Best Investment Plan in India for Senior Citizens

Best Investment Plans for Senior Citizens in IndiaBest Investment Plan in India for Senior Citizens

Once you retire, you would have earned a good amount of retirement money, however your regular monthly income stops. You feel, your luxury has gone away. You would try to reduce your expenses. This is what most of the Senior Citizens in India think. However, as a Senior Citizen, if you can plan it well, you can earn high returns on your retirement money. Which are the best investment plans for Senior Citizens in India? Which are the best investment options that can give higher returns for retired individuals? This article would provide some insights about good investment plans for Senior Citizens.

Also Read: Top 5 Best Mid Cap Mutual Funds to invest in 2018

Best Investment Plan in India for Senior Citizens

Here are some of the best investment options available for Senior Citizens. However, one should choose them based on tenure and any risk appetite (which is generally low anyways).

1) Senior Citizens Saving Scheme (SCSS)

It is a special account that can be opened by the senior citizens of India. It is a risk-free and tax-saving investment scheme that offers regular income to senior citizens. This scheme is available from major banks and post offices across India. Hindu Undivided Families (HUF) and NRIs are not allowed to invest in this scheme.

Who is eligible?

Any citizen who has attained 60 years of age.

The retirees who have opted for the VRS (Voluntary Retirement Scheme) or Superannuation between the ages of 55-60 years of age can also invest within a month of receiving the retirement corpus.

Retired defense personnel with a minimum age of 50 years.

What is the investment amount?

A maximum of Rs 15 lakhs (in the multiples of Rs. 1,000) can be invested in it either individually or jointly. The amount invested in the scheme cannot exceed the amount that has been received on the retirement.

The account can be opened by cash for an amount below Rs 1 lakh and by cheque for an amount above Rs 1 lakh. It offers a very good interest rate of 8.3% (Current), which is better than any FD or savings account. The tenure of this scheme is 5 years, which can be extended for 3 more years. If one invests Rs 15 Lakh at a 8.3 % interest rate in this scheme, senior citizen would get Rs 10,500 (approximately) per month. It is one of the safest investment option for Senior Citizen in India.

2) Post Office Monthly Income Plan (POMIP)

As the name suggests, this investment can be made in any post offices in India. It is a scheme to earn monthly income with lower risks. The investments are not exposed to market risks and hence it is a safe investment option. 

Who is eligible to invest?

Any Indian citizen can invest in this scheme.

NRIs cannot invest in this scheme.

What is the investment amount, Interest and tenure?

A maximum of Rs 4.5 lakh can be invested individually or Rs  9 lakh jointly. The account can be opened in the name of children also, provided that the age of the child is 10 years or above. The lock-in period is 5 years and the interest rate is 7.3% per annum. If the investor wishes to go for early withdrawals, they have to pay pre closure penalty. If the amount is withdrawn before one year, there is zero benefit. If it is withdrawn between 1st to 3rd year, the whole of the deposit is refunded after 2% penalty on the interest amount. If withdrawn between 3rd to 5th year, the entire amount is refunded after charging 1% penalty. The post office investment does not fall u/s 80C of the Income Tax Act and the interest amount received is taxable. If one invests Rs 9 Lakh at a 7.3 % interest rate in this scheme, senior citizen would get Rs 3,250 (approximately) per month. This is one of the best investment plan in India for Senior Citizen which is safe.

3) Monthly income Plan (MIP) Mutual Funds

MIP mutual funds are suitable for retirees and or for those individuals who are looking for regular returns with moderate risk. It is basically a debt-oriented hybrid mutual fund scheme which invests around 70% – 80% of the total corpus in debt instruments like government bonds, debentures etc. and the rest is invested in equity. The main objective of such MIP mutual fund investments is to provide steady income at regular intervals (may be monthly, quarterly or half-yearly) in the form of periodic dividend payouts. MIPs offers two options – dividend and growth. Under the dividend option, the fund houses offer regular dividends but it is not mandatory to declare dividends if the fund houses don’t have profits to distribute. However, one must note that the name is misleading and one does not get monthly income regularly as the name suggests. In the growth option, you will not get regular dividends. Rather the profit is added, to the NAV of the scheme. It is suitable for investors who want to see their funds growing.

Who can invest in this scheme?

Any individual, including NRIs can invest in this scheme.

What are negative points in MIP Mutual Funds?

You can expect a steady income when the market is in boom but the fund house may skip a month in the absence of surplus. This is the biggest disadvantage of MIP.

Another problem with MIP mutual funds is that they fall under the debt schemes for the purpose of taxation. So, if they are sold in less than three years, the gains are treated as short-term capital gains and if sold after three years, the income falls under the long-term capital gain and taxed accordingly.

MIP Mutual Funds typically provide anywhere between 7% to 9% annualized returns which are higher compared to any bank fixed deposits.

MIP Mutual Funds are one of the best investment plans for Senior Citizens who can take moderate risk.

4) Bank Fixed Deposits – Interest rates between 6.5% to 8% per annum

All banks offer higher interest rates to the senior citizens of India. This makes this investment lucrative as this is the safest and most guaranteed mode of investment. There are a several senior citizen fixed-deposit schemes to choose from with many varied features attached like interest payouts, loan facility, over-draft facility, flexible tenure, etc. Banks offer different rates of interest ranging between 6.5% to 8%. The interest rates are offered best in the tenure of 1-5 years. The highest rate of interest on senior citizen FDs is being offered by IDFC bank, which is 8% for 366 days. Some banks may allow customers to open this account at the age of 55 years who have taken VRS. The interest earned on FD would be liable for income tax based on the income tax rate applicable to them. The senior citizens may opt for different interest payout options (Monthly, Quarterly or Yearly) to get a regular income.

5) Pradhan Mantri Vaya Vandhana Yojana (PMVVY)

In July 2017, the Government of India announced this pension scheme exclusively for citizens who are 60 years and above.  Life Insurance Corporation of India (LIC) has been given the sole rights to run this scheme. It can be purchased online or offline. This scheme was supposed to be open for one year, but now it has been extended till March 2020. Pradhan Mantri Vaya Vandhana Yojana Scheme provides an assured 8% per annum return payable monthly for 10 years. The proposed changes in Budget 2018 will double it to Rs 15 Lakh.  A pension will be payable at the end of each period (monthly, quarterly, half-yearly or yearly) as chosen by the pensioner. It is exempted from Goods and service Tax (GST).   

Currently, in the monthly mode, an investor in the PMVVY scheme gets a monthly interest rate of Rs. 5,000 if he invests Rs. 7,50,000.

It also allows for a premature exit in the case of treatment of critical illness of self or spouse. On such premature exit, 98% of the purchase price would be refunded. On the death of the pensioner during the policy tenure of 10 years, the purchase price would be paid to the beneficiary.  Loan facility is also available on this scheme after the completion of 3 years.  This is one of the good Senior Citizen investment plan as this is offered by Govt of India which is safe to invest. However the returns are low.

Conclusion: All plans are not suitable to every Senior Citizen. You can choose based on the tenure, returns and the features of these best investment plans and pick the option which is best suitable to you.

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Best Investment Plan in India for Senior Citizens

Suresh KP


  1. Kindly let me know where I had to invest in SCSS whether it can be opened with bank or it should open at Post Office or it should be invested in Stock Market.

    Whether I can get the interest of 8.3% from next month of my investment or when I will starting to get the interest from the investment and whether it is taxable or not. Further I want to know the
    Lock in period or if any Foreclosure has been done whether any penalty is there under this scheme.

    Kindly give your advice at the earliest.

  2. In the Senior Citizen Savings Scheme (SCSS),is the interest rate fixed for the entire tenure of the scheme?Plz clarify..Presently,its 8.7%…will it be maintained for the entire 5yrs..

  3. In the SCSS, can I invest at the age of 63 ? Is early withdrawal or emergency loan possible ? If yes, what are conditions of such withdrawals ?
    Thanks & Regards,
    Tarwinder Singh

  4. Can anyone invest Rs.15 Lakhs in SCSS and Rs. 15 Lakhs in PMVVY at a time based on the availability of funds.

  5. My request is that against all the Schemes, the incidence of income tax or the tax-ability issue should be clearly spelt out. Because one cannot survive in today’s life without having an overall earning more than the tax exemption limit, i.e. 2.5 or 3.00 lakh and therefore the tax aspect has to be taken into account very clearly.

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