Fixed Income Instruments for Retired person

If you are looking for options to invest in your retirement fund, we have done the research work for you.

Following are the secured options that can give you regular income.

But, before we move on to the investment options, there are two things which need to be taken care of.

  1. You should have an Emergency Fund (3 to 6 months of expenses) in Savings a/c, FD, liquid funds
  2. Health Insurance is a must

 

You can park your fund in the following fixed income options:

 

  1. Senior Citizen Saving Scheme (SCSS)

Following are the benefits and features of Senior Citizen Saving Scheme (SCSS)

  • The SCSS is a scheme which offers high safety and regularity of income for senior citizens. It is an appropriate investment option for senior citizens above 60 years of age. 
  • You can open a SCSS account in any Bank or post office. 
  • The current rate of interest is 7.4% p.a which is very good as compared to fixed deposits.
  • The scheme has a 5 years maturity period with an option for 3 year extension. 
  • The interest is provided on a quarterly basis and is taxable. 
  • Under SCSS, there is an upper limit for investment. The maximum investment can be upto Rs 15 lakhs (individually or jointly) 
  • You also get a tax deduction of Rs 1.5 lakhs under Section 80 C of Income Tax Act.
  • Premature withdrawal is allowed, but only after 1 year. 
  • Penalty of 1.5% is levied if the account is closed in 1 year & 1% if closed in 2 years.

It is a good option for senior citizens with risk free regular returns as it is a government-sponsored scheme.

2. Pradhan Mantri Vaya Vandana Yojana (PMVVY) 

Following are the benefits and features of Pradhan Mantri Vaya Vandana Yojana (PMVVY)

  • Investment in PAVVY can only be done via LIC, as only LIC has been given the sole authority for it. 
  • PMVVY gives an assured rate of 8% for 10 years of lock-in period. 
  • Under this, there is an option to receive regular amounts in the form of pension. You can opt for monthly /half yearly /quarterly /annually pension. The interest paid is taxable.
  • Under PMVVY, one does not have the option of premature withdrawal (except in case of death or critical illness). 
  • Just like the Senior Citizen Saving Scheme, the maximum investment is Rs 15 lakhs. 
  • Also, the minimum amount of monthly pension is Rs1000 and maximum is Rs9250.
  • Under this scheme, loan facility of up to 75% is also available after completion of 3 years.
  • The initial minimum investment amount is 1.5 lakhs for a minimum pension of Rs 1000.
  • Only citizens who have completed 60 years of age are eligible for PMVVY.
  • In case of emergency, 98% of the investment amount can be withdrawn. 

 

3. Post Office Monthly Income Scheme (POMIS)

Following are the benefits and features of Post Office Monthly Income Scheme (POMIS)

  • As the name suggests, POMIS is a scheme which pays monthly interest. The ROI is 6.6% per annum with a maturity of 5 years.
  • The minimum amount of investment is Rs 1000 and maximum is Rs 4.5 lakh (for single account) and Rs 9 Lakhs (for joint accounts). 
  • Any indian citizen is eligible to open the account.
  • If the amount is withdrawn between 1st and 3rd year, a 2% penalty is levied. And, between 3rd and 5th year, a 1% penalty is levied.
  • The interest which is paid is taxable.

 

4. National Savings Certificate

Following are the benefits and features of National Savings Certificate

  • NSC is a fixed income instrument sponsored by the Government of India.
  • One can ensure capital protection with tax benefits while investing in NSC. 
  • It is a safe investment option to earn steady interest. 
  • All resident Indians are eligible for NPS. 
  • The current rate of interest is 6.8% p.a. 
  • The minimum amount of investment is Rs 1000. NSC has a maturity period of 5 years. 
  • Premature withdrawal is not allowed except in case of death of the investor. 
  • Tax benefit of up to Rs 1.5 lakhs is available. 
  • One can open an account in any post office.

 

5. RBI Floating Rate Savings Bonds 

Following are the benefits and features of RBI Floating Rate Savings Bonds

  • The interest rate of RBI floating rate savings bonds is always 0.35% above NSC rate.
  •  The current rate is 7.15 % p.a. 
  • Resident individuals and HUFs can invest in these bonds.
  • The maturity period of the bond is 7 years. 
  • Interest is paid every 6 months which is taxable. 
  • Minimum investment amount is Rs 1000. 
  • There is no maximum limit on the amount to be invested.

 

6. Debt Mutual Funds

Following are the benefits and features of Debt Mutual Funds

  • Debt Funds invest in fixed income securities which are issued by government and companies such as Government Bonds, Corporate Bonds and money market instruments. 
  • Investing in debt mutual funds is considered to be a very safe investment. 
  • These are less volatile and good for people who wish for regular income. 
  • They offer relatively stable returns.

 

7. Liquid Funds

Following are the benefits and features of Liquid Funds

  • Liquid funds are a kind of debt funds which invest in fixed-income instruments with a maturity of 91 days. 
  • One can withdraw the money invested within 24 hours, that is why these funds are known as liquid funds. 
  • They offer better returns from a regular savings account.

For investment in any of these fixed income instruments, contact us or mail your queries at contact@financialfriend.in