Savings scheme

Seniors Savings Plan 2020: all you need to know

To get the best return while building wealth, you need to combine both high risk and high return funds as well as low risk and fixed return investment options.

People over the age of 60 and looking for places to keep their savings safe after retirement while earning a moderate rate of return, typically land with investment options such as FD and RD Banks, National Pension System (NPS), post office DFs and RDs, Pradhan Mantri Vaya Vandana Yojana (PMVVY) and Savings Plan for the Elderly (SCSS).

While these are some of the best options for seniors, with mutual funds, some investments offer personalized services to seniors as well as higher interest rates.

For example, the Senior Citizens Savings Scheme offers a regular flow of income to seniors and tax benefits. While options like mutual funds offer a high return, they also come with relatively high risk. Therefore, experts claim that low risk fixed return investment options such as fixed bank deposits, postal FDs, PMVVY and SCSS are also needed in a senior’s wallet. investor. According to experts, an ideal portfolio depends on the needs of seniors. For example, getting the best return while building wealth requires a combination of both high risk and high return funds as well as low risk and fixed return investment options.

In addition, the government-backed SCSS system is known to be more secure, unlike bank FDs, as the investments are owned by the government. This savings plan has a duration of 5 years which can also be extended by 3 years by the investor.

Note that SCSS is a long term savings option. Investors can invest up to Rs 15 lakh, both individually and jointly in the savings plan. Having said that, an investor can invest the retirement benefit he received, or Rs 15 lakh, whichever is lower. The amount invested cannot exceed the retirement benefit the investor received.

Interest earned on the SCSS account is credited to the linked savings account of the investor at the same post office, therefore, investors should open a SCSS account at all Indian post offices. The current interest rate offered on SCSS is 7.4 percent, which is taxable, and investment under this program qualifies for the benefit of Section 80C of the 1961 Tax Act. on income.

Keep in mind that in case of premature withdrawal, penalties will be charged up to 1.5% of the deposit amount if the investor leaves the program before the end of the 2 years following the opening date of the account. If the investor leaves the program within 2 years and less than 5 years from the date of opening the account, 1 percent of the deposit amount as a penalty is charged.

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