Retirement planning – 4 Ways to Invest Money After Retirement

Nutan Gupta

01 Mar 2017

People look forward to living a relaxed life after their retirement. However, in order to live a tension free life after retirement, one needs to plan for his financial well-being well in advance. One of the most important things one needs to consider after his retirement is a regular flow of income in order to maintain one’s standard of living.

Here are some investment options you can consider investing your money in after retirement.

Instrument Lock-in Period Rate of interest
Senior Citizens Savings Scheme 5 years 8.5%
Post Office Monthly Income Scheme 5 years 7.7%
Post Office Time Deposit 1-year
2-year
3-year
5-year
7%
7.1%
7.3%
7.8%
Bank Fixed Deposit 5-10 years 6%

Senior Citizens Savings Scheme

As the name suggests, senior citizens savings scheme is a scheme launched by the government of India for senior citizens. An individual aged 60 years and above is eligible to invest in this scheme. If an individual has voluntarily opted to retire at the age of 55, he is also eligible to invest. An individual can invest a maximum of Rs. 15 lakh in SCSS. Investment in SCSS qualifies for a tax deduction under Section 80C of the Income Tax Act. This scheme comes with a lock-in period of 5 years and can be extended for another 3 years after that. SCSS gives an interest of 8.5%.

Post Office Monthly Income Scheme

POMIS ensures regular flow of income after retirement. The minimum investment that an individual can make is Rs. 1,500 and he can invest a maximum of Rs. 4.5 lakh. Joint account can be opened by two or three adults. All joint account holders have equal share in each joint account. Single account can be converted into joint and vice-versa. The maximum investment amount for joint account holders is Rs. 9 lakh. This scheme comes with a lock-in period of 5 years. POMIS offers an interest rate of 7.7%.

Post Office Time Deposit

Post office time deposits are similar to bank fixed deposits. The minimum amount which an individual can invest is Rs. 200, while there is no cap on the maximum amount that can be invested. The period for which an individual can deposit in this scheme can be 1-year, 2-year, 3-year and 5-year. The interest rate for all these periods are 7%, 7.1%, 7.3% and 7.8% respectively. The investment under 5-years time deposit qualifies for a tax benefit under Section 80C of the Income Tax Act.

Bank Fixed Deposit

Bank fixed deposits are offered by all the banks - public and private. As these deposits are offered by banks, they are safe in nature. Banks offer a rate of interest of 6% to senior citizens for a term of 5 years up to 10 years. Senior citizen fixed deposit also qualifies for a tax deduction under section 80C of the Income Tax Act.

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mutual-fund

Why to Choose Mutual Funds Instead of Directly Investing Into Equities?

Whether to invest in equities or mutual funds is a question that has plagued every investor. As someone who needs the best value for his/her investment should you invest in equity directly or via mutual funds?

Let’s start by first understanding what these two terms ‘equities’ and ‘mutual funds’ stand for-

Equities- Equities generally represent ownership of a company. If you own any equity in a company, you are a part owner of the said company (depending on how much equity you own).

Mutual Funds – It is an investment scheme which is professionally managed by an asset management company. It pools together the resources of a group of people and invests their money in equities, debentures, bonds and other securities.

Why choose mutual funds over equities?

For people who’ve never invested in either stocks or mutual funds, it is hard to know which is better and where to start. Broadly speaking, if you are a novice investor, mutual funds are not only less risky but also way easier to manage. Here are some ways in which investing in mutual funds is beneficial as opposed to investing in equities -

Diversification

Mutual funds provide more diversification as compared to an individual equity stock. When you invest in equity, you are investing in a single company which has its inherent risk. For example, if you invest Rs.20,000 in buying equities of one company, you could face a total loss if that particular company performs poorly in the market.  

If you invest the same amount in mutual funds, it will be invested in different kinds of stocks and financial instruments, high-risk and low-risk both, so you might not face total loss even if one company does poorly.

Scale of Investment and Lower Costs

For an individual investor buying and selling stocks is a difficult task due to its high price. Thus, any gains made from stock appreciation are nullified if the overall trading costs are considered. Comparatively with mutual funds, as the money is pooled from a large number of investors, the cost per individual is lowered.  

Another advantage of mutual funds is that you don’t need to invest large sums of money. Buying equities for a profitable venture needs huge amounts of money, a minimum of few lakhs. With mutual funds, you can start with Rs.1000 and earn profits on that as well.

Convenience

Keeping an eye on the markets everyday is a time-consuming business, especially if you are investing as a side gig. There are people who spend their lives studying the market and still end up sustaining heavy losses. Though investing in mutual funds does not guarantee high returns, it is stress-free and needs less work as compared to investing in equities.

To sum it up

It is important to remember that mutual funds have their own disadvantages as well. Thus, as with any financial decision, educating yourself and understanding the suitability of all the available options is the ideal way to invest. 


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Retirement planning – 4 Ways to Invest Money After Retirement

Nutan Gupta

01 Mar 2017

People look forward to living a relaxed life after their retirement. However, in order to live a tension free life after retirement, one needs to plan for his financial well-being well in advance. One of the most important things one needs to consider after his retirement is a regular flow of income in order to maintain one’s standard of living.

Here are some investment options you can consider investing your money in after retirement.

Instrument Lock-in Period Rate of interest
Senior Citizens Savings Scheme 5 years 8.5%
Post Office Monthly Income Scheme 5 years 7.7%
Post Office Time Deposit 1-year
2-year
3-year
5-year
7%
7.1%
7.3%
7.8%
Bank Fixed Deposit 5-10 years 6%

Senior Citizens Savings Scheme

As the name suggests, senior citizens savings scheme is a scheme launched by the government of India for senior citizens. An individual aged 60 years and above is eligible to invest in this scheme. If an individual has voluntarily opted to retire at the age of 55, he is also eligible to invest. An individual can invest a maximum of Rs. 15 lakh in SCSS. Investment in SCSS qualifies for a tax deduction under Section 80C of the Income Tax Act. This scheme comes with a lock-in period of 5 years and can be extended for another 3 years after that. SCSS gives an interest of 8.5%.

Post Office Monthly Income Scheme

POMIS ensures regular flow of income after retirement. The minimum investment that an individual can make is Rs. 1,500 and he can invest a maximum of Rs. 4.5 lakh. Joint account can be opened by two or three adults. All joint account holders have equal share in each joint account. Single account can be converted into joint and vice-versa. The maximum investment amount for joint account holders is Rs. 9 lakh. This scheme comes with a lock-in period of 5 years. POMIS offers an interest rate of 7.7%.

Post Office Time Deposit

Post office time deposits are similar to bank fixed deposits. The minimum amount which an individual can invest is Rs. 200, while there is no cap on the maximum amount that can be invested. The period for which an individual can deposit in this scheme can be 1-year, 2-year, 3-year and 5-year. The interest rate for all these periods are 7%, 7.1%, 7.3% and 7.8% respectively. The investment under 5-years time deposit qualifies for a tax benefit under Section 80C of the Income Tax Act.

Bank Fixed Deposit

Bank fixed deposits are offered by all the banks - public and private. As these deposits are offered by banks, they are safe in nature. Banks offer a rate of interest of 6% to senior citizens for a term of 5 years up to 10 years. Senior citizen fixed deposit also qualifies for a tax deduction under section 80C of the Income Tax Act.

Have Referral Code?