Investment Pattern Of Retired Individuals Essay

1213 words - 5 pages

INVESTEMENT PATTERN OF RETIRED PERSON

For most people, the regular income comes in the form of a salary, which is paid monthly.
Because of the regularity of income during our working life, we usually adapt our spending
To fit in with our income patterns. By the time retirement comes around we usually have our
Income and spending patterns well practiced, although these may change a little in retirement.
During retirement, or at some stage before, we also need to plan what we are going to do with
Our retirement savings. Usually this will involve looking at what to do with our superannuation
Money and any other savings that we may have accumulated along the way. In view of the
Above ...view middle of the document...

These data are based on the survey done by us
POMIS (Post Office Monthly Income Scheme)

POMIS is a very simplistic, safe and sure way to receive a monthly income for retired people. Retirees can invest their lump sum retirement benefit under this scheme and can earn as high as 8.4% annual interest and that too, without taking any default risk on their money.
 
The best feature of this plan is monthly pay-out of interest, which is the most critical need of distribution phase (retirement years).

Features of POMIS –

* Rate of interest is 8.5
* Maturity period is 5 years
* Auto credit facility of interest
* Minimum investment is INR 1500 and maximum investment is INR 4.5 Lacs for single account and INR 9 Lacs for joint account

SCSS (Senior Citizen Saving Scheme)

any resident individual who has attained 60 years of age can open this account. Joint account can be opened only with spouse. Investment under this scheme qualifies for the benefit u/s 80C of the Income Tax Act, 1961. Besides tax benefits, this scheme offers a high rate of interest at the rate of 9.20% per annum with quarterly interest pay-out.
Premature closure is allowed. Monthly Income Scheme (MIS) and Senior Citizen Saving Scheme (SCSS) are the best for Senior Citizens who desire monthly/quarterly interest. Invest in MIS / SCSS and transfer interest into RD account through SB account through written request and earn a combined interest of 10.5 % (approx.).
 
Bank Fixed Deposit

fixed deposit is a financial instrument which allows for money to be deposited with banks for a fixed duration ranging from 15 days to 5 years and above, and earn a higher rate of interest than conventional savings account. On maturity the investor receives a return which is equal to the principal plus the interest earned over the duration of fixed deposit.
Senior citizens who opt for a fixed deposit scheme are sometimes allowed an additional 0.5% on top of the regular return on offer. Deposits for 5 years or longer qualify for a tax benefit u/s 80C of IT Act, 1961.
 
Reverse Mortgage

Retired personnel, who could not acquire many assets for themselves besides a house, can now liquidate the value of house and survive during their retirement period. In a Reverse Mortgage, the borrower pledges a property that he already owns (with no existing loan outstanding against it) and the bank in turn pays a series of cash – flows for a fixed tenure to the owner. These can be thought of as reverse EMIs.

The draft guidelines of reverse mortgage...

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