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  • Post Retirement Investment Guidance.

    Are you searching for getting guidance regarding risks and returns pertaining to investments? Want to know which are best options for the investment made post retirement? Find fiancial advice from our experts here.

    After retirement many person did not manage their family expenditures due to unprofessional investment strategy. As there were limited fixed amount available for investment to earn a recurring monthly inflow to maintained their family, it is very essential and important to invest the money keeping in view the risk as well as the return aspect. Obviously it required a high professional to do the selection. Those who does not get Retirement pension, these selection needs extra care.
    Let me know your expert advised for a retired person who want to invest Rs. 60 lakh to maintained his four people's family.
  • Answers

    6 Answers found.
  • Investment is a matter of prudence and one must be very alert and cautious in that matter. A retired person who has some funds with him is always at the crossroads as how to invest that money for good returns. Today everywhere the interest rates are coming down and the return is getting lesser and lesser day by day.

    You have mentioned that the funds are to the tune of Rs 60 lakhs. If the person is having some other income like rent from another house or annuity from insurance or any return of that nature then he should go for cumulative fixed deposits for Rs 50 lakhs in banks or NSc / KVP scheme in Post Office and wait for that to turn into a bigger capital before keeping it in some monthly return plan. Remaining Rs 10 lakhs he can invest in shares and bonds which are riskier investments but with time they also give very good returns. If the retired person is having no other income and solely dependent on this money then he should not invest it in the share market or mutual fund as that is a risky proposition. What he should do is out of this money he should deposit Rs 15 lakhs (the allowed limit in the scheme is that only) in Govt senior citizen fixed deposit scheme in which interest is more than the usual fixed deposits and is paid to the person at regular intervals. This scheme is available in banks and Post offices. He can keep the remaining money in some other scheme like Post Office MIP (monthly income scheme) in which the monthly interest will get deposited in the savings bank account in Post Office itself and every month one can draw the money or ask for a Post Office cheque book for issuing cheque to pay money to others.

    A part of the earning can be spend for insurance policy so that in case of eventuality the insurance company finances the hospitalisation etc as losing ones hard earned money in treatment is not a desirable proposition. One must have an insurance policy to cater to such unfortunate times.

    If Rs 60 lakhs is all what he has then one thing which is very important is that he should not spend this money in any thing like marriage of children, house building, education, or any emergency as after that he will have no money left for his monthly expenses. He has to manage within the interest amount till his children get job and are settled and start to pay him some money every month. This is a very important thing and many retired people in their sentiments do a mistake of spending this capital and lose their monthly income from the interest.

    The last thing which I will like to mention in this matter is that there is a golden rule that one should not spend more than 70% of ones earnings and should save 30% for the rainy days and that applies in this case also. So, the person should not spend all his earnings from interest and should have a life style according to that only and manage in the 70% at any cost.

    Knowledge is power.

  • The investment pattern should be in such a way that the monthly needed money will come for expenses. We have to plan in such a way that our investment is safe. But if we invest everything in very safe instruments, the returns will be less. So it is better to divide the money in 70: 30 ratio and invested 70% in safe instruments and the remaining 30% in high yielding instruments.
    You can invest in bank FDs and RDs, post office FDs and RDs, Senior Citizens' Savings Scheme (SCSS), National Pension System (NPS). They will give you monthly income and the investments are safe. 70% of your money can be invested in any of the above instruments.
    The remaining amount can be invested in Mutual funds where there will be good growth in the investment money.

    The following are the details: a) Monthly returns investment plan;
    1. Bank Fixed Deposits and Recurring Deposits: The rate of interest for senior citizens will be 0.5% higher than normal rates. In addition to that according to Section 80 TTB of the Income Tax Act 1961, the Interest income up to Rs 50,000 per annum is tax-free for senior citizens. This includes interest on bank FDs, bank RDs, post office FDs, post office RDs and savings account.
    2. Post Office Fixed Deposits and Recurring Deposits: Post Office FDs and RDs are like bank FDs and RDs. The money invested in the post office will get into the government account directly and hence there is almost no chance of default. But the rate of interest is the same to all age people. There is no TDS deduction in the post of investments.
    3. Senior Citizens Savings Scheme: The Senior Citizens Savings Scheme (SCSS) is a savings scheme. It is backed by the government. It is more secure than bank FDs. The tenure is for 5 years and can be extended by another 3 years. The interest rate is 7.4%. Investments in this scheme up to Rs 1.5 lakh is tax-deductible. per annum. There is no tax exemption for the interest you obtain.
    4. Post Office Monthly Income Scheme (POMIS): It is also one of the best government-backed saving schemes. The applicable rate and paid out to the depositor(s) on a monthly basis. You can invest up to Rs.4.5 lakhs in an account held by a single person and up to Rs,9 Lakhs in jointly held accounts.
    B) Investment for Growth:
    1. Mutual Funds: Mutual Funds are good for growth and wealth creation for senior citizens also. Senior Citizens can invest in mutual funds of a general nature and can achieve higher returns, Large-cap funds are relatively low risk when compared to mid and small-cap funds which are high-risk and high return.
    Equity mutual funds which we will keep for more than are year are taxed at just 10% for gains above Rs 1 lakh. If the tenure is less than a year, they are taxed at 15%.
    Some mutual funds (ELSS) funds are eligible for tax deduction under Section 80C for investments up to Rs 1.5 lakh per annum. The following are some Mutual Funds. But when you want to invest better go through the details completely and decide.
    1. Axis Bluechip Fund
    2. Axis Small Cap Fund
    3. Motilal Oswal Midcap
    4. DSP Tax Saver Fund
    5. SBI Magnum Global Fund
    6. HDFC balanced advantage fund.

    always confident

  • After retirement the sources of income is drastically reduced and it is required that a person should keep his money in some safe and secure investment where earnings are good. Today the safest investment is thought to be the Govt of India or RBI bonds where interest is obtained in regular intervals and none is safe. Next is Post Office deposits in various schemes which also fetches good interest and is safe. So out of the amount of 60 lakhs at least 70% that is about 40 lakhs should be invested in these avenues. The remaining amount can be invested in high dividend yielding shares in the market. He can take advice of a share broker who will guide in this matter. High dividend yielding shares of some god companies are sometimes good for a steady income and there is appreciation in their values with time. One thing that is to be understood is that share market investment is a risky one and one has to think twice before taking such risks specially in an advanced age. He can deposit his amount in Bank FDs also where provision for monthly interest is there. He should deposit preferably in Govt or PSU banks only.

    Thoughts exchanged is knowledge gained.

  • If the retired person is the family head and only earner in the family, then he has to tread very prudently and systematically. As the regular salary income stops suddenly and there is no pension provision, the expenses have to be met from the retirement benefits lump sum and any accumulated savings available. If there is one or more income earners in the family the situation is more easily manageable.
    In the present case we take it as the retired person is the family head and sole earner and has to maintain a family of four person.
    He is now having a corpus of Sixty Lakhs rupees.

    In this case he cannot go for high return investments because such investments will entail high risk including capital(principal) risk also. He has to calculate wat will be the essential monthly expenses. In that he has to add medical insurance premium too. Medical insurance is an essential requirement at this age. A family floater policy will be ideal.

    After calculating the essential monthly expenses, he has to invest a lump sum in a safe investment scheme where he will get regular monthly return(income) equal to the monthly expenses. He can arrive at the optimum principal, period and interest rate by doing reverse calculations using the normal interest calculation formula. Senior Citizen Savings Scheme, Bank Fixed deposits with reputed and established banks, Post Office Savings FDs etc are ideal.

    Now from the corpus amount remaining after that investment a part can be invested Govt bonds, a part in medium risk medium return investments like established and good track record mutual funds, debentures and FDs of very strong and reputed established companies etc.

    An amount equal to a couple of months expense may be kept i n short term fixed deposits with banks.

    A small portion may be invested in gold( as pure gold coin or bar) with proper bill and tax from approved and reputed vendors or jewelleries.

  • My suggestion is if your age is under 60 you select post office monthly income scheme. If you crossed 60 you select senior citizens savings deposit in post offices. You can refer www.India for the procedure and details of interest etc. In case of both the above you can get monthly / quarterly interest.
    Here you can opt the services of postal agents service, they offer a good service in this connection.
    Besides the above if you start a savings bank account with atm card facility in the same post office you need not go to post office periodically as they regularly credit your interest into your savings account. You can draw money from any bank's ATM at your needy hours with the ATM card provided by post office. Simultaneously you will get interest for accumulated amount in the SB account also.

  • To support a family of 4 members with a corpus of Rs. 60 lakhs would require detailed planning and even more precaution in spending, as the expenses for 4 people will vary around 15,000 - 20,000 monthly depending upon the cost of living where you reside. This can be less if you own a house and don't plan a capital investment in the near future.

    Most common schemes available for a Senior citizen are Post Office Monthly Income Scheme (POMIS) and Senior Citizen Saving Scheme (SCSS), both offering interest rates over 7%, i.e. 7.6% for POMIS and 7.4% for SCSS. The maximum amount that can be invested in these schemes is 9 lakhs in POMIS (Joint account) and 15 lakhs in SCSS.

    POMIS will offer monthly income while SCSS will offer quarterly income, which will trickle down to this:
    Rs. 5,700 p.m. from POMIS (900000*7.6%/12) and Rs. 27,750 every quarter from SCSS (1500000*7.4%/4).

    This can become a monthly inflow of Rs. 5700 + 9250 = Rs. 14,950.

    Now you will be left with Rs. 36 lakhs as corpus (60 - 15+9). You can safely keep Rs. 6 lakhs in a savings bank with a bank offering over or around 6 % as the rate of interest, which seems a bit hypothetical in current times, but there are few banks that are actually offering that. Banks also pay quarterly interest, so this again can convert to monthly income of Rs. 3,000 safely.

    Now with a balance Rs. 30 lakhs in hand you can invest around 20 lakhs in FDs for 1, 2, 3 years, and so on. This you must decide based on your immediate and future requirements. Do smaller amount FDs for short term and bigger amount FD for a longer tenure, as you already have a sum of Rs. 6 lakhs in a savings bank for any contingency. If still needed you can break smaller FDs for any emergency requirements. These FDs can also offer a return of over 7% easily but they will be only after the maturity period.

    Now with the remaining Rs. 10 lakhs, you have 2 options. The first option is to open a small general store in or around your home with a small investment and or any other shop that will cater to people living around you.
    You can even rent out a small shop and start earning right away. Income will be small but will keep you engaged away from boredom.

    The second option is to get some rooms constructed in your house and let them out on rent and earn a rental income, again this will be totally based on the place where you reside. Advice on this aspect is purely assumption based and may not suit or work for you if you reside in a remote place.

    I will suggest against investing in mutual funds or equity markets as they may seem lucrative but have huge risks attached to them and investing in these options post-retirement is a big NO.

    Regarding the taxation part, there will be hardly any tax on your income as there will be deduction under Section 80TTA and basic exemption limit so your income will not be under the taxable limit. Also, you must submit Form 15H to your bank where you will invest in Fixed deposits to avoid deduction of TDS.

    I am assuming that 2 people are senior citizens and the rest 2 are kids who will soon begin their professional journey and will not be burden on you in near future.

    Live before you leave.

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