6 Investment Options For The Retired
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6 Investment Options for the Retired

 
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Financial Advisor
The importance of planning for a financially healthy retirement well in advance cannot be stressed enough. Typically, the aim at the time of retirement is to have a healthy corpus as well as a regular stream of income to address living expenses.

Whilst many financial advisors suggest opting for a retirement portfolio with a mix of fixed income and market-lined options, the challenge is always in maintaining a portfolio with relatively low risk. With that in mind, here are a number of popular investment options for the purpose of retirement:

1)Senior Citizens Saving Scheme (SCSS)

 This is among the most popular choices for those looking to invest for retirement given the healthy returns and reliable security it offers. As the title indicates, this is only open to senior citizens – those who are 60 or above. Having said that, it is also available to those who opt for early retirement between the ages of 55 and 60. The scheme allows an upper limit of investment of Rs.15 lakhs per individual and Rs.30 lakhs for joint accounts. SCSS has a tenure of 5 years, which can be extended by a further 3 years at the time of maturity. The scheme offers a interest of around 8% which is paid quarterly and is considered one of the most favourable fixed income products in terms of returns.

2)Post Office Monthly Income Scheme (POMIS)

POMIS is a 5 year investment that allows you to invest a maximum Rs.4.5 lakhs per individual and Rs.9 lakhs under joint investment. The interest rate offered is also around 8%; however, unlike SCSS, the interest earned is entirely taxable.

3)Fixed Deposits (FD)

Another popular choice of investment, investing in FDs is very profitable as it offers the attractive combination of fixed income and low risk. While they offer more flexibility than other options on this list, given that their lock-in periods typically range from 36 to 60 months, it is important for you to opt for those offering rates above the rate of inflation. This is to ensure that the real value of your investment doesn’t diminish over time. Senior citizens do however get offered a rate that is 0.5% higher, which is an added bonus.

4)Mutual Funds (MF)

Depending on your risk profile, many retirees choose to opt for mutual funds. Large-cap equity funds offer lower risk and higher chances of regular dividend payments, which may be more suitable to your goals. Retirees are generally advised to avoid mid- and small-cap funds because of the higher risk associated meaning more volatile returns. 

5)Tax-Free Bonds

Issued by various government institutions, tax-free bonds offer a high degree of security. But this is partly because many of these only mature after 10, 15 or even 20 years, which may not be ideal for you. Furthermore, as the name suggests, the interest earned is tax exempt but these interest payments are issued annually rather than monthly or quarterly.

6)Immediate Annuities

Life insurance companies issue immediate annuity schemes, which are also a popular retirement investment option. The annuity offered is around 5% to 6% and is entirely taxable. What’s more, the initial corpus amount isn’t returned to the investor. The advantage here is you could get a pension for life, which would continue issuing payments to your family in the event of your death.

 When it comes to investing for retirement, there are a range of available options that you can tailor around your specific requirements of returns, tax and flexibility. What is advised is that you opt for a diverse portfolio made up of a number of these instruments to increase chances of a healthy return and regular income.

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