Best Investment plans for senior citizens/ retired people after retirement

If your parents are not well aware if current taxation rules and regulations, then its better that you invest on behalf of your parents. Grab more information about various Senior Citizen Savings Schemes.

If your senior parents don't have huge amount to invest in, then you can yourself plan investment for senior citizen parents. Here we are going to discuss different institution schemes for senior citizens.

Senior Citizen Saving Scheme

This is best option to receive monthly income especially if you don't want to take any risk. Both partners (husband and wife) can individually invest in this government saving scheme for senior citizen up to Rs. 15 lakhs. This investment had tax exemption under section 80C. Only quarterly interest received is taxable.

Fixed Deposit (F.D.) for Senior Citizen

Since most of the banks are offering interest rates of more than 10% to senior citizens, thus F.D. is also a good option for senior citizen to invest in. Investment in corporate FDis also a good choice but it has a little risk as compared to bank FD. But amount of return is also higher. Thus it is advisable to invest in those corporate FDs which have best credit rating.

Date funds/ fixed maturity plan for elderly people

Date funds especially Fixed Maturity plan can provide you better return as compared to above mentioned plans. Tax saving is also higher as compared to Fixed Deposit and other schemes. This is because interest received on FD, SCSS, and NSC etc. is completely taxable. On the other hand, when you withdraw from any date fund, then only capital gain per unit is taxable. Another positive feature of funds is their flexibility. If senior citizen has invested Rs. 10 lakhs in bank @ 10%, then monthly return will be Rs. 8333. But this income many not be sufficient enough in coming years due to inflation. On the contrary, you can fix your monthly income in case of mutual funds.

Investment in gold and stocks

On most cases, aged people get ready to invest in stock but hesitate in taking risk by investing in stock. In such a situation, suggest your parents to invest in Systematic Investment Plan (SIP). These funds invest very minor portion (15-20%) of total amount in equity, and provide a better return. SIP has provided average 9% of annual return in last 3 years.

Income from investment in land and property

Many people, especially senior citizens, invest lump sum amount in land and property. Such property could be the house in which they are residing or it could be some other area. If such land or property is put on reverse mortgage, then they can earn very smart income after retirement. In the process of reverse mortgage, banks pay EMI to the owner of the property in lieu of his property. A house valuing Rs. 70-80 lakhs can provide you monthly income of Rs. 20-22 thousand. In case of death of such senior person, his/her heir can gain the ownership of the property by paying loan amount to the bank. If they don't want to pay such loan amount, then bank pay them the remaining amount by selling the property.

Risk and return on best investment plans for elderly people

- Risk on equity diversified funds is very high. Average rate of return is 15%.
- Risk on balanced funds is moderate. It provides an average return @ 12% to 15%.

Read PPF vs Fixed Deposits: Which is better and why?


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