Options for Seniors to Earn Regular Low Risk Income


NEW DELHI: Many older people need a regular income. There are options that can help a senior maintain a simple, secure, liquid, tax-efficient, and manageable income portfolio.

Here are some of the options.

1) Seniors Savings Plan (SCSS): You can invest 15 lakhs in SCSS which is a product of five years extendable by three additional years. Interest rates are currently 7.40% per annum. You can opt for quarterly payments. It can be purchased from most public sector banks or Indian post offices.

2) Pradhan Mantri Vaya Vandana Yojana (PMVVY): So it’s a 10 year product. We can invest up to 15 in this diagram. Interest rates are currently 7.40% pa Opt for monthly payments. It can be purchased at most branches of Life Insurance Corp or online.

3) RBI variable rate bonds: invest 15 lakhs or more in RBI floating rate bonds. It has a six-year lockdown for citizens over 60 (over 70 – 5 and over 80 – 4). Interest rates are currently 7.15% per annum and are only paid semi-annually.

4) About 10-25% of total savings can be placed in bank accounts for liquidity-related purposes, said Naveen Rego, registered investment advisor at Sebi.

5) About 1.50 lakh can be invested annually in tax saving fixed deposits or national postal savings scheme to reduce taxable income under Section 80C.

“The above wallet is suitable for the elderly whose financial portfolio is less than 75 lakhs to 1crore and one has no other income from pensions and rents. As most of these instruments give a return of 7% per annum and more according to a rough estimate, 1 crore invested in the above strategy would yield approximately 55,000 income per month and that too without taxes or tensions, ”said Rego.

“The elderly get 50,000 deduction under section 80TTB and 1.50 lakhs under Sec 80C. This would contribute to tax efficiency. My belief is that there is no need to have market related product complications in such portfolios, regardless of the returns one gets from competing products. Let need (and not greed) be the main driver in building this portfolio, ”he added.

Other points to note:

“Seniors with larger financial portfolios, over Rs75 lakh-1 crore) and / or with other large incomes (like rentals / pensions) should look at portfolios of stocks, mutual funds and REIT in addition to the above for the best benefits. Here too, with good planning, one can balance security, liquidity, regular income and tax efficiency, ”Rego said.

One can avoid annuity plans from insurance companies because the returns are quite low.

Avoid real estate investments as they are illiquid and generate low rental income.

Avoid unregulated diets and get rich quick. There is nothing like high returns and low risk.

Submit Form 15G to the relevant institutions if you have no taxable income. This will reduce the impact of withholding tax (TDS).

No need to have a life insurance plan. Mutuals are compulsory but beware of exclusions. Keep cash on hand for emergencies.

Have valid nominations and an appropriate will.

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