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Top Senior Citizen Savings Schemes In India

Updated On Mar 21, 2022

You have spent your entire life working and setting objectives, achieving them, and running the race toward your dreams. It is the one that gives you a rush. This pause in our lives, which we affectionately refer to as retirement, is a wonderful change. There is so much more you would like to accomplish, from travel to entrepreneurship to self-wellness programmes. Choosing wisely among the greatest investment options for senior folks will help you realize your dreams. Follow three simple beginning steps to completely understand the applicable benefits of these and choose the proper ones: decide how much you want to invest, how long you want to invest it for, and what you want to get out of it.

Senior Citizen Savings Scheme

In India, retirees are looking for programmes that provide them with the maximum level of security and a consistent income. Many people believe that the greatest senior citizen investment programmes are those that are considered safe because they are backed by a sovereign guarantee, meaning that they are backed by the Indian government. The Senior Citizen Saving Scheme (SCSS), a programme offered by the Government of India since August 2004, is one such investment. SCSS is a government-sponsored savings programme. It is a risk-free complete debt instrument. It is available to persons over the age of 60 and provides the security of a guaranteed income for the duration of the investment.

  • Rate of Interest : This senior citizen scheme currently offers a 7.4 percent interest yield. These prices are reviewed every three months, with the most recent review taking place on March 31, 2021. This increased rate is only applicable to new deposits made after that date, not to current ones. While SCSS interest rates are subject to fluctuation every quarter, these changes will not affect investors who have already registered.
  • Tenure : The Senior Citizen Savings Scheme has a maximum term of 5 years. You can extend it for another three years after that. This is only a one-time opportunity. It is worth noting that if the loan is extended, the interest rates in effect at the time will apply. Such actions are said to be made with the goal of protecting older citizens' hard-earned savings and providing them with flexible benefits that are aligned with market behavior, overall financial performance, and inflation.

Senior Citizen Fixed Deposits

The COVID-19 pandemic produced financial insecurity among investors in general, but especially among senior citizens, who had fewer years of earning and relied more on interest income. The Senior Citizen Fixed Deposit Scheme was created in response to the financial ramifications of the Covid-19 epidemic, which had a direct impact on interest rates. Its goal was to offer regular income to depositors aged 60 and up. It is one of the newest investment alternatives for older adults, having been introduced in May 2020 and remaining open until June 30, 2021.

  • Rate of Interest : Each and every bank in the country does not give the same fixed rate. This is likely due to the institutions' recognition of both the short window and the market swings brought on by a worldwide crisis. Large banks are currently offering rates of up to 6.25 percent p.a. on Senior Citizen Fixed Deposits, while Small Finance Banks are offering rates of up to 7.75 percent p.a. on Senior Citizen Fixed Deposits. This is between 0.25 percent and 1.0 percent more than the interest rates offered by traditional FDs.
  • Tenure : A Senior Citizen Fixed Deposit might be for a short period of 180 days or for a longer period of 1, 3, or 5 years.

Mutual Funds 

Mutual funds aggregate money from a number of different participants and invest it in a variety of asset classes, such as equity and debt. They are overseen by fund managers, who make sure the fund's investing goals are met. Most fixed-income investment products, as previously indicated, can only provide inflation-level returns; however, mutual fund returns have the potential to outperform inflation by a large margin.

  • Tax Implications : Under present mutual fund taxation laws, you must pay capital gains tax on the returns when you redeem your investments. Gains created by assets held for less than three years are subject to short-term capital gains tax (STCG), and you must pay tax according to your income tax bracket for Debt Funds and Debt-oriented Hybrid Funds such conservative hybrid funds. The gains are considered as long-term capital gains tax if they are redeemed after holding the investments for at least three years (LTCG). After indexation, you pay a 20% tax on LTCG.
  • Investment Amount : If you want to invest monthly or in a lump sum, you can start a Systematic Investment Plan (SIP) in these funds. Most SIPs start at Rs. 500 per month, however this can vary depending on the fund.

Take Away

As a result, you will need to plan ahead of time, evaluate all of your life goals, and budget for the costs that come with them. With a cherry on top, retirement investments in the best senior citizens plans promise just that. It guarantees that you will happily retire from work but not from living life to the fullest.

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