Whether you plan to retire in your 40s or 60s, retirement is inevitable, unlike you are a trending movie star who still earns sufficient money for their appearance. We assume you have been working or running a business your whole life and you have accumulated a lot of money. But this doesn’t mean or imply you can let the money sit as it is and not let it grow. Age is a number, and nothing weird about it. You cannot think that as you have grown up and retired, you cannot make your money work. Your money can still work, and you can let it grow exponentially for a brighter, safe, and secure future.
This article is not for those in their 20s. It is for those who are undergoing the retirement phase and are confused or overwhelmed with what to do with their retirement corpus. However, people in their 20s or early 30s can obviously read this article for their parents. Moreover, you will seek better insights on the significance of a retirement corpus and how you can start saving for your requirement right now.
Before we move towards the actual investment options, we would like to emphasize certain aspects. Following are the pointers that you need to study and try out various retirement investment options.
Reset your mindset
You are not thinking wrong. You have worked your whole life and spent your entire youth trying to collect as much money as possible. But it is not sufficient. As you are on the verge of retirement, you need to stop being a collector of money and become an investor of funds. Your accumulating phase is over; once you understand this, you can be more financially stable. You should not focus on the collection part but the growth aspect.
The Investment strategy will not be the same
We all think that all retired persons can invest in mutual funds or should stick to government schemes. Well, no expert will advise you to invest your hard-earned retirement corpus in a mutual fund that your friend has invested in. This is because you and your friend have collected varying amounts of retirement funds.
For example, it is ideal for saving the desired amount of retirement corpus. But you have saved only half of the said amount. While your friend has exceeded the stated limit. Yes, that’s why what works for your friend cannot work for you.
Now, we will browse through the best investment options, but before that, we need you to save your money in the following buckets for safety purposes. Any financial expert will advise you to do this, no matter what your age or income, or retirement corpus is.
This is the fund that you can utilize only during rainy days. Moreover, these funds should be highly liquid and easily accessible. You might need these funds anytime, and hence, you should be capable of retrieving them anytime. Some of the examples of ways of storing emergency funds are savings and personal bank accounts, fixed deposits, tenure deposits (with an easy maturity scheme), and liquid funds. You can seek some ideas about liquid funds from the internet, but we will now discuss the post-retirement investment options.
This is a must, no matter how much money you have in your retirement corpus. If you plan to spend your retirement corpus for your medical expenses, it will be a bad decision on your part. So, seek health insurance and ensure that you premiums on time without any delay. You can also insure your family members.
10 best investment options for retired senior citizens
Let us come to the primary part of this article. Now, you know the basics to do once you get retired. Moreover, you know the fundamentals that each one of us can adopt a different investment strategy. Now, it is time to discuss options.
1. Bank Deposits
This is one of the safest and most secure investment options to explore. People with all amounts of retirement corpus can invest in bank deposits. You can check with the leading banks of your country to know about the interest rates, especially for the senior citizens. It is good to know that in some countries, the interest rates on bank deposits for senior citizens are higher.
You have two bank deposit options depending on the kind of bank deposits your country offers – fixed deposits and recurring deposits. In the case of fixed deposits, you can invest a lump sum amount for a certain period of time and expect decent returns on maturity. In the case of recurring deposits, you can transfer a certain amount (or set automatic transfers) every month for a certain period and expect the lumpsum amount plus the interest to be credited to your account.
2. Post Office Savings
Well, it depends on the country you live in, and the type of post office saving schemes they offer to the public. You can check with the nearby post office to know more about the saving schemes for retired people. This is another assured and safe way of investing your money. Moreover, these savings schemes provide tax relaxations to senior citizens, so you don’t have to worry about it.
In some countries, post offices do not work in a redundant manner. They work digitally, and you can open saving schemes and invest money in them. You don’t have to travel to the post office each time you deposit money but do it online. Similarly, the money will be credited to your bank account on maturity. It is the best thing that post offices work incredibly in some countries, and they have made special provisions for senior citizens.
3. Government Schemes and Bonds
You must have met several retired friends and colleagues, and they must have surely bragged about the government bonds they have invested in? Of course, government schemes and bonds yield high returns over a period, and they are safe and easy to invest in. Moreover, government schemes can be purchased by anyone with a retirement corpus. You don’t have to accumulate a million dollars in your retirement account to buy them. It is for all.
These are fixed-income investment security, and it is like a loan given to the government by you. You don’t need to have extensive or massive knowledge of the government bonds, however, check with your country which bonds they issue. The country’s government can be trusted, and you don’t have to worry about your money since they are in safe custody with the government. You can purchase government bonds directly from the government or through a broker.
In the case of schemes, these are very safe and can be purchased directly from the government. Actually, you don’t purchase them, but sign up for these schemes. Some schemes can be taken for a lifetime and some for a short while.
4. Mutual Funds
Mutual funds have become the buzzword these days. You can find them advertised and heavily promoted everywhere. But are mutual funds for senior citizens or only for the young? Yes, mutual funds are for both young and old alike, provided the elderly people have sufficient money in their retirement corpus and extra savings to invest in a risky mutual fund.
Mutual funds have a good rep of being safe and highly yielding, but remember that they are also subject to risk. Hence, you need to have sufficient funds to invest in them and not just depend on them to seek more growth. It is an excellent and effective way of diversifying your investment portfolio and is best for retirement. You need to study mutual funds, know more about the companies and identify your niche. Several retired citizens do not seek knowledge and tend to invest in incorrect funds and blame the mutual fund industry as a whole. Ensure that you do not make this rookie mistake.
When we say you need to be knowledgeable, it doesn’t mean mutual funds is a rocket science. You can sign up for a short course or watch a few videos or consult your friend or an expert and know more about them.
Equity is a crucial investment option for senior citizens. No doubt, you need to have sufficient and ample funds in your retirement corpus when you decide to invest in equity. However, you need extensive knowledge about it before you invest. Watching videos or reading a few books might help, but it won’t be adequate to be confident to invest in it. Hence, we suggest signing up for a good course or consulting an expert (a highly experienced financial expert) before you invest in it.
Equity is high-yielding, no doubt, but it has several intricacies and rules to follow. Hence, you need to know more about the equity and the method to earn a return out of it. You will find inquisitive and excellent learners who are above 60 and yet want to know more about equity. So, be a good learner to become a good investor.
6. Real Estate
It sounds completely different from what we discussed above but it is an excellent investment option. Yeah, for some of you, it could be an old-school concept but it still enjoys investors’ attention. However, our point is not to limit real estate investment in apartments, villas, or typical houses. You can even buy a commercial property, a co-working space, a resort, or an office space. If you have sufficient money, you can go through the existing options in the real estate industry in your country and not limit yourself to the traditional ones.
7. Gold and Silver
In some countries, it might not be a good idea to invest in gold, but in countries like India, investing in gold and other valuable metals is great. However, we do not want you to invest in gold and silver for the sake of emotions. It should be from the investors’ perspective. If you prefer digital forms of investment and not the physical gold form, you can invest in gold funds or related funds. In these investment options, you don’t buy gold physically but invest in a formal document stating that you own gold and can be traded later.
Yes, any investment-related article (irrespective of the age group) will never be complete without the mention of cryptocurrencies. It could be bitcoin or anything, but you need to have profound knowledge and adequate funds to invest in them. Read, research, consult, ask experts and try to find as much information as possible before you pour money into these investment options.
9. Corporate Bonds
Just like a government bond, in the case of corporate bonds, you issue a loan to the corporate organization and not to the government. These could be risky because the government is not at all involved. But these yield higher returns than a typical government bond. Hence, you can approach an experienced investment broker who can suggest safe and less risky options.
10. Dividend Stocks
We all know what dividend is. It is the regular payment made by the companies to their shareholders for the shares they hold. They are stable and regular, and these are the best things about them. You can buy them from an online broker. As a senior investor, you can look for stocks that pay regular dividends and do not involve considerable risk. You might not be interested in reinvesting the dividends, but you can certainly withdraw them as a fixed income.
We hope you enjoyed going through these investment options for senior citizens and are about to make conscious decisions.
Senior citizens can invest in fixed income investments, such as certificates of deposit, bonds, and Treasury bills, as well as in stocks, mutual funds, and exchange-traded funds.
Yes, there are tax benefits under Section 80C and Section 80D of the Income Tax Act 1961 for senior citizens who make investments.
Yes, there are additional tax concessions and deductions available for senior citizens as per the Income Tax Act 1961, which makes income tax filing easier for them.
Generally speaking, senior citizens should opt for lower-risk investments, such as bonds and CDs, as these carry lower levels of risk than stocks and other higher-risk investments.
Annuities can be a great option for senior citizens as they offer guaranteed income for life and provide a hedge against inflation.
Mutual funds offer diversification, liquidity, professional management and convenience of investing. They also tend to perform better than other types of investments over the long term.
Alternatives such as gold and real estate can be suitable investments for senior citizens, provided they understand the risks of each option and have a long-term plan in place.
Investing in penny stocks carries a higher risk than other types of investments due to their low liquidity and potential for fraud. Senior citizens should exercise caution when investing in penny stocks.
Yes, many investments, such as mutual funds, charge fees and commissions. Senior citizens should review the fees associated with any investment before committing to it.
Generally speaking, the age of the senior citizen does not affect the types of investments suitable for them, though some tax advantages may be available for older senior citizens.