If you don’t have a steady source of income, you may have to rely on other people or cut down on certain basic needs. Therefore, a stable income is essential if you want to be free to accomplish what you want in your retirement. Hence, creating a solid retirement fund becomes nothing less than a necessity.
But at the same time, what do you do with a fund you have built once you retire? You must understand that this amount of money is essential in ensuring you can live comfortably for the rest of your life, even after retirement, so plan a retirement fund. If you are stuck in the same dilemma, fret not; below are some options you can try.
Conservative funds
To preserve your investment’s value, you may want to explore conservative funds, which typically include an asset mix of 85%-90% debt and 5- 10% equity. Because the fund also holds high-quality stocks, it offers low-risk investors the chance to earn higher returns than a debt-only investment. Investors with a low-risk tolerance and a focus on the long term will benefit from these products. If you have extra money after reducing your fixed-income risk, you could also want to put it into short-term funds.
Fixed deposits
Bank fixed deposits are another popular choice for retirees looking to invest their funds. Fixed-deposit (FDs) are highly regarded as a reliable investment choice due to their stability, predictability of return, and simplicity of use. Although it’s a safe investment, the interest rate is not comparable to other investment forms. There is a lot of leeway in how long you may leave money in the bank. An investor doesn’t have to commit their funds to a single maturity but may spread them among various terms. It is a safeguard against capital loss and a source of ready cash. A bank FD that matures in five years might be a better option if you want to save some money on taxes. An investment in this manner may qualify for a tax deduction under Section 80C. In contrast, such a deposit cannot be accessed for five years after making it. Interest income is taxable, but the tax savings more than make up for it, at least in the year the money is invested.
Senior Citizen Saving Scheme
Investors seeking a high fixed rate of return that outpaces inflation and guarantees a steady income may be interested in the Senior Citizen Saving Scheme. The current SCSS interest rate of 7.4% is greater than the interest rates banks offer on Fixed Deposits. Even though the interest you earn is taxable, any money you put into this plan is tax-free according to Section 80C. You may create a single or joint account if you or your spouse are above 60. The lowest allowed investment is also rather modest, at only Rs 1,000, and the term may be extended from its standard five years by an additional two at no further cost. But don’t put in more than Rs 15 lakhs altogether.
Post Office Monthly Income Scheme
The Post Office Monthly Income Scheme is another option, with a slightly lower rate of 6.6%, a 5-year period, and an investment ceiling of Rs 4.5 lakh for single account holders or Rs 9 lakh for joint account users (POMIS). Since the government is behind this initiative, participants may rest easy knowing their money is well protected. In addition, they may provide reasonable returns on mutual fund investments. However, keep in mind that there are no tax advantages to using this method.
Conclusion
Ensuring your retirement corpus is protected and growing is important to providing financial stability post-retirement. Ensure you research and choose an option from above according to your taste for the best results.
