Dividend paying stocks to FDs: Best fixed income investments for senior citizens

Manish P Hingar said “While retirement gives you much-needed time, having the necessary savings is essential to sustain your retirement dreams. So, here are some of the most reliable investment options for senior citizens in India that can help you make your retired life the life of your dreams.

Fixed income investments for senior citizens according to CA Manish P Hingar

A) Dividend paying stocks: Some stocks pay dividends on a regular basis, and these dividends can provide steady income. Dividend-paying stocks can be a good choice for those looking for regular income, but it’s important to research companies carefully and consider the potential risks of investing in the stock market.

B) bonds: Bonds are debt securities issued by companies, municipalities, and other organizations. When you buy a bond, you lend money to the issuer in exchange for paying interest and returning the principal at the end of the bond’s term. Bonds are generally considered less risky than stocks, and they can be a good option for those looking for a more stable source of income.

C) Annuities: Annuities are insurance products that provide a guaranteed stream of income for a specific period of time. There are several different types of annuities, and they can be an attractive option for those looking for a guaranteed source of income in retirement. However, it is important to thoroughly understand the terms and conditions of an annuity before purchasing.

D) Bank fixed deposits (FDs): FDs are a popular choice for senior citizens as they offer a fixed rate of interest and provide a regular stream of income through periodic interest payments. FDs are available for different tenures, and the interest rate offered may vary depending on the bank and the length of the deposit.

E) Renting a property: If you own a rental property, you can generate a regular stream of income by renting it out. This can be a good option for those who have property that is not being used and want to generate additional income. However, it is important to carefully consider the potential risks and responsibilities of a landlord before taking this step.

F) Senior Citizen Savings Scheme (SCSS): It is a government-backed savings scheme specifically designed for senior citizens. It offers a fixed interest rate, which is currently 7.4% per annum and has a maximum investment limit of ₹15 thousand. The investment can be made in one’s name or jointly with a spouse.

G) Post office monthly income scheme (POMIS): This is a savings scheme offered by the Indian postal department that offers a fixed interest rate, currently at 6.6% per annum, and pays a regular income to the investor through monthly installments. The maximum investment limit for an individual is ₹4.5 lakh, while the maximum limit for a joint account is ₹9 lakhs.

H) PMVVY (Pradhan Mantri Vaya Vandana Yojana): It is a pension scheme launched by the Government of India in 2017. It is designed to provide financial security to senior citizens by offering a guaranteed pension every month. The program is open to individuals aged 60 and over, and the pension is paid monthly for 10 years. To join the scheme, individuals must make a one-time investment in the form of a purchase price, which is paid at the time of enrolment. The pension amount is based on the purchase price and is paid by the individual every month for the duration of the policy. The scheme is administered by the Life Insurance Corporation of India (LIC).

It is important to carefully evaluate the suitability of each option based on your financial goals and risk tolerance before making a decision. It’s also a good idea to seek professional financial advice to ensure you’re making the most appropriate investment choices for your specific needs.

Fixed income investments for senior citizens like Vivek Banka, Founding Team of GoalTeller

Senior citizens and individuals above the age of 60 should be careful while planning their investments. We hear many stories at night about this section of people who have been victims of mis-sold insurance policies where money has been locked away and individuals have suffered a huge liquidation collapse. .

Some basic investment options/strategies are simple for such individuals (assuming here that a large section of these individuals will fall in the lower tax brackets due to lower sources of income)

Fixed Deposits – A very simple but effective way to invest safely. Investors here need to make large deposits so that they can withdraw some when needed. One can also opt for interest payment option for regular liquidity.

High quality Corporate Bonds – A high-quality corporate bond that pays regular interest is a good bet where liquidity and safety can be achieved. However, one should be very careful while deciding the company they are buying the bond from and not just rely on the ratings.

Equity + Fixed Deposits + Liquid Funds – In such a strategy, one can look at deploying some amount in equities, some in fixed deposits and some in liquid funds that take care of their liquidity needs. This strategy generates higher returns than others but evaporates more quickly than others.

Disclaimer: The views and recommendations made above are those of individual analysts or broking firms, and not of Mint. We advise investors to check with certified experts before making any investment decision.