Retirement is an important milestone in the life of every employed person. Irrespective of the number of years and level of income, you need to be able to save and invest a decent amount for this phase of your life when you might not have a working monthly income. Income needs to be created from the wealth you have earned during this working phase. It is imperative that you find high paying and stable investment options that will earn the requisite returns without eroding the capital on the basis of current market scenarios.
Let us look at various plans available for people to build a sizeable corpus for the future –
- Senior Citizen Savings Schemes – This is a superannuation fund which is created by the government under the Small Savings Scheme Act to bridge the gap between the existing income levels before retirement and the new phase of retirement. This cannot be used standalone for a long time as the time frame for this is 5 years with only one extension of there years allowed. The rates are announced each quarter by Ministry of Finance depending upon the liquidity in the system.
You can avail tax benefits under Section 80 C up to a limit of Rs 1.5 lakhs in the year you invest, and each year you earn interest.
- Equity Linked Savings Scheme – This is a type of mutual funds with 60% or more investments in the equity market. While you might wonder if it is safe or not – it certainly comes with its risks of losing capital but is bound to give a high return on investment over a period of 3 years when it is in a lock-in. You can avail tax benefit under Section 80 C up to Rs 1.5 lakhs.
- National Pension System – This is a holistic pension system created for all income levels and with the freedom to choose your investment fund. If you can bear the risk and want to earn from equity markets, you can choose the particular investments fund. Similarly, a risk-averse investor can choose medium to low-risk investment option while investing and also later. You can avail a tax break of maximum Rs 1.5 lakhs under Section 80 C.
- Tax – Free Bonds – These are long term tax-free bonds which are floated to collect money for infrastructure projects by the government. They are tax-free under Section 10 with a maximum investment under Rs. 10 lakhs and tenor of 10, 15 or 20 years. These are currently offering rates of 6.5%. There are no TDS applicable on these.
- 5-year Fixed Deposits – You can look at bank FDs of 5 years lock-in which offers tax exemption under Section 80 C. A lock-in period of 5 years helps you multiply the principal and also lock-in the current rates when you invest.
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While these options are tax-free, there are investments like company deposits which pay a much higher interest rate. For example, FD interest rates offered by Bajaj Finance FD range much higher than all the above instruments. For a senior citizen, it is the best investment post-retirement as it pays a rate of 8.95% for a period of 3 years. You can also look at the non-cumulative option which pays a periodic amount to allow you to have a regular income after retirement. You can put in a good lump sum and seek benefits from the high-interest rates.
Bajaj Finance Fixed Deposit(FD) is certified with the highest ratings by credit rating agencies ICRA and CRISIL. As a senior citizen, you will find these features of Bajaj Finance FD quite helpful-
- Online FD return calculator
- Debit Card
- Multi-deposit facility