If you are a retired individual, there are two things that you would be essentially looking for - the first is safety and the second is very high returns, because you need that periodic interest income and money. Here are a few best investment options for retired individuals. They can also place the lumpsum amount here.
Senior Citizens Saving Scheme
The interest rates on these schemes have dropped dramatically in the last few quarters. From interest rates of more than 9 per cent, individuals are getting just about 8.5 per cent. This is one of the schemes that presently offers the best interest rates for senior citizens. You can avail a tax benefit of Rs 1.5 lakhs per year, under Sec 80C of the Income Tax Act, though sadly enough the interest earned is not exempted from income tax in India. There is a pre-mature withdrawal that is possible, for which you need to pay charges of 1.5 per cent before two years and 1 per cent, if you withdraw the amount after two years. A TDS would be deducted if the amount exceeds Rs 10,000.
KTDFC Fixed Deposit
Again, it is very difficult to get a fixed deposit with an interest rate of 8.50 per cent at the moment. The KTDFC fixed deposits offer you the backing of the government of Kerala. So, it is very safe, since it is a government owned institution. As usual there would be taxes on the fixed deposits, as these are not tax free instruments. There is a TDS that would be deducted if the interest income crosses Rs 5,000, unless you submit form 15G and 15H.
These are AAA rated deposits that offer good safety for the hard-earned money of retired individuals. You get an interest rate of 8 per cent on these deposits, which is again very good. At the moment public sector banks in the country give you an interest rate of only 7 per cent. So, this is not a bad deal at all. Again, like KTDFC there would be a TDS that would be applicable after an amount of Rs 5,000 earned as interest. So, do your tax planning accordingly, before considering this investment.
Post Office Monthly Income Scheme
If you are a retired individual, then you should go for this scheme, because as the name suggests, you will be able to get income every month. The interest rate on this scheme has fallen like most other government schemes and is now at 7.7 per cent per annum. This scheme does not offer you any tax benefit whatsoever. There is a penalty that is applicable, if you withdraw the scheme before one year. This scheme is suitable for retired individuals simply because it offers an individual monthly income. It is also safe since it is backed by the government. A great safe retirement investment where you can consider a lumpsum amount.
Debt Funds of Mutual Funds
You can consider some of the open ended debt funds of mutual funds, if you are looking to park your lumpsum retired money. However, we wish to state that these are very risky as compared to some of the solid government owned schemes mentioned above. Some of these funds do invest in government securities, but, they also own private sector bonds and other financial instruments.
When you are looking to invest your retirement corpus, the first thing that should be looking at is safety. After this you can look for returns and tax liability. As mentioned above, the best thing for looking at apart from interest would be the tax liability. In short, safety, returns and tax liability should be the concern, of every individual looking to invest in these schemes.