The interest rate on fixed deposits is currently approaching its all-time low. If you want to invest in this financial instrument for regular income then this is not a good time. For example, State Bank of India gives an interest of 5.80 per cent to senior citizens on 3-year FDs whereas only 5 per cent interest is available on 1-year FDs.
You get interest on this type of FD almost around the inflation rate. Similarly, if you fall on the higher slab of tax, then after paying the tax, this interest goes below the inflation rate.
There is also no expectation of any increase in interest rates from the banks in the near future, in such a situation it becomes necessary for people investing in FDs to look for other investment options in the hope of regular income.
Let’s take a look at these other options
Senior citizens can invest in SCSS (Senior Citizen Savings Scheme) for regular income. These are invested for a period of 5 years. Interest is paid on such investments on a quarterly basis. The rate of interest is 7.4% per annum. You also get a tax exemption of up to Rs 1.5 lakh on this scheme, but keep in mind that only up to Rs 15 lakh can be invested in this.
If you want to invest a larger amount than this, then Pradhan Mantri Vaya Vandana Yojana (PMVVY) can be another option for you. This is a government backed scheme which is operated by LIC. In this, you get monthly interest at the rate of 7.4 percent. Up to Rs 15 lakh can be invested in this scheme also.
Post Office Monthly Income Scheme
Even after investing 30 lakh rupees in these two schemes, if you have money to invest, then we can tell 2 such schemes of post office which can have good regular income.
By investing in India Post’s Post Office Monthly Income Scheme Account (POMIS), you can earn a better monthly income as compared to FDs. The maximum investment that can be made in this is Rs 4.5 lakh. You can get an interest of 6.6 per cent on this type of investment.
Mumbai-based mutual fund distributor Vinayak Kulkarni Says that the combination of POMIS and SCSS can prove to be the best combination for a senior citizen for regular income. Even this is a better investment option for people below 60 years of age. Apart from this, investments can also be made in FDs and NCDs of companies for regular income.
Private sector companies offer the option of investing in FDs and NCDs, in which the interest rate is also very high but there is more risk associated with them. However, some government companies also give the option of investing in NCDs from time to time. With government companies the risk is slightly less.
Vinayak Kulkarni says that FDs of large companies like HDFC FD have the option of paying monthly interest and it is also a good investment option. HDFC FDs can be invested for a tenure of 1 to 10 years, their interest rate increases as the investment tenure increases. For example, at present, an interest of 6.2 percent is available on HDFC’s 5-year FD.
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