The Public Provident Fund is among the most popular untaxable saving schemes for Indians. The plan generates stable and untaxable returns for 15 years until it matures. Once it matures, individuals can extend their tenure or withdraw and invest their accumulated corpus. If you are looking for where to invest your withdrawals, below are the best places to consider.
1. Senior Citizens Savings Scheme
Many retirees seek the safest investments that offer a reliable post-retirement income with minimal risks. Senior Citizen Savings Scheme is among such options. SCSS provides a secure investment plan for individuals above 60 years(or 55 years for those who opt for voluntary retirement). It also offers a desirable interest rate of 8.2%, reviewed quarterly.
The plan requires a maximum of ₹30 Lakh. It also has a maximum tenure of 5 years, although you can extend for three more years. Understanding your tax obligations is vital when choosing SCSS. For instance, the plan falls under the ETT category. That means the investment qualifies for tax deduction but the interest is taxable.
2. Real Estate and Precious Metals
Buying properties can offer financial security after retirement. For instance, you can use your PPF withdrawals to purchase rental and commercial properties and earn passive income from rent. The properties can also give higher returns if you choose to sell them. You can also choose REITs if you don’t want to be directly involved in property management.
Precious metals such as gold and silver have historically been safe assets for retirees. Unlike real estate, they are ideal if you are after wealth creation and preservation. However, you can invest in government-backed options such as Sovereign Gold Bonds(SGBs) to earn interest payouts. Gold ETFs and digital metals also offer the best alternatives to physical metals with liquidity benefits.
Investing in precious metals allows you to withdraw from your savings and invest from anywhere. However, understanding your required minimum distributions is vital to ensure you comply with the withdrawal rules. The IRA RMD calculator is essential for your financial planning if you plan to reside in the US after retirement.
3. Bank Fixed Deposits
Banked Fixed Deposits(FDs) remain preferred for retirees looking for low-risk investments with fixed returns. The plan is valid for Indians above 60 years, although some banks accept customers above 55 years who have taken early retirement. Eligibility terms and conditions also vary among banks. However, senior citizens can get higher predetermined interest rates on the deposits, typically between 0.5% and 1% more than regular fixed deposits.
Senior citizen FDs offer flexible tenure, from short-term deposits of 180 days to longer terms of over five years. They also provide capital protection and predictable returns at the end of the tenure. However, you can opt for monthly or quarterly payouts to supplement your retirement income. While your interest is taxable, you can choose tax-saving FDs with Section 80C benefits.
Endnote
Extending your tenure with five-year blocks ensures you have the safest and tax-efficient savings with higher returns. However, if you decide to close the PPF account and withdraw your accumulated amount, you can diversify your withdrawals with the above options for a stable income with minimum risks. You should consult a financial advisor and assess each option’s potential risks before investing.
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Poor advice ! PPF is EEE from taxation point of view. Hence, better to extend it and enjoy tax free withdrawal every year.
Thanks for your comment. The objective is “If you” want to withdraw what options are available. Extension option is always available.