Safe Investment Options For Senior Citizens In Uncertain Times

With ample liquidity at hand, banks will no longer have the nudge to increase rates on conventional investment options such as savings account and fixed deposit. And apart from such instruments which though may not be adequate to meet your present needs, you may consider these options for investment which indeed are safe as well:

1. Senior Citizen Savings Scheme:

For regular returns the instrument offers 7.4% return that is paid out quarterly. Also, given the current uncertain time, a proposal is being made to not levy tax on interest earned on SCSS.

The maximum deposit allowed in the account is Rs. 15 lakh with pre-mature withdrawal facility with a penalty of 1.5%.

Also, the investment in SCSS can be claimed for tax deduction under section 80C to a maximum of Rs. 1.5 lakh in a year.

2. Pradhan Mantri Vaya Vandana Yojana (PMVVY):

Risk averse senior citizens with a tenure of next 10 years can consider investment in this govt. backed scheme and get a return of 8.3%. For different pay-opt option, the rate shall be as following:

For maximum pay out of Rs. 10000 per month, investor can deposit a maximum of Rs. 15 lakh in the instrument.
The sole distributor of Pradhan Mantri Vaya Vandana Yojana is Life Insurance Corporation (LIC) of India.

3. GOI Taxable savings bonds:

Investors can also consider safe government backed bonds with no risk to capital. The interest on these is charged as per the investor's tax slab. There is no upper limit for investment in 7.75% government bonds. For senior citizens there is leeway in the lock in period i.e. is six, five and four years, respectively, for investors in the age bracket of 60-70 years, 70-80 years and above 80 years

4. FDs and Corporate Fixed deposits:

These can too be considered despite interest rates going down. Notably as per section 80TTB of the income tax, for this category of investors, interest up to Rs. 50000 per year will not attract any taxation implication. Also, safe corporate deposits such as of Bajaj Finance can also be considered.

5. Tax free bonds:

Those in the high income tax bracket may also consider investment in tax free bonds that are also available on the secondary market, but can be available at a premium because of the declining interest rates. Some of the PSUs offering these bonds include IRFC, PFC, NHAI, HUDCO, REC, NTPC, NHPC and Indian Renewable Energy Development Agency (IREDA). Typically these are long term of between 10-20 years, but the investment can be liquidated in the secondary market.