Investment Options For The Retired Individuals
Updated On Nov 19, 2021
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Retirement implies the end of an individual’s earning period, unless they decide to take something up as a consultant. For retirees, it’s important to make efficient and proper use of their retirement savings to reduce tax burden and maintain a steady flow of income at the same time. For many retirees, putting up a retirement portfolio that includes a mix of fixed income and market-linked assets remains a difficult task.
The main idea is to put together a retirement portfolio that includes a mix of fixed income and market-linked assets. Therefore, it’s important for retirees to create a stable, low-risk income source. Many income-generating products can help support the social security and retirement plans while minimising risk. To find out more on post-retirement investment alternatives for retired individuals, read on.
Importance of Post-Retirement Investment Alternatives
Following are some key reasons why anyone should put importance on having post-retirement alternatives -
1. Public Provident Fund (PPF)
PPF was introduced in India with the goal of mobilising small savings via investment, along with earning a return on the same. It's also known as a savings-cum-tax savings investment vehicle since it helps an individual to create a retirement fund while saving on annual taxes. A PPF account is a form of secure investment choice for anyone wishing to avoid taxes and wants to earn guaranteed profits on the same.
2. Fixed Deposit
Fixed Deposits are considered to be very crucial in every retiree’s portfolio as they provide guaranteed returns with no risk. These investments don;t require regular monitoring by their respective investors. They are self-earning deposits in which retirees can make a single investment and get guaranteed returns at the end of the term. Not only are the funds placed safely in a fixed deposit, but it provides the benefit of being broken at low penalty rates if an individual needs cash urgently. From an individual point of view, it's a good investment that benefits the respective individual.
3. Senior Citizens Savings Scheme (SCSS)
This scheme provides a comprehensive package to retirees with an ideal investing opportunity. This scheme offers a variety of benefits, ranging from tax rebates to regular payouts, as well as capital protection. The required age to avail this scheme is 60 years, if the investor has chosen voluntary retirement, but an individual can avail this scheme at 55 years as well if they choose this scheme within a month of receiving their retirement payments.
4. Post Office Time Deposits (POTD)
This investment scheme is another long-running Postal Department initiative that provides investment alternatives with a very low minimum investment amount. The least amount that may be invested is Rs 200, and the maximum amount that can be invested is unlimited, however it must be in multiples of Rs 200. The interest rate on this programme ranges from 8.2 percent to 8.5 percent, depending on the investment term. Although interest is accumulated quarterly, it is only paid once a year. The investment tenures for this form of investment spans from one to five years, with a 2% penalty charge for early or premature withdrawal.
5. Post Office Monthly Income Schemes (POMIS)
Another low-risk investment scheme that ensures a monthly source of income and has an investment cap of Rs 4,50,000 for single accounts and Rs 9,00,000 for combined accounts. The minimum investment amount is Rs 1500, with further investments in multiples of Rs 1500.
This scheme has a 5-year investment period. This 5-year term yields a monthly interest rate of 8.5 percent each year. This scheme has a low risk of losing money, but there is a somewhat larger penalty cost for early or premature withdrawals. If funds are removed before the plan has completed 3 years, the penalty is 2%; if funds are withdrawn after the programme has completed 3 years, the penalty is 1%.
It is understandable that retirees and individuals approaching retirement are, naturally, careful investors. They would seek stability instead of risks. Therefore, it's important to remember that there is no such thing as a "risk-free" investment. Even the safest investing alternatives come with certain risks involved with them. As a result, when it comes to investing, one should always make well-informed choices and make appropriate decisions.
Also Read: 5 Reasons to Invest in the Best Pension Plan
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.