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The average age of retirement in India is around 58-60 years, while the average life expectancy has risen to 80 years. This means that retirees have to plan their retirement for at least 20 years of their life, on top of making sure to help their younger inexperienced family members. Leaving behind an inheritance is also a major concern for many senior citizens. This list has some useful tips that senior citizens can use to make safe investments in their retirement years.
Senior Citizen Fixed Deposits at Financial Institutions
The best and still the safest option for making the most out of your investment are FD (Fixed Deposits). In fact, in the FY18 budget, finance minister Mr. Arun Jaitley announced the new section 80TTB. This section raised the tax exemption limit from INR 10,000 to INR 50,000 for interest returns on fixed deposits. Under this new amendment, senior citizens are the biggest beneficiaries.
With the stock market on a continuous upward trend and the phenomenon of demonetisation, it was expected for banks to lower their interest rates. But, some institutions, such as Bajaj Finance, are even offering as high as 8.20% senior citizen fixed deposit interest rates.
Senior Citizen Saving Scheme
These schemes are lucrative for senior citizens who have a large sum to park in an investment. They provide up to 8.6% interest rates annually. But, the difference here is that the interest from these schemes is taxable. Which is why, it’s more appealing to senior citizens with larger seed capital as you can open more than one account. The upper limit of such a scheme is set at INR 15 Lakhs.
Mutual Funds
Senior citizens or not, mutual funds are always a great instrument for growing one’s investment. Although, senior citizens do have the added advantage of having experienced the market’s ups and downs more than younger investors. The SENSEX and NIFTY have both been consistently rising over the last year which means mutual funds are paying out higher right now.
However, investing in large-cap and mid-cap stocks would be advisable as a correction or crash might be imminent. In such a case, it is advisable to park funds in safer vehicles that are not too heavily reliant on the market, such as blue-chip stocks. Companies like HDFC, IndusInd, SBI, Maruti Suzuki etc. have options that should be safe in the event of a market upheaval and would provide stable returns.
Life Insurances
This option is advisable for all senior citizens to invest in as it ensures an inheritance and help in terms of medical bills for themselves. It is advisable not to invest in plans that are touting large payoffs at minimum premium as they are heavily reliant on the market. Schemes that promise moderate returns at expected premiums are the most stable plans to invest in.
Liquidity Matters
At retirement age, liquidity of assets is important as you never know when you might need to shell out for large medical bills or help family members. Debt mutual funds are good investments as far as liquidity goes. They also provide a lower taxation rate and are better for senior citizens who fall under the highest tax bracket. Debt funds can easily be sold off at a moment’s notice which provides the flexibility in case of emergencies.
As with all age groups, the best way to ensure a maximum return is to invest in several things. Diversity in the portfolio will give you added safety in case one option fails. While each of these options has its own set of benefits, collectively they can ensure safety of funds post retirement with lucrative returns.