Many financial planners advise that it is wiser to begin saving for retirement as you start earning. This advice is not followed by many due to which people face problems in their retirement age. It is a common story that after people start earning, they begin to start spending on things like buying vehicles, house, family expenditure and other unplanned expenses. In a recent survey conducted by financial planners, it was revealed that only 46 percent of the people think that retirement planning is important. To make sure that you gain more benefits, you can consider options like Senior Citizen Fixed Deposit, Mutual Funds and Post Office Monthly Income Scheme (POMIS) Account.
The age of 50s can be the milestone in the lives of people when they become aware of their financial standings. Old age can bring in financial crisis disguised in the form of medical expenses or unnecessary expenditure. The best way to fund your retirement is to start investing at an early age. Since there are many investment sources in the market, you need to choose the one that suits your financial condition. Losing your money at this point of life can be very disappointing, which means that you should look for sources that offer risk averse returns.
For people who are in their 50s, there are options like Post Office Monthly Income Scheme (POMIS) Account, Senior Citizen fixed deposits (FDs), Mutual funds (MFs). To invest in any of these options, you need to have basic information about them:
- Post Office Monthly Income Scheme (POMIS) Account: It is government supported investment scheme and functions similar to the Fixed Deposit. It has a maximum deposit amount limit of INR 9 lakhs with joint investors and INR 4.5 lakhs with a single investor. The investment in POMIS lasts for five years and offers returns at 7.8 percent that can be availed monthly. The returns gained from the POMIS is fully taxable.
- Senior Citizen Fixed Deposits: The Senior Citizen fixed deposit can be beneficial for the people who expect higher returns and security of the investment. There are two ways that you can use to apply for a Senior Citizen Fd, i.e. you can invest in FDs of the banks, or you can take the help of the Non-Banking Financial Companies (NBFCs). For better service and higher income, you can choose NBFCs as they provide rate of interest at 8.15 percent for the FDs.
- Mutual funds: This can be the fastest way to double your money, but it also has maximum risk regarding the investment security. There is no time bar to keep your funds parked in mutual funds; you can liquidate your funds anytime you need. You need to have a deep market knowledge and experience to gain profit from mutual funds. Without proper knowledge and experience, you may even end up losing your money.
Senior Citizen FDs can be the best options as the earnings you gain from it is not taxable (if you apply for 15H). There are NBFCs that provide FD investment service starting from a basic deposit amount of INR 25,000. They also have online portals through which you can track your investment whereabouts.
The need for investment for retirement at a young age may seem a futile idea, but you need to consider the fact that it can be your ultimate funding backup during the retirement age.