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World Senior Citizen’s Day is observed across the globe on August 21 every year to recognise contributions that seniors make to their communities. It was taken up by the United Nations in 1990 and is celebrated to create “awareness of the condition of older people and to support them throughout the aging process.”
Best investment options
Age is a crucial determinant in investment planning. For the senior citizens consistent and regular payments are a key requirement. Several investments provide such facilities. Take a look at some of the most effective alternatives for retirees and senior citizens:
1) Senior Citizen Saving Scheme
SCSS is one of the most popular investment instruments among senior citizens. It is a government-backed retirement benefit program. Now SCSS is offering 7.4% annual interest rate. An individual of the age of 60 years or more can open an SCSS account in post offices or banks.
The tenure of the scheme is 5 years. But the account can be extended for further 3 years. The maximum limit of investment is Rs 15 lakh.
2) Pradhan Mantri Vaya Vandana Yojana
Pradhan Mantri Vaya Vandana Yojana is another scheme tailormade for senior citizens. The rate is revised at the start of every financial year by the finance ministry. Now it is offering 7.4% interest per annum. The policy is for the period of 10 years and the existing limit on investment is Rs 15 lakh. PMVVY gives you a chance to have an inflation-beating return even when interest rates have declined over the year.
3) Post office monthly income scheme
The Post Office Monthly Income Scheme (POMIS) is also popular among senior citizens. It has a provision of interest payback on a monthly basis. The account can be open only in post offices. The tenure of MIS is 5 years. It offers 6.6% interest rates per annum.
The minimum investment amount is Rs 1,000 and the maximum limit is Rs 4.5 lakh in a single account.
4) Fixed deposits and recurring deposits
These are two of the most popular investment vehicles for retirees. Banks also offer seniors a comparably higher interest rate on FDs and RDs. Under section 80TTB of the Income Tax Act, older citizens are exempt from tax on interest income up to Rs 50,000 in a financial year.
5) Floating-rate RBI bonds
RBI’s floating rate savings bonds are an instrument that gives one relatively high and secure returns. These bonds are offered by the government of India. Generally, the bonds carry a floating rate of interest that is 0.35 percentage point or 35 basis points higher than the interest rate of National Savings Certificates (NSC). The interest rate for the first half of 2021 has been set at 7.15%.
The minimum invested amount in RBI floating rate bonds is Rs 1,000 and multiple of Rs 1,000 thereafter. There is no maximum limit.
6) National Pension Scheme
Individuals between the ages of 18 and 65 can enrol for the National Pension Scheme. Senior citizens may also extend their tenure up to the age of 70. Taxpayers may deduct up to Rs 1.50 lakh per year on contributions to NPS under section 80C of the Income Tax Act.
NPS investment can be made in equities, corporate, or government assets, depending on the individual’s preference under the active option.