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  • Regarding prudential savings of retirement benefits

    Have a query about prudential savings of retirement benefits? Want to know how to get better benefits in savings? Scroll through this page for advice from our experts for your query.

    I have a classmate who is sixty plus now. She had taken voluntary retirement in the year 2014. As a private company employee she had been rewarded with some retirement benefit and that's all. She has no pension. But being a lonely person and as a senior citizen her first and foremost concern is, effective investment of her money so that she can spend peacefully in her old age. She is not interested in mutual fund or the kind of investment which has risk factor.

    (1) She had invested total Rs 352500 in MIS scheme of Post Office. This amount has now matured.
    My Question : Prudentially what should be her option – To go for MIS again or any other kind of investment in Post Office which will be more effective than MIS?

    (2)She has also a FD of Rs 500000/- with a nationalized bank.
    My Question : As today bank FD's interest is too low, what should be her option so that she gets a better benefit?
  • Answers

    4 Answers found.
  • The following are the best options for a senior citizen to invest his/ her money so that the money is safe and the returns will be good.
    1. Senior Citizen Savings Scheme (SCSS): One can invest up to 15 Lakhs in this scheme. The amount is protected and the government of India is giving a guarantee for the entire amount throughout the investment. As of date, the rate of interest is 7.4%. You can invest for 5 years and can be extended for another 5 years. Income tax is applicable as per the rules. You can get the details from the nearest SBI branch
    2. Pradhan Mantri Vaya Vandana Yojana (PMVVY): This is introduced in the year 2017. This is operated by the LIC of India. It is a retirement cum pension scheme. The maximum amount is Rs,15 Lakhs and the minimum amount is 1.5 Lakhs. The rate of interest is about 8% and that depends on the periodicity of the pension. You can get the full details from your nearest LIC branch ].
    3. Post Office Monthly Income Scheme (POMIS): This is already what you are talking about. The rate of interest will be around 6.6%. You can invest up to 4.5 lakhs in this scheme. Tax exemptions are not applicable.
    4. Senior Citizen Fixed Deposits: Some banks are offering a higher rate of interest to senior citizens and it may vary from bank to bank. It starts at 6,5% and maybe up to 7.5%. No tax exemption. You can invest up to 2 crores in this.
    5. Mutual funds: There are some safe MFs where you can invest for better returns. But a thorough study and advice from the professionals in the field are required.
    You can decide as per your idea and which suits you.

    always confident

  • As she is a retired person so at this age she should not be investing in risky areas like shares, mutual funds, company deposit etc. For a retired person best course is Post Office schemes and Bank FDs.
    MIS scheme of the Post Office is very good giving a sustained interest every month for our expenses. Even if one has other sources for monthly expenses then one can plough back the monthly interest of the MIS scheme in a Post Office recurring deposit (RD) where it would multiply nicely over the next few years depending on the duration of the RD chosen.
    Due to inflation looking up, banks have started increasing the interest rate albeit in small increments so bank FD is also a good investment right now for a retired employee. One should go for a long time FD to safeguard against the possible interest decrease in near future. Banks also have a monthly income scheme and one can consider that.
    Another good investment is the gold bonds issued by the government from time to time. In that one also gets interest at the rate of 2.5 % per annum. Though it is a low interest but generally the gold prices increase with time and the capital returned at the end of the scheme is quite high.
    Senior citizen scheme and PM Yojana as already detailed above in one response are also good schemes giving good returns.
    For a retired person in our country there are limited avenues for investment because of the risk patterns existing in the present market. So one has to remain invested preferably in Post Office and bank.

    Knowledge is power.

  • In the given circumstances I suggest that she continues with the two schemes she is already having. She may renew both amounts in the same schemes.
    The bank FD also she may change to Monthly Interest basis , if not so now.
    In case she has surplus from the monthly amounts of interest received, then she can again transfer the surplus amount after reaching a ump sum.

    It is suggested to keep some cushion amount always in her ordinary savings account as there can occurs various needs, and she may need money.

    Though there may be some other schemes in some other institutions, she should not change the existing ones jus for the sake of a small fraction of interest change as the amounts are not very large to make much difference. In this age and stage, it is always better to stick with 'known' people and institutions.

  • Though the rate of interest has come down to a low level in terms of fixed deposits of banks, there are other avenues of investments where the rate of interest would be slightly better apart from the same being a non risky affair. The following are the attractive options for the retired persons.
    1) Senior Citizens Saving Scheme - This scheme has been designed to offer better earnings to the retired people offering them 7.4 % per year having its maturity period of five years with the scope of its extension for further three years. However in such a case, interest will be awarded as per prevailing declaration by the government. Alternatively, once the corpus is matured, the same can be reinvested for a tenure of five years with the existing rate of interest.
    2) Pradhan Mantri Vaya Vandana Yojana - This scheme has been floated by LIC and is effective since 2017 where you can invest at best Rs Fifteen Lakhs enjoying 7.4 % Interest per year having its maturity period for ten years. In that way, your rate of interest for the entire tenure is guaranteed.
    3) Post Office Monthly Scheme Saving Scheme- This scheme would offer you rate of interest of 6.6% at present and the rate of interest is subject to variation with time. Here you can invest up to Rs 4.5 lakhs. Tax - exemption is not included with this scheme.
    4) Bank Fixed Deposits- If you have any excess amount after your investments in the points as suggested from 1 to 3, you can think of the fixed deposits of the nationalised banks where you can earn interest ranging from 6.5 % to 7.5% per year and the offerings would vary depending upon the bank and the tenure for which deposit is to be made. You will have to pay income- tax for the interest you would earn by way of interest.

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