There are a number of investment options for senior citizens where they can save their money without being taxed. Many financial institutions offer a higher rate of interest for senior citizens for Fixed Deposits. This ensures that you get more returns for the amount invested.
You can also check out the Balanced Fund Scheme and those who are helping elderly parents with finances can also opt for Systematic Withdrawal Plan or SWP after 12 months of investment. One can withdraw 0.75% per month and the returns are going to be tax-free as per the tax regulations. Senior citizens can expect the corpus to grow even after the withdrawal for a period of ten years.
Some of the other investment options for senior citizens include PPF and EPF where deposits have to be made regularly and interest between 8.1-8.8% can be earned as well. To get tax benefits, invest part of the Public Provident Fund proceeds into an annuity plan. There are senior citizens savings schemes available as well where you can deposit a maximum of Rs. 15 lakh for tenors of 5 years and this can be increased by another 3 years. Interest rates range between 8.5-9.5%. The investment is free from taxation although the interest is taxable.
Besides the other options, post office scheme is also a good choice under the Senior Citizen Savings Scheme or SCSS. It falls under the post office schemes and it offers fair returns with low risk and has tax saving options as well. One can get tax benefits as per Section 80C of the Income Tax Act. The rate of interest under this scheme is 8.3% and in case the opening amount is less than Rs 1 lakh, then it can be opened with cash money.
Senior citizens will also be able to save taxes considerably with this investment and can invest a maximum amount of Rs. 15 lakhs either jointly or individually in the SCSS account. The invested amount cannot surpass the money that one gets upon retirement. As a result, one can invest the retirement proceeds or Rs. 15 lakh whichever is lower. Senior citizens can also consider other kinds of investments like tax-saver FDs which have lock-in periods of around 5 years or so. Tax-free government bonds are another good option when it comes to saving on income tax as far as senior citizens are concerned. They can also consider ELSS investments for tax savings.
Best Investment Options for Senior Citizens to get Reasonable Monthly Returns to beat Inflation:
For a long period of time, the best investment options for senior citizens were Fixed Deposits, PPF and Post Office Monthly Income scheme for senior citizens. However, interest rates have gone down over the years and RBI has been tackling inflation along with the Repo, Reverse Repo, SLR, and CRR. Although the inflation rate has come down from 6% to less than 4%, it is expected to rise again and it is important to invest likewise. One can invest money in tax-free bonds and the money on PPF is absolutely tax-free. One can also invest a small amount of money in SIPs after taking calculated risks.
In fact, Fixed Deposits (FDs) are also good options for senior citizens since they automatically get interest rates which are 0.25-0.50% higher than regular interest rates offered by financial institutions. Fixed Deposits are best saving options just because interest rates on FDs are also rising in the current scenario. In addition, senior citizens can choose monthly payouts of interest which will fetch them a regular income. They can also opt for annuity plans by paying a lump sum amount that offers them a guaranteed monthly income throughout their lifetime. There are various monthly income schemes for senior citizens giving a higher return that one should carefully scrutinize before taking a final decision.