior citizens aged 60 years and above.

NOTE: NRIs cannot apply for PMVVY. 

In this, the minimum purchase price is comparatively huge, Rs. 1.5 lakh. The maximum amount is Rs. 15 lakh. Interest rates are fairly decent in this scheme. It typically ranges from 8% to 8.3% per annum. 

The PMVVY scheme allows you to take a loan of up to 75% of the purchase price. Note that it is applicable once you have completed three years in the scheme. You must also know that the tenure of the policy is ten years.

However, you can apply for foreclosure in case of emergencies. Also, the pension amount is fixed regardless of your age.  

Senior Citizen Fixed Deposit

A fixed deposit is the most common and simple investment avenue with stable returns. It is the most popular among senior citizens. So, it is not a bad pick for those unwilling to burden themselves with any risk.

SCFD is especially for senior citizens of 60 years and above. It ensures you have a regular and stable income on your fixed deposit. The best part is that it is open for NRIs too. NRIs can opt for their fixed deposit accounts using their NRO or NRE accounts. 

Every bank offers a different interest rate on its senior citizen fixed deposits. However, it is found to be roughly 7.9% calculated on average. The minimum investment of Rs. 5,000 in case of online booking and Rs. 10,000 for booking at a bank branch is necessary. The maximum amount of investment varies between every bank. 

Post Office Monthly Income Scheme (POMIS)

The MIS scheme under the Ministry of Finance is another low-risk investment option for senior citizens. It provides you with a fixed interest every month. Also, it offers the flexibility of age. Any Indian who is ten years and above is eligible to apply for this scheme. 

POMIS requires less investment and, in turn, offers slightly low-interest rates. The minimum investment is Rs. 1,500, and Rs. 4.5 lakh is the maximum cap. Now, if you own a joint account, you have the freedom to invest Rs. 9 lakh. 

As of June 2021, the interest rate in the post office MIS program was 6.6% per annum. This rate is revised every quarter. The tenure of this scheme is at least five years, post which you can re-apply for the next five years. 

You can demand withdrawal after a minimum of 1 year of the plan. In that case, you will be charged a 2% and 1% penalty if you withdraw between 1-3 years and 3-5 years, respectively.

Mutual fund scheme

Mutual funds focus on reducing market risk by considering a diverse investment portfolio. They collect funds from various investors and spread them into different assets. Fund managers do the job of handling them and checking if the fund criteria are met. 

The list of best mutual funds to invest in India is vast. We recommend you go for low-risk mutual options like debt or hybrid mutual funds. They provide more security. Depending on the extent of risk you can afford to bear, apply for a mutual fund that offers the stability you need post-retirement.  

Key Takeaways

It’s a no-brainer that a robust investment portfolio guarantees a tension-free retirement life. If you imagine yourself with peace of mind post-retirement, you must take action now. Building a post-retirement plan takes time, so the time is now. A financial expert like Piramal Finance can help you with applying for a personal loan and investments and managing your finances swiftly.