Page 26 - seniors today August issue

Money

Invest Wisely and Well

In the second part of our series on Financial Planning,
Deepak Gagrani takes readers through the pros and
cons of various investment strategies

As we discussed in the previous edition, it is years, once the scheme matures.
important for senior citizens to have a well- •Premature withdrawals are allowed only after
defined investment strategy aligning their goals the first year of investment and will attract
and objectives with their risk profile. An ideal penal charges upto 1.5% of the invested amount.
portfolio has to generate both regular income •Principle amount invested upto INR 1.5 lakhs
and growth, depending on each investor’s is eligible for tax benefits under Section 80C.
requirements. However, interest received is taxable.
A senior citizen has a wide array of choices Positives
available when it comes to investing. In addition •A superior product compared to bank FDs in
to traditional bank FDs, small savings schemes terms of higher returns and safety as it is backed
like PPF, NSC etc, one can explore the following by sovereign guarantee on the entire amount
key investment avenues depending on their (unlike bank FDs, wherein only INR 1 lakh per
investment horizon and goals to be achieved. bank is insured).
•Ideal for investors who are looking for a fixed
1. SENIOR CITIZENS SAVINGS periodic payout and may not need the principal
SCHEME amount for foreseeable future.
Key Features Limitations
•Government sponsored investment scheme •Returns are taxable and hence not tax-efficient
and hence one of the safest and most reliable •Relatively less liquid
investment options.
•Senior citizens of India aged 60 years or above 2. PRADHAN MANTRI VAYA
or early retirees in the age bracket of 55-60 can VANDANA YOJANA
invest. NRIs and HUFs are not allowed to invest Key Features
in this scheme. •Pension scheme announced by Government
•Maximum investment amount restricted to of India for senior citizens aged 60 and above
INR 15 lakhs. and is currently available upto 31st March
•Currently, the interest rate is 8.6% p.a., payable 2020. The scheme is operated by Life Insurance
quarterly. The interest rates are set each quarter Corporation (LIC) of India only.
and linked to the prevailing g-sec rates. Once •Maximum investment amount restricted to
invested, the rates remain fixed for entire INR 15 lakhs.
tenure. •Assured interest rate of 8% p.a., payable
•5-year tenure, which can be extended by 3 monthly / quarterly / half-yearly / yearly as