Retirement Related Investments – 2 : Government Schemes, Equities and Purpose Based Mutual Funds

A person always strives to gather funds and get a big corpus for a better retirement life. To accomplish this aim they start gathering funds and investing them into various investment plans at an early age. The best age to start the same is in the early 20s. Now there are multiple ways to invest into your 20s and plan for the future. But the actual planning here is not where to invest to have a retirement corpus. Rather the aim is to provide investment plans for the corpus that a person has gathered his entire life for retirement. 

In the previous part the focus was on the conservative funds. Emergency funds were also mentioned. The reinvestment of funds also forms an important part into the portfolio of those who have a lot as savings. Now let’s discuss the remaining most prominent ways to invest. 

Basis Of Diversification among The Securities

It is important to first classify the needs and weigh the corpus in front of it. If a person has gathered 50 Lakh Rs. On the other hand if his monthly requirement is 10000 Rs. only then the preferred mode for him is risky securities. The risk needs to be allocated along with safe investment for daily spending. Hence the needs of a person along with his or her corpus is the deciding factor for determination of the investment tools.

Government Schemes

It is the safest mode of investment. These schemes give proper  returns and have no way of failing as they are run by the government. If a person has low savings then he or she should adapt these schemes. The reason is the safety of Retirement corpus. For this class of people it is not important to earn more interest rather their priority is safety of their corpus.

For this purpose some important schemes are SCSS, PMVVY and POMIS. 

SCSS 

It stands for Senior Citizen Savings Scheme. It can be opened through any bank or post office and the rate of interest is 7.4% hence beating the inflation rate. The term is 5 years for this scheme. The extension is available for 3 years inside this scheme. The minimum deposit amount is 1000 Rs. The maximum limit in this corpus is 15 Lakh Rs. 

PMV 

It stands for Pradhan Mantri Vaya Vandana Yojna. The scheme is run by LIC and is available upto 2023 only. It is open for people above 60 years only. The term period is10 years and the rate of interest is 7.4%. The deposit is 1.5 Lakh Rs and the maximum limit is 15 Lakh Rs.

POMIS

It stands for Post Office Monthly Income Scheme. One can only open an account in it through the Post Office. The term applicable is 5 years. The rate of interest in it is 6.8%. The minimum investment is 1000 Rs and the maximum is 4.5 Lakh Rs. No TDS applicable and interest is based on the tax slab.

Mutual Funds 

Multiple variants of mutual funds are available in the market. They cover ESG funds, Technology funds, Oil Funds, Finance Funds, Midcap Funds, Small Cap Funds, Blue Chip Funds, Penny Stock Funds etc. The selection of this investment is available to only those who have surplus savings for them. This savings amount should not carry any burden of necessities. Hence it can be available for risky investments. There are also funds available who involve government securities and bonds only. 

Thus the selection of mutual funds entirely depends on the risk profile of a person. More cravings for interest would be possible only with equity based funds. While safe investments are possible only with government bonds based funds.

ESG funds and other types of funds are explained in other articles.

Equities

It is the most risky investment mode. At the age of retirement one should focus more on dividend based companies. Big companies with high dividend payout ratios should be chosen. The reason is their constant dividend possibility even if the stick is trailing in losses. Also this investment attracts high taxation. One can also create a mixed portfolio of best companies and penny stocks to keep a balance of risk and reward. Again this type of investment is only possible for those who have surplus amounts in savings. The reason is very obvious – high risk associated. Yet it is said that Indian Markets are on the verge of a boom. Hence the entire world is bullish on Indian Markets. The reason is huge uncaptured market territory and great scope of development.

Nowadays there are various online websites and applications available for investments. These sites and platforms attract customers due to quick buying and selling possibilities. Also the brokerages on such platforms are very low. The best platform in India is Zerodha due to its huge customer base and low brokerage model. 

INVESTALLIGN

At Investallign we provide retirement fund investment along with equity facilities. We are having a tie up with Zerodha and provide multiple facilities under its brand name. Investallign is one of the best Zerodha Partnered Firm. We provide daily market updates through our blog updates and our brokerage rates are aligned with the Zerodha model.

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