Q. My wife is a senior citizen (under 80 years) and I am a super senior citizen (80 plus). We have limited income and that too, only from interest. So, we would like to plan for getting the maximum amount by investing in very safe avenues. The limit of investment in Senior Citizens Saving Scheme is ₹15 lakh. Can you please let me know whether both of us can individually invest in this, having the other as nominee? Is this legally permissible? Is there any other safe scheme which would give a return of more than 8%?
A. Yes, you can individually invest ₹15 lakh each in Post Office Senior Citizens’ Scheme. So, you can effectively invest up to ₹30 lakh. Since the entire amount invested is attributed to the first account holder, you can also hold it jointly with each of you being the first holder in two different accounts and the other a joint holder.
One other good scheme for senior citizens is LIC’s Pradhan Mantri Vaya Vandana Yojana for citizens aged 60 years, introduced by the Government of India. It has an 8% p.a interest payable monthly (effectively 8.3% p.a). It is also available as quarterly, half yearly and annual payouts. The policy term is 10 years and the maximum amount that can be invested is ₹15 lakh. The purchase price will be refunded to the nominee/legal heir on the passing away of the policy holder. On survival of the pensioner over the policy term too, the purchase price shall be paid back with the final pension instalment.
Q. I am shortly due for a VRS in view of some health issues. I hope to invest most of the funds into totally secure and guaranteed returns but I am aware that unless I invest a little bit in mutual funds, NCDs or other market-linked schemes, my family and I may not be able to cope with the increasing cost of inflation in the future. Kindly advise. In one of your recent replies you talked about SEBI advisers. How do I choose a suitable one?
A.You are right in recognising that you will need market-linked products like mutual funds to ensure that your corpus lasts longer. It is a good idea to seek a registered investment adviser’s help to aid in drawing up a plan as follows: your monthly cash flow plan, your requirement for medical expenses and any amount for emergencies and any financial goals for your family.
You must then identify how much you need to invest in low-risk fixed income products, to meet your monthly expenses for the next 3-5 years. The remaining corpus is what should be used to grow, until such time you need to tap it for your monthly requirements. You can visit https://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intmId=13 to find a RIA near your place, in the city you live in. Look for a person who has understanding across personal finance products and not just mutual funds and insurance. Understand if the fee the adviser charges includes not just a planning fee but to also regularly monitor your investments.
Q. I am 24 and I earn ₹35,000 per month. My expenditure is ₹5,000 per month. How can I invest the remaining ₹30,000 to get maximum returns in 5 to 6 years?
A.You are starting with a good sum. Given your age, you should invest in market-linked investments such as mutual funds and stocks. To start with, consider consistently performing multi-cap equity funds with some low-risk debt fund, using the systematic investment plan (SIP). Do not stop SIPs if you see the market going down.
(The author is co-founder, Redwood Research)