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Investment options for senior citizens that can fetch better returns than bank FD

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For a senior citizen, an investment instrument that has minimum risk or zero risk is the most suitable option to park money. That’s why bank fixed deposit (FD) is the most favoured investment tool among the sixty plus population. However, the way bank FD interest rate has been nosediving; senior citizens are unable to beat the inflation growth rate by investing in bank FD these days. So, for them central government-backed Senior Citizen Saving Scheme (SCSS), which is 100 per cent risk-free, is advisable. Senior Citizen Saving Scheme interest rate is 7.4 per cent, which is much higher than the average inflation rate of 5.5 per cent to 6 per cent. However, if we go by the tax and investment experts’ view, bank bonds can also be a better option for senior citizens who are looking for options other than bank FD.

Highlighting the features of Senior Citizen Saving Scheme or SCSS Kartik Jhaveri, Director — Wealth Management at Transcend Consultants said, “Senior Citizen Saving Scheme or SCSS is fully debt instrument and it is 100 per cent risk-free. As per the latest announcement by the central government, the small saving scheme is currently giving 7.4 per cent annual return to the senior citizens investing in this scheme.”

However, Jhaveri advised senior citizens to look at bank bonds as it gives around 9 per cent annual return to the investor. He said that like SCSS, bank bonds are also 100 per cent risk-free as Government of India (GoI) is the guarantor of the money received by various banks from the investors.

On why not government bonds, why bank bonds Jhaveri said, “Unlike government bonds, bank bonds are always available for investing but to buy bank bond, one needs Demat Account.”

On why not government bonds, why bank bonds Jhaveri said, “Unlike government bonds, bank bonds are always available for investing but to buy bank bond, one needs Demat Account.”

Speaking on SCSS vs bank bonds; SEBI registered tax and investment expert Jitendra Solanki said, “For opening a SCSS account one has to be at least 55 years of age while in the case of bank bond, there is no such age limit. Anybody can buy bank bonds at any age provided they have a Demat Account.” Solanki also said that in SCSS, one can’t invest above 15 lakh while in bank bonds; one can invest any amount available for investing.

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