Want to retire rich? Try these investment options, say experts

A retired person can't work and earn the way he has done in the last 30-35 years during his working life. But, even if he or she is not working, they want their money to work and grow even after they are retired. For them, investment with better returns is the best option. Since they can't afford to take a risk, they invest in risk-free options like bank FD, Senior Citizen Saving Schemes (SCSS), however, bank bonds can also be a better option for them, say investment experts.

Elaborating upon the return that one can expect in SCSS and in bank bonds, Kartik Jhaveri, Director — Wealth Management at Transcend Consultants said, "Senior Citizen Saving Schemes are hundred per cent risk-free and one can get an assured 8.6 per cent return in this investment." He said that interest paid under the scheme is paid quarterly and its rate of interest is also decided by the government on a quarterly basis. But, for such investors, bank bonds are a better option as it gives to the tune of 9 per cent returns instead of 8.6 per cent in SCSS. Like SCSS, bank bonds are also risk-free as the government of India is there as guarantor for the money being taken by banks for the bonds issued by them." Jhaveri said that unlike government bonds, bank bonds are available all the time but for that, one needs a Demat account that is necessary for buying a bank bond through a bond broker. He said that in SCSS, one has to be at least 55 years of age while opening an SCSS account but in bank bond, there is no such age bar. Anybody at any age can buy bank bonds.

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Speaking on the SCSS, Balwant Jain, a Mumbai-based tax and investment expert said, "If you have retired on superannuation or have taken voluntary retirement, you can also invest under this scheme provided you have completed 55 years of age at the time of opening the account. The age limit does not apply to the retired personnel of the defense services. In either of the case, the account under SCSS has to be opened within one month from the receipt of retirement money with proof of disbursal. Only the money received as retirement benefits under the terms of such retirement can be invested under this scheme." He said that initial tenure of the account opened under SCSS is five years but can be extended for once for another period of three years. Deposits made under SCSS can be withdrawn after completion of one year, but that too with a penalty. A penalty of 1.50 per cent of the deposit amount is levied if you close the account after one year but before completion of two years. The amount of penalty comes down to 1 per cent for accounts closed after two years. The deposits under extended account can be withdrawn any time after one year without any penalty. As deposits under SCSS cannot be withdrawn within one year, you should assess your liquidity requirement for the next year before making deposits under SCSS.

On investments that an investor in the SCSS can do Balwant Jain said, "One can deposit only up to Rs 15 lakh under this scheme either by opening a single or a joint account. Since for determining the eligibility to open the account under this scheme the age of the first holder is only considered, the spouse can be added as joint holder even if he/she has not completed the required age. The deposits within the overall limit can be made either in one single account or in multiple accounts."

Batting for bank bonds ahead of the SCSS Kartik Jhaveri of Transcend Consultants said, "In SCSS, one can't invest above Rs 15 lakhs while in bank bonds, one can invest up to any level."