You earned, you planned, and you saved. The basic idea of retirement planning is to plan for a risk-free flow of income to meet routine expenses post retirement and manage to have a respectable life after the regular income has stopped but not the inflation. Sometimes, it may also get difficult to sustain the same standard of living if you have failed to invest wisely during your working life. But then assuming you did not tumble making investments and your smart financial planning paid you some good amount, do you exactly know where to invest your retirement money now? To get the best out of your retirement corpus, you must continuously invest, to uphold your lifestyle and put up with inflation issues.
Here are some excellent post retirement investment options for you.
#1 – Senior Citizens Savings Scheme (SCSS)
This scheme was introduced by the government of India particularly for retired senior citizens. The post office, State Bank of India and some other branches of nationalized banks offer this scheme for senior citizens (60 years or above) and people who took voluntary retirement (55 years or above) with subject to some conditions.
You can invest as small as Rs. 1,000 to Rs. 15,00,000 for a fixed tenure of 5 years (extendable to another 3 years) which pays you interest at 9.2% per annum calculated quarterly.
In case you need to withdraw in between the fixed tenure, a penalty of 1.5% is applicable before 2 years while a penalty of 1% is charged after 2 years on the deposited amount.
#2 – Post Office Monthly Income Scheme (POMIS)
Launched by India Post, this is a monthly income scheme for people looking out for guaranteed monthly income. The investment ranges from as low as Rs. 1500 to a maximum of Rs.4,50,000 per head, and pays you interest at 8.4% per annum. In case of a joint account, you can invest a maximum of 9,00,000. Moreover, on successful completion of maturity period i.e. 5 years, you get a maturity bonus of 5% of the deposited amount.
In case of premature closure of account, the amount can be encashed after 1 year and before 3 years @2% deduction from the deposit while a deduction of 1% deposit will be charged at or after 3 years.
#3 – Post Office Time Deposit Account (POTDA)
India Post offers POTDA which works the same way as other term deposit accounts offered by banks. The minimum amount you can deposit is Rs. 200 and in multiples of it thereafter whilst there is no upper limit on the maximum amount you can invest. The period of POTD account can be from 1 to 5 years where the rate of interest varies from year to year. From 1/4/2013, the interest rates are 8.2% for 1 and 2-year accounts, 8.3% for 3-year account and 8.4% for 5-year account.
The investment under 5 Years term deposit is eligible for the benefit of Section 80C of the Income Tax Act, 1961.
#4 – Monthly Income Plan (MIP) in mutual funds
If you are looking for higher returns, these monthly income plans offered by mutual funds is the best choice for you. As they invest up to 15% of their assets in equities, MIP returns are expected to be higher than bank fixed deposits. These monthly income plans are tax efficient investment options but come with some market risks.
#5 – Bank Fixed Deposit (FD)
If you believe in playing with minimum risk and guaranteed returns, bank fixed deposit is the right investment option for your or a part of your retirement corpus. The rate of interest varies from 4% to 11% while all banks give 0.5-1% higher interest rate to senior citizens. Fixed deposit accounts are offered by banks and companies both. The company fixed deposit interest rates vary from 8%-15% as compared to 4%-11% of bank fixed deposits, there is a higher risk involved with company fixed deposits while the banks are safer.