If you are a retired individual, who is looking at regular income, you need to look for fixed income yielding instruments. Apart from this the penchant to take risk is "zero", which means these instruments should be safe. Here are a list of 5 safe instruments that can yield good interest rates for retired individuals.
TN Power Finance
For senior citizens, Tamil Nadu Power Finance and Infrastructure Development Corporation offers an interest rate of 8.75 per cent under the cumulative scheme and also under the monthly income scheme. For the annual interest scheme, the interest rate is as high as as 9.11 per cent.
The company is a government of Tamil Nadu owned entity and hence the deposits are relatively safe. There would be a TDS that is applicable if the interest rate crosses Rs 5,000 or more. For other category of investors the interest is lower at around 8.25 per cent. The yield, however, is higher depending on the tenure.
Senior Citizens Saving Scheme
The Senior Citizens Saving Scheme is also a good bet for retired individuals. The interest rate on this at the moment is 8.60 per cent, which is way higher than what banks are offering.
The interest is not exempt from tax, though there would be Sec80C benefits that accrue for individuals.
We strongly recommend this scheme, also because it is very safe. The maturity period for the scheme is 5 years and you can withdraw the deposit early, however, there would be penalty levied for early withdrawal from the scheme.
This is for an individual, who has attended 60 years of age, but those more than 55 years can also invest, provided they have attended super annuity.
KTDFC is again a government owned entity, this time owned by the Government of Kerala. The NBFC offers an interest rate of 7.75 per cent on its 1, 2 and 3 years. Fixed deposits of upto Rs 4,000 crores are guaranteed by the government of Kerala. The deposits are very safe, given the assurance from the government of Kerala. The interest rate on this deposit may not be the best, but, it nonetheless offers safety. One would need to apply for the same by contacting the company, as we understand that many brokers are not accepting this deposit. All of the above three mentioned are government owned entities.
Mahindra Finance offers an interest rate of 9 per cent for those opening online. the deposits are rated AAA and are hence very safe. Retired individuals can go for this scheme as they are relatively safe.
However, it is important to note that the interest rates on the physical deposits are slightly lower at 8.85 per cent. Hence, investors can consider the online option for investments. Interest of more than Rs 5,000 will be subject to a tax deducted at source.
Fixed deposits of Bajaj Finance
The fixed deposits at Bajaj Finance offer you an interest rate of 8.95 per cent for senior citizens, which is pretty decent. The deposits are rated as AAA by both ICRA and Crisil. The minimum deposit under the scheme is Rs 25,000.
Investors can opt for this scheme by investing in the same for a slightly longer tenure.