Best Investment of Retirement Fund:
There is a regular inflow of money when you are employed. However when you retire the money inflow stops. Employees get a good amount of retirement corpus from their employer especially the one working in Public Sector Undertakings (PSUs) like Coal India, ONGC, BHEL, BPCL, etc. However, they are not aware of how to invest this huge retirement fund and still get a regular income even after retirement. Here are top 5 investment of retirement fund.
It is usually considered the savings in the bank or Fixed Deposits (FD) are the only options. However, there are several opportunities are available for investing money in India.
From the senior citizen’s point of view, the high-return investment options provide greater security. Their opinion is not fully wrong but they should look for the investment options that provide them the sufficient returns while ensuring greater safety along with capital protection.
As per a good retirement plan, a retired person should invest in the Senior Citizens Saving Scheme (SCSS) which offers 8.6% per annum. He/She can contribute to the Post Office Monthly Income Scheme at 7.6 % per annum. For the corpus protection, it is advisable to save funds in Senior Citizen Fixed Deposit and earn 7.3% to 7.5%. Also, invest in tax-free bonds for secure and good returns. Furthermore, funds can be invested in debt and liquid mutual funds with a horizon of three years or more.
The above is a brief how to build a diverse and secure retirement portfolio along with the higher returns. That is why whether it is senior citizens or PSU employees they must be aware of the best investment of retirements
Here are the top recommended investment plans for PSU Employees:
1. Senior citizen savings scheme (SCSS): Best investment of retirement fund
SCSS is a good investing option to generate money. Senior citizens above 60 years can invest in it. You can open an account with INR 1 lakh and invest a maximum amount of Rs 15 lakhs. The tenure of this scheme is 5 years and can be extended for 3 more years. The current interest rate offers is Rs. 8.7%, which is very good as compared to saving or FD account.
At an 8.5% interest rate with a deposit of 15 lakhs, the monthly income is stated to be approx INR 10,625 per month. It is considered to be one the safest and most reliable investment options as this is an Indian government-sponsored investment scheme. This is probably the best investment of the retirement fund of the senior citizens.
2. National Savings Time Deposit (TD) Scheme, 2019:
A new Savings Time Deposit Scheme, 2019 has been notified by the Finance Ministry, which has no maximum limit of depositing. Hence, it is a good investment plan for those who have a large amount of retirement corpus. The scheme provides for four types of time deposit (or fixed deposit) accounts – One-year account (interest 6.9%), two-year account(interest 6.9%), three-year account (interest 6.9%), and five-year account (interest 7.7%).
Therefore, if you deposit INR 1 lakh in a 5-year account, you will earn a total of around INR 7925×5 = 39,625 in five years as interest.
3. Tax-Free Bonds:
Tabonds are issued by a government enterprise such as Indian Railway Finance Corporation Ltd (IRFC), Power Finance Corporation Ltd (PFC), National Highways Authority of India (NHAI), Housing and Urban Development Corporation Ltd (HUDCO). These bonds are an excellent choice for investors looking for fixed and regular income. They have a higher lock-in-period that ranges from 10 years to 20 years with the interest rate range from 7.3% to 7.5% per year.
As this investment has low risk and has no TDS deduction, they are good investment option of your retirement fund.
3. Mutual Funds (MFs):
Mutual funds are growth and wealth creation option in the portfolio of senior citizens. There are three kinds of funds: debt funds (government securities), equity-oriented funds (stock investment) and hybrid funds (both debt and equity). A mutual fund offers two options to invest either as a lump sum or a systematic investment plan (SIP).
Mutual funds are a good option to earn higher returns, unlike the other options; they do not assure fixed returns but can be higher if the market grows. You can take advice from mutual fund managers to invest your money in the mutual funds with 1, 3 or 5 years return options. For instance, SBI Small Cap Fund can even get a 17% return with the 5 years return plan. However, you should take recommendations before investing in MFs.
4. Post Office Monthly Income Scheme (POMIS):
POMIS is a five-year investment scheme. It is currently offering 7.8% per annum, payable monthly. It generates a stable and safe income without any risk of the market. You can deposit a maximum of Rs 9 lakh under joint ownership and INR 4.5 lakh under single ownership. POMIS enables the provision to transfer the returns directly into your savings account. In this kind of investment senior citizens and PSU, employees can also get interested of the retirement fund.
5. Pradhan Mantri Vaya Vandana Yojana (PMVVY):Low risk investment of retirement fund.
It is a type of fixed deposit or pension scheme with LIC (Life Insurance Corporation). Those having an age of 60 years or more can deposit. The scheme comes with a tenure of 10 years. The scheme assures the return of 8% to 8.30% per annum. The return of money depends on the payout plan i.e. monthly, quarterly, half-yearly or yearly. PMVVY is relatively a low-risk investment.
The minimum purchase price for investing every month is INR 1.5 lakh, which gives a pension of INR 1,000 per month. The maximum purchase price is INR 15 lakh, which will give INR 10,000 per month.
Apart from the above, you can opt for other investment options like
- National Pension Scheme,
- Post Office Fixed Deposits and Recurring Deposits,
- Bank Fixed Deposits (FDs),
- Public Provident Fund (PPF),
- Atal Pension Yojana (APY)
These are the best short term retirement plans for PSU Employes (senior citizens) who want a decent risk free return on a corpus fund.
Now, you have understood how to diversify your retirement corpus fund. This will generate a steady and stable income. A constant flow of income will let you live happily and gather memories of traveling with your spouse and family. However, your ultimate decision is based on whether you are willing to take risks.
Have a happy investing!