Top 5 Investment Options for Retired Investors

While on one hand, retirement means an end of monthly salary and the days of savings for many, on the other hand, there are a number of issues that come up with lack of finance inflow.

Now, irrespective of how financially secure you have been in your entire life till 60, it is not uncommon for retired people to run out of their savings and ultimately rely on their pensions. So, what should retired people do? People who wish to lead a luxurious life and still make new financial goals?

The answer is simple. They should invest.

In this article, we will be looking into a few investment modes which people who are retired should invest in to lead a content life.

All the investment options presented below are – to some extent – very easy on the pockets of retired people. This way, they will never have to face any major financial crunch in any single month.

5 Investment Options for Retired People to Lead a Content Life

  1. Senior Citizen Investment Scheme

SCSS tends to be the first choice for most retirees as a must-have investment. The scheme is available to either early retirees or senior citizens. It can be availed from both bank and post offices by those who are more than 60 years of age. SCSS comes with a five-year tenure that can be then extended to three years once the scheme has matured.

Presently, the rate of interest in SCSS is 8.6% which is gets paidpayed to investors on a quarterly basis. It offers the highest after-tax returns when compared with other fixed income tax products.

The benefits do not end here. Senior Citizen Saving Scheme even allows premature withdrawal.

  1. Post Office Monthly Income Scheme

It is a five-year investment mode with a cap of Rs.9 lakh made under joint ownership along with Rs. 4.5 Lakh in single ownership. The interest rate for POMIS is presently at 7.8% which is paid to the investor on a monthly basis.

The investment mode gives investors the flexibility to get monthly amount credited into the savings account.

  1. Tax-Free Bond

Although not offered in the primary market, Tax-free bonds can also be a part of retired personnel’s portfolio. Issued mainly by government-backed establishments like Indian Railways, NHAI, HUDCO, REC, and NTPC among others, these investment types come with the biggest safety ratings.

There are some things that the retired investors need to consider before investing in tax-free bonds such as –

  1. They are a form of long-term investment which matures after 10 – 20 years.
  2. The interest on tax-free bonds is tax-free.
  3. The liquidity is pretty low in case of tax-free bonds.
  4. They offer yearly payouts which might not help you fulfill your monthly financial objective.
  1. Mutual Funds

While it is a common myth that Mutual Fund investment is only best suited for those in the working class who have the freedom to take risks, the reality is very different.

By putting their money in Systematic Investment Plans, retired investors will get the benefit of investing as low as Rs. 500 in return for high-interest rates and a low-risk investment.

  1. Bank Fixed Deposits

Fixed deposits are as another popular choice among the retired generation. Fixed deposits benefit from the safety and ease that it comes tagged with. But the present 7.25% rate of interest is low and off-putting.

Unlike the POMIS and SCSS, fixed deposit offers flexibility in sense of tenure. So, instead of locking the funds in, investors can spread amount around different maturities via laddering. It not just offer fund liquidity but also help manage re-investment risks.

The one sure shot way for investors to earn high returns with Fixed Deposit is – when the short term FD gets matured you should renew it again for long duration and then continue the whole process when all your other FDs havematured.

So here were five investment options that retired investors can choose from to have a content lifestyle that doesn’t change between professional and non-professional life.

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