In this era of declining interest rates, options for regular income have reduced. Many investors look for regular income options on their capital. They have had a lot of impact in the era of declining interest rates for some time now.
At the moment when the country’s top banks are paying a maximum of 6% interest on fixed deposits of five to six years to senior citizens, comparatively higher interest rates on post office small savings scheme.
Investment experts, however, believe that interest rates on small savings are not going to be sustainable for a very long time. The government keeps cutting these interest rates from time to time. Although the government had previously reduced interest rates for the April-June quarter, that decision was later withdrawn.
In this environment, we are presenting five such investment options for senior citizens, so that their hard-earned income continues to bring good regular income.
1. Senior Citizen Saving Scheme (SCSS)
Senior Citizen Savings Scheme (SCSS) is a government supported savings scheme. It has been introduced for the residents of India over 60 years of age. After 5 years from the date of account opening in SCSS, the deposit matures. After this, this period can be extended for an additional 3 years.
The interest rate on SCSS has been set at 7.4% for April-June 2021. This is the highest interest rate among small savings schemes in India. Account in SCSS can be opened through public / private sector banks and post offices in India. A maximum of Rs 15 lakh can be invested in SCSS.
Income tax deduction under Section 80C of Income Tax Act, 1961 is available on investments made in Senior Citizen Savings Scheme account.
2. Post Office Monthly Savings Scheme (POMIS)
Post Office Monthly Income Scheme (POMIS) is the right investment option for senior citizens. Monthly Income Scheme (MIS) is an investment scheme run under the Union Ministry of Communications. Post Office Monthly Income Scheme (POMIS) gives higher returns than FD.
You have a fixed monthly income from POMIS. You can start investing in POMIS by depositing a minimum of 1500 rupees every month. At present, 6.6 percent interest is available on Post Office Monthly Income Scheme (POMIS).
The maturity period for the Post Office Monthly Income Scheme (POMIS) is 5 years. You can invest a maximum of 9 lakh rupees in this scheme. Even if you open a joint account with your wife or children in the Post Office Monthly Income Scheme (POMIS), you can invest up to Rs 9 lakh only.
3. PM Vayana Vandan Yojana (PMVVY)
PMVVY is a social security scheme for senior citizens. LIC is fully authorized to operate PMVVY. The scheme is a non-linked, non-participating pension scheme. The Government of India has given subsidy in this scheme.
Pradhan Mantri Vaya Vandana Yojana is a pension scheme available to senior citizens. On opting for monthly pension, senior citizens get guaranteed pension at a fixed rate for 10 years in the scheme. The scheme also offers death benefit. Under this, the purchase price is refunded to the nominee. The maximum limit of 7.75 per cent interest has been fixed in PMVVY.
Senior citizens of 60 years or more can invest in PMVVY. There is no maximum age limit. A person can invest a maximum of Rs 15 lakh in the scheme.
4. Floating Rate Saving Bond (FRSB)
Floating Rate Saving Bonds: Senior citizens can invest for 7 years in 2020. The interest rates in this scheme change every 6 months and it is given by adding 35 basis points in addition to the interest rate given on the National Savings Certificate. Interest is paid on floating rate saving bonds twice a year on 1 January and 1 July. At present, 7.15 percent interest is being given in FRSB. One problem with this scheme is that you have to pay tax on its interest when the investor is in the hands. There is no upper investment limit in this scheme.
5. Bank Fixed Deposit
Bank fix deposits have always been a popular option for investors looking for regular income. The attractiveness of bank fix deposits has decreased in the recent past as interest rates have been steadily decreasing. Senior citizens can decide the frequency of the amount that comes into their hands in advance by making a fixed deposit in the bank.
Whether they want monthly withdrawals or quarterly, half-yearly withdrawals or annually, all this can be decided in advance. At this time, most banks pay six percent interest on fixed deposits to senior citizens for a period of 5 to 10 years. Some small finance banks and cooperative banks are paying more than 7% interest on fix deposits to senior citizens.
