Investment decisions need careful planning and market study. Safety of funds and high returns are a matter of concern for all investors, irrespective of whether they are young or elderly. However, the investment avenues for senior citizens get limited due to restrictions like age, retirement etc. In such a situation any investment starts having some necessary requirements such as low risk, generation of periodic income etc. Add to this the ever increasing inflation and decreasing interest rates which makes the choice of investment even more difficult for this segment of investors.Thus, careful financial planning is a must for senior citizens.
Factors to Consider
Senior citizens need to keep a few things in mind before investing their lifelong savings.
Importance of Capital Protection
The importance of protection of capital (safety of money) is very high as the funds available to the investor are usually a corpus of their lifelong savings which will be utilized to generate resources for the life ahead. Generally, senior citizens are either retired or are nearing retirement, so instead being aggressive in investment they should focus on schemes and plans which are safe and offer fixed returns.
Post retirement, the source of monthly income like salary fades away leaving them dependent on their savings. So, they should ensure that the avenues in which they are investing provides them high degree of liquidity so that they can meet unforeseen expenses quickly, if they arise.
Regular flow of Income
The investment portfolio of the elderly should also take care of the fact that in the absence of alternative means of regular income, the income generated from it would be the only source of funds for them to meet the regular expenses.
As of now, there are not many investment options in India which are directed specifically for senior citizens. But there are some good investment alternatives for them, which are listed below:
Senior Citizens Savings Scheme
Senior citizens savings scheme is a government guaranteed scheme targeted only on the elderly. It is open for investment to those individuals who are above the age of 60 years, though those who are 55 years and above can also invest provided they fulfill certain conditions. Investments in it can be made through 24 public sector banks, ICICI Bank and post offices.
The scheme requires a minimum investment of Rs. 1000 and a maximum investment of Rs. 15 lakh. It offers an interest rate of 9.3% payable quarterly on the last days of March, June, September and December. The scheme has a lock in period of 5 years, which can be further extended for another 3 years. But, premature withdrawal of funds is also allowed subject to a penalty of 1% to 1.5% making it a favorable option among those who want high liquidity.