Invest in mutual funds
Mutual funds are becoming increasingly popular in India. As an investment option though it is riskier, it nevertheless has a tendency to give more returns. A debt oriented mutual fund is more advisable for retirees, since it has a track record of giving stable returns.
There are specific retirement income funds which are based on debts. These retirement income funds have monthly payment schemes due to their higher liquidity. You can also avail many tax rebates if you invest in mutual funds. In case of exigencies, you can withdraw both the principal amount and the interest earned.
Post office monthly income scheme (POMIS)
Many people often wish to have a monthly scheme which enables them to sustain life after retirement. In such a scenario, POMIS offers ideal benefits. In this scheme, you can invest up to Rs 9 lakh in joint accounts and Rs 4.5 lakh in a single account.
The government fixes the interest rate which ranges from 7 to 9%. Though your interest earned is taxable, you can easily manage to get monthly payouts from your savings account.
This is the most traditional option for a retiree to earn money. Almost every bank offers higher interest rates for senior citizens; the difference ranges from 0.25% to 0.75% compared to regular fixed deposits. You can search for higher interest rates and can rest assured since Bank FDs give fixed returns.
However, interests are taxable. In case you want to save tax, then you can choose tax saving FDs. There are some companies which also offer fixed deposits. Generally, they tend to offer more interest rates than banks, but are riskier.
Public provident fund (PPF)
Many major banks and post offices offer PPF. PPF is a time-tested investment option available for those who are thinking about increasing their retirement income. One of the biggest advantages of PPF is that it is completely tax-free.
The interest earned is tax free and the returns are also assured. It is also very safe since it is a Government of India initiative. The money that you invest in PPF has to be maintained for a period of 15 years. You can withdraw 50% of the accumulated corpus after completing 5 years.
Explore Various Mutual Funds here.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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