Savings scheme

What is best for seniors?

SCSS vs PMVVY: For an elderly person, investing in a risk-free instrument is the most advisable. That is why bank fixed deposit (FD) is one of the most preferred investment options among the elderly. But, the way the FD bank interest rate nosedived, seniors began to look at other insured return options like Senior Citizen Saving Scheme (SCSS). If a senior is looking for a regular monthly income, then Pradhan Mantri Vaya Vandana Yojana (PMVVY) is another good option for people aged 60 and over to park their money. However, if we look at the opinion of experts, in SCSS there is more liquidity while in PMVVY there is a guaranteed fixed monthly return available to the investor. They advised the elderly to invest in both in order to have an assured and fixed monthly income and at the same time in case of financial crisis one can also monetize his investment.

Speaking on SCSS vs PMVVY, Kartik Jhaveri, Director of Wealth Management at Transcend Consultants, said, “In both PMVVY and SCSS the interest rate offered is 7.4%. But, in SCSS, the interest rate can vary on a quarterly basis while in PMVVY, its interest rate is fixed at the time of investment for the entire duration of the investment. Jhaveri said that in SCSS the investment period is five years while in PMVVY the investment period is 10 years.

Jhaveri added that in PMVVY one gets a fixed monthly pension based on the annual interest rate offered at the time of investment. And if the investor dies before the maturity period, the amount invested or the capital investment will be refunded to the investor’s nominee. He said that in case the investor survives the 10 investment period, the capital investment will be returned to the investor.

“PMVVY is an LIC plan and according to the LIC website, the PMVVY interest rate offered until March 31, 2022 is 7.4%,” Jhaveri said.

Advising investors to also look at the liquidity angle, Jitendra Solanki, SEBI-registered tax and investment expert, said: “Being a senior, there may be a financial emergency ahead as the income possibilities post retirement become limited. So in my opinion one needs to have a diversified investment in SCSS and PMVVY so that one can have an insurance monthly report as well as a way to deal with the financial emergency arising in the future close. “

Solanki also said that in SCSS one can start investing after reaching the age of 55, while in PMVVY one has to be 60 to be eligible to invest.

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