Your retirement is a reflection of how well you have planned and saved/ invested for it. All this is to be done in advance, i.e while you are still young and earning. With so many options – some good, some not so good to choose from, individuals planning for their retirement are highly likely to find it difficult to make a choice for themselves.
So, here is a guide to help you decide which investment/savings instrument to go for:
National Savings Certificate
Popularly known as NSC, these are government savings bonds that have tenures of the range of 5 years or 10 years. NSC are considered favorable as small savings and for the income tax benefits they provide. Section 80C of the Income Tax Act provides tax benefits.
Banks are known to provide loans against the deposit which acts as the security.
Senior Citizens Saving Schemes
As is clear from the name, this investment option is meant exclusively for senior citizen investors. In these schemes, individuals aged between 55 years and 60 years, who have opted for voluntary retirement are eligible to open an account, but within 30 days of receiving retirement benefits. The tenure is of 5 years and on maturity, it can be extended by 3 years.
Returns are of the range of 8.4% and payable 4 times in a year and are taxable. Having said that, they are still considered to be one of the best fixed income instruments after considering post tax returns.
Fixed deposits are provided by banks and Non-Banking Financial Companies (NBFCs) and provide returns of the range of 7% to more than 8%, depending on the age of the investor, the financial institution chosen and the tenure of investment. Senior citizen investors earn 0.25% to 0.50% more than regular customers. For longer tenures of investment, the interest rate offered is higher than shorter tenures.
Post Office Monthly Income Scheme
The Post Office Monthly Income Scheme is a great way to generate regular, monthly income after retirement, with an interest rate of 7.5% per year that gets credited each month into your account. Similar to the previous investment option, the interest income of this five-year scheme is taxable. You can open an account by investing a maximum of Rs 4.5 lakhs at any post office and later get it transferred to a different post office according to your convenience.
These are some of the safest investment options for retirement . You can choose one or more of these to create the right mix of options and build a strong portfolio that yields the best returns for your retirement.
Tips and Tricks: How to Make your Fixed Deposit Yield More Returns