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Best Investment Options for Senior Citizens
Fixed deposits are popular among senior citizens because they are safe and secure. However, there may be better options regarding returns and growth potential. As every person wants a peaceful post-retirement life journey, investing in high-risks can be somewhat a debatable thing. But going with an amalgam of choices that touches upon low-risk, mid-risk and high-risk can be an ideal combination for the investor.
Alternative Options to Fixed Deposits for Senior Citizens
Senior Citizen Savings Scheme (SCSS) − Backed by the government, this scheme is specially designed for senior citizens. It offers an attractive interest of up to 7.4%, which is paid quarterly. The limit of investment for this scheme is Rs. 15 lakhs, and the tenure is five years, which can be extended by another three years.
Pradhan Mantri Vaya Vandana Yojana (PMVVY) − This scheme is headed by the government and offers a guaranteed return of 7.4% annually for ten years. The limit of investment for this scheme is Rs. 15 lakhs, and the returns are paid out monthly. The scheme is considered safe and secure, and ensures guaranteed returns.
Mutual Funds − This investment option is very popular amongst senior citizens as it provides high returns.
Various types of mutual funds cater to different investment goals and risk profiles. Equity mutual funds provide very high returns but are not recommended as high risk is included. Debt mutual funds are more stable and even provide stable returns in the long run. A mix of both equity and debt can do the trick, resulting in portfolio diversification, which can be a healthy investment option for senior citizens.
Annuity Plans − This is another investment option providing regular income to senior citizens. They are insurance policies that provide regular payments to the policyholder for a specified period or the rest of their life. These plans can be customised to suit the policyholder's needs and provide a regular income source for the policyholder's lifetime.
Reasons Senior Citizens Should Consider Investing in Other Avenues
There are several reasons why senior citizens should consider investing in other avenues besides fixed deposits. Inflation is one of those reasons, as it can impact the purchasing power, savings, and investments over time.
Beats Inflation − One of the primary reasons why senior citizens should consider investing in other avenues is inflation. Fixed deposits can’t alone offer higher returns in this scenario. Therefore, investing in other financial options can aid in generating inflation-beating returns.
Build a Retirement Corpus − As senior citizens, having a retirement corpus to support us for the rest of our lives is important.
Diversify Investments − If you want to minimize risk and maximize returns, diversification can help you. One can start doing that by investing in multiple options like bonds, mutual funds or stock, etc.
Achieve Financial Goals − Investing in other avenues can help you to achieve your financial goals much quicker than putting all eggs in one basket. Whether you’re saving for a child's education, buying a house, or funding a vacation, having different investment options in hand let you achieve your goals in no time.
Increase Wealth − Investing in other avenues can also increase wealth over time. Although fixed deposits provide you stable returns with less risk, you should still invest in other avenues to earn higher returns in the long run.
Customise Investment Portfolio − Other avenues allow senior citizens to customise their investment portfolios to match their risk profile, investment goals, and financial needs. Choosing an investment option that aligns with our financial goals and matches our risk tolerance is important.
Regular Income − Investment options such as annuity plans can provide regular income for senior citizens for a specified period or the rest of their life. These plans can be customised to suit the policyholder's needs and provide a regular source of income for their lifetime.
Senior citizens should consider investing in other avenues besides fixed deposits to beat inflation, build a retirement corpus, diversify their investments, achieve their financial goals, and increase their wealth. Choosing an investment option matching your risk profile, goals, and financial needs is important. Diversifying your investments can also minimise risk and maximise returns.
Q1. What should be the best options for investment for senior citizens?
Ans. The best investment options for senior citizens include mutual funds, stocks, bonds, annuity plans, and real estate.
Q2. Why should senior citizens invest in other avenues besides fixed deposits?
Ans. Senior citizens should invest in other avenues besides fixed deposits to beat inflation, build a retirement corpus, diversify their investments, achieve their financial goals, increase their wealth, customise their investment portfolio, and receive regular income.
Q3. Are any risks associated with investing in other avenues besides fixed deposits?
Ans. Investing in other avenues apart from fixed deposits is risky.
The returns on mutual funds, stocks, or bonds are variable depending on the market. Choosing an investment option that aligns with our financial goals and matches our risk tolerance is important.
Q4. Can senior citizens invest in real estate?
Ans. Yes, senior citizens can invest in real estate. They can buy any property or invest in Real Estate Investment Trusts (REITs). Real estate can provide stable returns over the long term and help fight inflation.
Q5. How can senior citizens choose the best investment option for their needs?
Ans. Senior citizens should consider their financial goals, risk tolerance, and investment time horizon when choosing the best investment option for their needs. Financial advisors can also be consulted to get clarity on making the right investment.
Q6. How do annuity plan work?
Ans. Annuity plans are insurance policies that provide regular payments to the policyholder for a specified period or the rest of their life. The policyholder makes a lump-sum payment, and the insurance company provides regular payments to the policyholder in return.
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