In the purview of the COVID-19 pandemic, the economy has taken a massive hit. Even as several people in India have lost jobs and are facing lower income due to the lockdown measures, the bank interests are falling too. In such a scenario, the investors who are looking to get fixed income from their deposits are hit the most.
Today, most of the nationalised banks are offering return about 5.5% for all deposits. And, even though the senior citizens may have scrapped through the falling interest rate scare, the situation could only be temporary. The Reserve Bank of India recently hinted that the interest rates for all kinds of deposits may fall in the time to come.
So, as a senior citizen, you may be wondering, where to invest your money to get a regular income and manage the household expenses? Here are some of the best investment plans that you can consider having in your portfolio.
Senior citizen savings scheme (SCSS)
The senior citizen savings scheme is backed by the government of India and it is essentially a small-to-medium term scheme with a lock-in period of five years. You can withdraw the amount after five years or continue to invest and renew the account in a block of three years.
You can open more than one SCSS account, however, total investment in all the account is limited to Rs. 15 lakhs. Also, you can start the SCSS account with investment as low as Rs. 500 per month, and invest more as you progress in your career and get higher income. This makes it an ideal investment choice for all.
One of the most significant reasons why many senior citizens prefer investing in this scheme is that it assures capital safety and provides fixed returns. Currently for the period (April to June 2021), the interest rate for SCSS is about 7.4% per annum and the interest is paid quarterly.
Bank Fixed Deposits (FDs)
The bank FDs have been one of the most popular investment choices for most Indians since a long time. The bank FDs are highly flexible, you can choose the investment term as per your needs; the deposit period can range from six months to 10 years or more. Also, most banks give you the flexibility to choose the interest pay out mode. You choose to receive the interest returns monthly, quarterly, semi-annually or annually.
While the Bank FDs offer complete capital safety and fixed returns, the interest rate may differ from bank to bank. While some of the nationalised banks offer interest ranging from 5-7% for the senior citizens, some of the small finance banks offer higher interest rate ranging from 7% to 9%.
Floating Rate Savings Bonds
This is probably one of the lesser-known investment plans for senior citizens. These bonds typically have an investment term of seven year and the interest paid is on a floating rate basis. This means the interest rate varies throughout the deposit period. The coupon for the first coupon period payable on January 1, 2021 was fixed at 7.15 percent.
Apart from the above-mentioned investment plans, there are plenty of other schemes that provide regular income for senior citizens. It is advisable to diversify your portfolio, i.e., you must invest a small amount in different plans to reduce risk and get attractive returns.