Senior citizens, especially those who are retired tend to look for safety as well as returns. There is also a tendency to place money, where there is a regular payment of interest. Here are a few options for senior citizens, considering interest rates and safety. We have avoided recommending riskier investments like mutual funds and equities.
1. The Senior Citizens Saving Scheme
The Senior Citizen Savings Scheme offers an interest rate of 7.4 per cent per annum, payable on March 31, June 30, Sept 30 and Dec 31.
The interest rate of 7.4 per cent is the best in its class. In fact, bank deposits are offering senior citizens an interest rate of 6 per cent or thereabouts. ICICI Bank offered a new scheme for senior citizens, where the interest rate was just 6.55 per cent.
An individual of the Age of 60 years or more may open the account. However, if an investor of the age of 55 years or more but less than 60 years has retired on superannuation or under VRS can also open account subject to the condition that the account is opened within one month of receipt of retirement benefits. This is a government backed scheme and is hence very safe.
2. Post Office Monthly Income Scheme
For senior citizens looking at monthly income, this is not a bad bet. In fact, the interest rates are much better than what banks in the country are offering. The interest rate is 6.6 per cent, that is paid every month. However, the only problem is that the maximum amount that one can invest under the scheme is Rs 4.5 lakhs for a single account and Rs 9 lakhs for a joint account.
The scheme runs for a period of 5 years and nomination facility is also available for the same. Once again, the scheme is extremely safe, as it is backed by the Government of India. However, interest rates have fallen over the last 1 year and this is reflected in this scheme as well.
3. LIC Housing Finance Fixed Deposits
The company offers an interest rate of 7 per cent on a 1 and 2 year deposit, while the 3-year deposit, fetches an interest rate of 7.10 per cent.
The deposits are rated as FAA by Crisil and are hence secure. The company is also majority owned by LIC, which makes the investment strong.
It's important to remember that in the case of company deposits, there would be a TDS that is applicable if the interest amount exceeds Rs 5,000. You need to plan your investments accordingly.
4. ICICI Bank Special FD scheme
ICICI Bank recently introduced a special FD scheme for senior citizens. The scheme offers interest rate of 6.55% to senior citizens, and is available on new FDs and renewal of Fds.
‘ICICI Bank Golden Years FD', is available from May 20 to September 30, 2020 only. This deposit is safe, but, the interest rates is way below what the Senior Citizens Saving Scheme offers.
The one good feature is that the amount that his is applicable on a single FD amounting to less than Rs. 2 crore.