People around the world are getting older day by day and also living longer. One of the biggest social challenges we face in the 21st century is to accept and prepare for this major shift in population age. India has more young people than any other country, but its population is ageing fast. Right now, there are 153 million older adults (60 years and older) in India. By 2050, this number is expected to jump to 347 million. This change in age groups isn’t just a number – it’s a big change in society that will affect many things in ways we haven’t seen before.
In this scene, government-backed plans like SCSS and POMIS which give appealing and guaranteed returns are top picks. These investment choices aim to provide safety and steady income, meeting the specific money needs of older adults. We’ll explore the best ways for seniors in India to invest, looking at what each option offers. It will help understand the choices senior citizens can make to make the best use of their retirement savings.
How Can Senior Citizens Begin With Their Investment Journey?
Having financial stability and mental peace of mind is still a top priority, particularly for people who have navigated life’s ups and downs with grace. India’s senior population has access to a wide range of lucrative investment options. They work well and are simple to use. Below are some of the steps that they can take to get started:
- Assess Financial Goals and Risk Appetite: Understand your current financial situation and future needs. Consider factors like daily expenses, healthcare costs, and any debts. You should have a clear understanding of the amount of income that needs to be generated and the amount of risk you can take for that. This understanding will help you choose the right investment vehicles.
- Consult with a Registered Investment Advisor: Consulting a financial advisor will help you understand what investment strategy aligns with your goals and needs. Advisors have a clear understanding of investment vehicles available in the market and can help you make an informed decision by explaining the different aspects of a vehicle like return, risk, liquidity, and tax treatment.
Investment Plans for Senior Citizens in India
Here’s a list of investment choices designed for older adults to create a steady income stream in their retirement. The goal is to build a retirement portfolio that includes these investment options.
- Senior Citizen Savings Scheme (SCSS): The Senior Citizen Saving Scheme is a government-backed scheme which is for individuals who are above the age of 60. This scheme first started in 2004. Its goal was to offer senior citizens a stable source of income during their post-retirement phase. Every quarter, the interest rate is reviewed by the GOI. Once invested, the interest for the first five years is locked. The maximum investment limit is 30 lakhs per individual. Premature withdrawal is allowed with an applicable penalty.
- Post Office Monthly Income Scheme (POMIS): With a current interest rate of 7.4% (5 years), POMIS is among the top choices for stable and secure monthly income. The scheme has a minimum investment amount of 1500 and a maximum limit of Rs.4,50,000 for a single account and Rs. 9 lakhs for a joint account. The interest rate is paid out monthly and the principal is returned after five years. Premature withdrawal is allowed after a year with an applicable penalty.
- Bank Fixed Deposits (FD): Fixed deposits are one of the most accessible and omnipresent investment options in India. Retirees can consider FDs from some of the large banks and safely generate regular income. Senior citizens in India can also earn higher interest rates on fixed deposits than regular depositors. This can lead to a significant increase in returns, especially for long-term deposits. FD investments can also be diversified by taking relatively higher risk through NBFC FDs and small finance bank FDs which tend to offer very high interest rates.
- Mutual Funds: Senior citizens looking to put some of their savings into market linked investments can go for hybrid funds or debt-focused or pure equity mutual funds. Mutual funds are professionally managed instruments that are liquid and provide flexible investment options. Tax treatment of capital gains from MFs are also favourable especially for equity funds which can help you save a substantial amount of tax. If you are seeking to generate regular income, SWPs from mutual funds are one of the best choices by investing into debt and hybrid funds. Funds that are not needed to generate income can also be deployed in pure equity funds to generate inflation beating return in the long term.
Making Investments for Senior Citizen’s Better Futures
As India’s population ages rapidly, senior citizens must plan for their financial future. Government-backed schemes provide competitive interest rates and guaranteed returns, making them perfect for people seeking security and a consistent income. To create a comprehensive retirement portfolio, diversify your investments between SCSS, POMIS, bank FDs, and mutual funds. Other options such as RBI bonds and Government securities can also be considered for generating income.
-Nischay Avichal
