Wednesday, September 12, 2018

How to Manage Your Investment Income With FD for Senior Citizens

Most people’s lives are spent in working their days off to save money for the future. However, as the future comes near they are faced with an important question – how to manage all the income coming from their lifelong investments? 

Another important question that arises in their minds is – do we have enough money which would be able to give a decent amount of returns? Also, as they age, there is a certain feeling of independence that becomes stronger as well. 

As we grow, our financial situation changes and may or may not worry us – depending on the way in which your money is invested. 

However, but the savings and returns you have accumulated can grow by investing in investment instruments including FD for senior citizens, special saving schemes, mutual funds etc. Before investing your income, keep some of these tips in mind:

Come up with an expenditure plan for yourself and then plan a pay-out strategy which would offer a safe option to keep your funds flowing.

Diversification of the investment income is extremely important, so that you can withdraw liquid cash if any emergency or unexpected circumstances arise.

Regularly reviewing and revising these diversified investments is an important pre-requisite to keep a check on the amount of returns you are earning.

Here are some ways in which you can manage the income from your investments:

Saving Schemes

There are many investment schemes for senior citizens like Senior Citizen Saving Scheme (SCSS), Post Office Monthly Income Scheme (POMIS), Varishtha Pension Bima Yojana (VPBY), The Pradhan Mantri Vaya Vandana Yojana (PNVVY), Rashtriya Vayoshri Yoajana (RVY) that offer steady monthly income to senior citizens. 

All your money from provident funds, small savings accounts and employee provident fund can be transferred to these schemes. POMIS offers a fully taxable interest rate of 7.8% per year which can either be invested by a single person or in joint ownership. 

The capitals for both types is Rs. 4.5 Lakh and Rs. 9 Lakh respectively. SCSS is another great investment for senior citizens whose maximum duration is 5 years with an annual interest rate of 8.6% per annum – extendable up to 3 years once matured.

Fixed Deposits

Fixed Deposits for senior citizens offered by many banks and companies provide them the liquidity of easily available funds whenever they want to withdraw money. This advantage of having a FD for senior citizen helps them to invest in various different FDs, instead of parking all their funds in just one. 

Companies offer an interest rate of 8.75% - higher than the rate provided by banks. The tenor of these FDs ranges from anywhere between 12 months to 5 years divided in cumulative and non-cumulative interest rates. 

The cumulative interest rates for a period of 24-35 months at a minimum amount of capital Rs. 25000 is 8.50%, whereas, the non-cumulative interest rates for monthly, quarterly, half-yearly, and yearly range from 8.23%, 8,28%, 8.35%, and 8.50%, respectively.

Investing in Fixed Deposits gives you flexibility of distributing your investments in multiple FDs that you can choose based on tenor or interest rates. 

If you are not sure about the amount of returns or interest you are going to earn with an FD, you can compute it through an FD interest calculator which would show you the exact amount at the maturity and the interest you would be earning. Based on that, you can plan out your investments starting with the short durations and re-investing as they mature.

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