Page 26 - seniors today August issue
P. 26


                                        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
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