One of the steppingstones to a peaceful post-retirement life is investing your retirement money in stable and efficient options. This allows you to sustain the lifestyle you had while working. Before choosing your plan, it is vital to keep in mind factors like your initial capital and monthly living expenses. There are many options available in the market and picking one that suits you best can be tiresome. To learn more about safe ways to build your ideal investment portfolio, keep reading!
Prerequisites of investing after retirement:
- Review your profile and identify the associated risks. Try to keep your profile as balanced as possible and be well-informed about the consequences.
- Calculate how much you will need to pay for your bills and other monthly expenses. Plan your investments so that these expenses do not deplete your initial amount.
- Better safe than sorry, have a clear understanding of the investments you are making. Analyse the risk and returns of each investment before committing to it.
- Divide your investments, don't pour all your funds into one type of investment and avoid losing more than you can afford.
- Have a reasonable amount of emergency funds that can act as a safety net in the case of a medical emergency or a bad investment.
So, you've gone through all the prerequisites, checked all the right boxes and are now looking at a vast ocean of investment opportunities. Here are some of the most recommended investment plans for retirees that allow you to avoid tax liability and have a steady source of monthly income.
1. Senior Citizens’ Saving Scheme (SCSS):
As the name suggests, this scheme is only for citizens above the age of 60. It is one of the most popular choices among retirees as it provides an assured way to protect your initial capital. It offers the highest post taxable returns compared to other fixed-income taxable products, allows premature withdrawal, and is eligible for tax benefits.
With an upper investment limit of 15 lakhs, the freedom to open multiple accounts, a five-year tenure with an extension of three years, and a current interest rate of 8.6% per annum, SCSS is a post-retirement investment opportunity you don't want to miss out on.
2. Fixed Deposits (FD) For Seniors:
One of the safest form of investments as it is free from market variables and provides a fixed monthly or quarterly return based on your preference. Banks generally offer higher interest rates on FDs for senior citizens, that range anywhere between 5 to 9%.
The tenure period ranges from 12 months to 60 months; FD also offers higher liquidity and enables you to withdraw money whenever you require. Everything considered, an FD is a stable option and you should include it in your investment portfolio.
3. Post Office Monthly Income Scheme:
This unique investment opportunity for seniors offers considerable returns at an interest rate of 7.6% as per rates announced in Q2 2019. The maximum deposit allowed is 4.5 lakhs for single ownership and not more than nine lakhs for joint accounts.
Like Fixed Deposits, POMIS offers monthly returns that are not affected by market fluctuations and are taxable. Unlike a Fixed Deposit, POMIS has a fixed maturity period of 5 years. The best part? The monthly interest is directly credited to your savings account, so you can add it to your arsenal of investments.
4. Mutual funds:
“Mutual funds sahi hai.” we've heard this statement one too many times. To retirees who are economically stable enough to invest in higher-risk alternatives, mutual funds are an exciting option. Investing in mutual funds can provide high returns but they are also highly volatile and are subject to market risks.
Identify the right risk profile for your current situation and allocate your funds accordingly. Retirees are urged to steer clear of thematic and funds including mid or small caps.
5. Debt funds:
A debt fund is a type of mutual fund but doesn't have as much risk involved because they focus on fixed-income investments. They can provide returns as high as 15% of your investment per annum, are flexible and provide liquidity, but charges may apply, and money cannot be withdrawn immediately. Nevertheless, long term debt funds offer high returns based on market performance.
After retirement, the money you have worked tirelessly to save should work on its own to provide for your monthly expenses. Retirees are advised to construct an efficient investment portfolio that distributes their funds to several options by weighing the risk involved and meets their monthly financial requirements.
Make your savings work for you while you sit back and get a kick out of your retirement.
