Retirement years should be a stress-free, relaxed phase of your life. To facilitate this, it is important that you invest your retirement money appropriately. This will ensure that you don’t have to worry about a lack of finance impacting your lifestyle. Besides, maintaining financial fluidity post retirement is easier than you’d think. As long as you pick the right investments, you can watch your money grow.
Take a look at the ways in which you can invest to reap maximum growth on your retirement corpus.
Invest in a Senior Citizen’ Saving Scheme
The Senior Citizens’ Saving Scheme or SCSS is one of the most noteworthy investment options for a retired person. You can invest in this scheme by approaching and starting the same at your local post office or a bank. You can invest in a SCSS for a 5-year tenor, which you can extend to another 3 years on maturity.
You can invest a maximum of Rs.15 lakh in one account under the SCSS scheme. But, you can have multiple accounts. Once parked into safety, your invested sum earns an 8.6% interest all through the tenor. Additionally, this investment allows you to claim deduction under Section 80 C of the Income Tax Act.
Open a Post Office Monthly Income Scheme account
Another viable investment option for a retired person is POMIS. You can invest a maximum of Rs.9 lakh through a joint investment account and Rs.4.5 lakh via a single account for a maturity tenor of 5 years. The interest is calculated on your investment every quarter and the same is added to your savings account.
The rate of interest on POMIS at present is 7.8% per annum payable monthly. However, this investment does not fetch you tax benefits and the interest earned is also fully taxable.
Choose FDs for regular income and tax-saving
One of the best investment options for a retired person is a fixed deposit. FDs are beneficial for you because of a number of reasons: Not only do you get to park your money safely with a FD for assured return, but you also get to claim tax deductions. You can choose FDs based on your needs from non-cumulative and cumulative offerings and invest based on competitive interest offerings across financial institutions.
Choose the non-cumulative variant to access the interest payout as regular income, while your invested sum stays safe until maturity. This variant is a highly beneficial investment options for a retired person like you, who does not have a regular salary to bank on.
FDs are generally known to fetch 7-8% interest on your investment. However, senior citizen FDs will fetch you 0.25%-0.35% extra interest on your interest. Choose Fixed Deposits with the right financial institution such as Bajaj Finance to park your investment into safety and subject the same to maturity at an attractive rate of interest. This is not only the highest interest offerings by any financial institution in India but Bajaj Finance has also been awarded ICRA’s MAAA (Stable) Rating and CRISIL’s FAAA/Stable Rating, which adds an extra layer of security to your investment.
Invest in tax-free bonds
Government assisted concerns such as Indian Railways, National Highways Authority of India (NHAI), Housing and Urban Development Corporation Ltd (HUDCO), and NTPC Ltd etc., release bonds of various amounts from time to time. Very few nationalised banks and stock exchanges are the only places where you get to buy these bonds. However, you will have to keep a look-out for these bonds as the same is not available in the primary market.
The maturity tenor on these bonds generally is longer as compared to the other investment options for a retired person. So, invest in a bond only if you can keep aside a bigger portion of your money untouched for a minimum of 10-15 years. But you can be sure that your invested sum and its interest gain is completely tax-free, so if you weigh your investment on the basis of tax benefits then you can surely consider this instrument.
Make use of a good mutual fund scheme
If you want liquidity in your investment folio, then you can also keep aside a portion of your savings in mutual funds. But be sure to spare the least amount of your savings for this device as the same is directly market linked and is high on risk. Apart from the high gain on your invested sum you do not gain much on the tax purview unless you park your mutual fund investment into a lock-in period of at least 3 years.
So even though gaining dividends from the market sounds very lucrative, remember you are considering this as a part of your retirement investment portfolio so make a decision after weighing the pros and cons in a holistic way.
Invest your retirement money by understanding your budgetary requirements after you retire, the monthly obligations you will have, and the funds at hand to make conscious and thoughtful decisions.