For senior citizens, getting fixed monthly flow to deal with expenses during the sunset years is the prime concern and with FD rates falling, what recourse they have here we will delve on the issue:
Now with return needed on your life-long savings what you also require is appreciation of capital, this is to support the inflation rate that keeps growing.
FD rates to remain lower for some time more:
With no dearth on the liquidity front, banks are no more motivated to extend that extra for gaining investors' money. Lakshmi Iyer, CIO of Debt & Head (Products) at Kotak AMC says, "The Indian banking system is currently flush with liquidity, close to about Rs 7 lakh crore. Because of this sluggish economic phase, the credit off-take of the banking system is in low single digits. While the accretion in the form of bank fixed deposits is in reasonable high double digits. That itself is suggesting that the bank deposit rates are unlikely to rise anytime in the near future."So as experts while following investments with sovereign backing, you even cannot ignore the equities as is the scenario now:
So, here are investment options suggested to support you in your retired life:
1. SCSS or Senior citizens savings scheme:
These earn a higher return than the bank deposits, which for a 5-10 years is fetching 5.4% return per annum from SBI. The return on the scheme is 7.4% and the maximum limit of investment per person is Rs. 15 lakh. Also, the interest in case of SCSS is paid out quarterly.
2. Government Floating rate Bonds:
These bonds with a maturity of 7 years will fetch 7.15% bi-annually and the interest earned on the scheme shall be taxed as per your slab rate. These have been launched after RBI 7.75% savings bonds were withdrawn considering the low interest rate regime
3. Post office MIS scheme:
It fetches the highest rate of return and 7.6% per annum and is payable on a monthly basis. This scheme, like other post office schemes, is recognized and validated by The Ministry of Finance and hence is highly safe in nature.
4. Staggered investment in equities via mutual funds (may be direct plans or some likely conservation options say liquid funds )
Though it shall be not an easy take for a novice equity investor but staggered route can still be taken i.e. 20% of the person's savings can be deployed into equities may be via direct plans or liquid funds and then spread it over the next 24 months.
5. Corporate and NBFC fixed deposits can be looked upon for short term duration:
For short term, seniors can also mobilize their funds with corporate or NBFCs or even small finance banks for that matter to earn a higher return.