Invest Wisely and Well

Investment Advise - Seniors Today

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 important for senior citizens to have a well-defined investment strategy aligning their goals and objectives with their risk profile. An ideal portfolio has to generate both regular income and growth, depending on each investor’s requirements.

A senior citizen has a wide array of choices available when it comes to investing. In addition to traditional bank FDs, small savings schemes like PPF, NSC etc, one can explore the following key investment avenues depending on their investment horizon and goals to be achieved.


• Government sponsored investment scheme and hence one of the safest and most reliable investment options.
• Senior citizens of India aged 60 years or above or early retirees in the age bracket of 55-60 can invest. NRIs and HUFs are not allowed to invest in this scheme.
• Maximum investment amount restricted to INR 15 lakhs.
• Currently, the interest rate is 8.6% p.a., payable quarterly. The interest rates are set each quarter and linked to the prevailing g-sec rates. Once invested, the rates remain fixed for entire tenure.
• 5-year tenure, which can be extended by 3 years, once the scheme matures.
• Premature withdrawals are allowed only after the first year of investment and will attract penal charges upto 1.5% of the invested amount.
• Principle amount invested upto INR 1.5 lakhs is eligible for tax benefits under Section 80C. However, interest received is taxable.


•Pension scheme announced by the Government of India for senior citizens aged 60 and above and is currently available upto 31st March 2020. The scheme is operated by Life Insurance Corporation (LIC) of India only.
•Maximum investment amount restricted to INR 15 lakhs.
•Assured interest rate of 8% p.a., payable monthly / quarterly / half-yearly / yearly as chosen by the investor.
•10 year tenure, which can be extended by 3 years, once the scheme matures.
•Premature withdrawals are allowed only in case of any critical/terminal illness of self or spouse with a penalty of 2%.
•Interest received is taxable.

•Higher fixed returns and safe as it is backed by Government of India.
•Ideal for investors who are looking for a fixed periodic payout and may not need the principal amount for 10 years.

•Returns are taxable and hence not tax-efficient
•Illiquid, except in case of medical emergencies


•Professionally managed by SEBI registered Asset Managers. These funds invest in various debt instruments such as guests, corporate bonds, debentures, etc
•Investment can start from a minimum of INR 100 and there is no restriction on the maximum amount.
•Different categories of funds available for different time horizons and different risk profiles. It can be as small as overnight up to funds suitable for 7 years above.
•Returns vary, depending on the type of fund and are subject to prevailing interest rates and credit cycle. Typically they offer better returns compared to other similar time horizon debt products.
• Open-ended Debt Mutual Funds can be redeemed anytime, though there may be a charge in select funds for withdrawal before the minimum investment term.
• Returns are eligible for indexation benefits under income tax laws if redemption is made beyond a period of 3 years and is taxed at a preferential rate as long term capital gains.

• A superior product compared to corporate FDs, as risk is diversified across different corporates and the merits of investments are managed by professional teams.
• Highly liquid
• Tax efficient. Indexation and preferential rate (in case of long term capital gains) significantly reduces the tax liability and has to be paid only at the time of redemption, thereby making it one of the most tax-efficient debt investments.
•Ideal for investors in the high tax slabs or investors who are not looking at fixed returns. There may be some volatility in returns but effectively, it is one of the best modes of taking exposure to debt instruments.

•Returns are not fixed and may be subject to interest & credit risk


Key Features
•Like Debt Mutual Funds, Equity MFs are professionally managed by SEBI registered Asset Managers and it is one of the cheapest modes of taking equity exposure
•Investment can start from a minimum of INR 100 and there is no restriction on the maximum amount.
•Different categories of funds available which is suitable for an investment horizon of at least 5-7 years and above.
•Returns vary, depending on the equity market performance.
•Returns up to INR 1 lakh per annum is tax-exempt. Returns in excess of INR 1 lakh p.a. for investments held for more than 12 months are taxable @ 10%.

•A superior product considering professional management, small ticket size and lower costs.
•Ideal for investors who may not be adept to track equity markets themselves diligently and has a time horizon of more than 5-7 years to stay invested.

•Returns are not fixed and may be subject to equity market risk. Equities in short term may be extremely volatile and hence not suitable for short-term investments

It is important to reiterate the importance of sound financial planning at this stage of life, as any money mistake did may not have enough time to be reversed. It is recommended that one takes qualified professional help to ensure that their financial goals and objectives are achieved. One has to remember that “An individual retires; their money has to continue to work for them.”

Happy Investing!!!

About Deepak Gagrani

Deepak Gagrani is a Chartered Accountant by qualification and has set up Money Mint Mantras Solutions, a niche financial services firm ( He can be reached at and via telephone at +919820153269

View all posts by Deepak Gagrani

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