Investment Options for the Retired to Create a Balanced Portfolio

Retirement marks the end of your working days and the start of a new phase of life. It is time to explore new things and devote more time to your family and hobbies.  You are now dependent on your life’s savings for all your daily as well as contingency expenditures. But, with smart investment planning, you can maintain your lifestyle.  

Little wonder, financial experts focus on retirement planning for people of all age groups. The idea of financial planning is to invest in a mix of investment product that not only helps you generate attractive returns but also minimize your tax outgo. If you are seeking for professional financial advice, check pensions advice uk.

But, once you cross the age of 60, here are some of the schemes you can choose. 

1. Senior Citizens Saving Scheme (SCSS)

One of the most preferred options among retirees, SCSS is a government-sponsored, non-cumulative fixed deposit (FD) scheme offered by banks and post office. SCSS has a maximum investment limit of Rs. 15 lakh.

SCSS has a lock-in period of 5 years, extendable once only for three years. The interest rate offered on SCSS is higher (8.6% in July-September quarter) compared to fixed deposits of same tenure. The interest is calculated quarterly and paid to the beneficiary at the end of each quarter.

2. Fixed Deposits

Bank FDs are most popular among senior citizens, as it offers the security of capital and guaranteed returns. Moreover, banks have the highest fixed deposit interest rates for senior citizens, which is generally 0.5% higher compared to regular citizens.

The depositor also gets the flexibility to choose the deposit tenure ranging from 7 days to 10 years, enjoy premature withdrawal facility, and benefit of tax saving. Banks offer around 7% fixed deposit rates on deposits of longer tenure, which is pretty attractive given the uncertain and volatile market condition.

3. Mutual Funds

Investing a part of your income or retirement corpus in equity or debt mutual funds through a SIP or lumpsum will help you get higher inflation-adjusted returns. 

Compared to fixed deposits, mutual funds have higher tax benefits and also adds to the diversification of the portfolio.

However, mutual funds are subject to market risk and one should invest according to their risk profile.

4. Post-Office Monthly Income Scheme

The scheme operated by the Post Office offers 7.6%  per annum interest rate on the deposit payable monthly and has a maturity period of 5 years.

An individual can invest a maximum amount of Rs 4.5 lakh in a single account and Rs 9 lakh in a joint account. The interest income is credited into saving accounts maintained at any CBS Post Offices. 

5. LIC Pension Plan

LIC offers pension plans with monthly income scheme for the senior citizens under different plan policies. Following are the three pension plans through which senior citizens can have a regular income stream and enjoy other associated benefits:

• Pradhan Mantri Vaya Vandana Yojana
• LIC New Jeevan Nidhi
• LIC Jeevan Sathi

6. Tax-Free Bonds

Sovereign guaranteed tax-free bonds issued by government institutions are another good option for senior citizens to add to the retirement portfolio. As all bonds are sovereign guaranteed, it has the highest safety ratings and the interest earned is completely tax-free.

Conclusion

Creating a sound portfolio with a mix of different categories of securities is important to lead your post-retirement life peacefully. From SCSS and FDs offering attractive fixed deposit rates to mutual funds and tax-free bonds offering growth, there are various financial instruments you can avail of to help you create a balanced portfolio and also minimize the burden of taxation.