Your parents have taken lots of stress and pain so far, now it’s your time to take the front seat and their time to take a rest.
If you’re a young reader, and I hope your parents have worked hard for a long time and they’re retired, some may be ready to retire.
Your parents have reached a stage where they need support from their grown-up kids – both physical and financial. But still, some parents hesitate to ask their kids for money or in other words they like to be independent in their finances.
Here, I would like to share with you the investment opportunities which are there for your parents. Sit and guide them clearly to make the right investment choice for their hard-earned money.
This guide may not be suitable for the parents who have made a proper retirement plan and retired happily now, this is for parents who haven’t planned any of those and sitting on some cash that they saved in the long run.
Let’s get started.
Before going to the investment part make sure they’ve enough cover for their health insurance and 6 to 12 months of the emergency corpus. This is mandatory, if not guide them or you have it covered on behalf of them. (Check out my mistakes on health insurance and emergency corpus here)
You can’t tell them to invest in equity, they’ve crossed their age in taking risks. Also, you can’t convince them to invest in debt mutual funds and it has credit risks and interest rate risks.
So, I came up with two fixed instruments for elderly people where they can expect monthly returns from their invested amount.
- Senior Citizen Saving Scheme (SCSS)
- Pradhan Mantri Vaya Vandana Yojana (PMVVY)
Taxation and Inflation
The interest received is taxable. If they’re in any at tax slab, they have to pay. If not, they only need to file ITR for it and no deductions will be made for their returns.
And this return may not beat inflation at this moment, but in the long run, it can beat inflation, or at least it can travel in line with inflation periods like what is happening now.
Your parents might have saved a decent amount in their savings account so far and it deserves some respect rather than sitting simply in a savings bank account or in FD with returns that won’t beat inflation.
So, guide your parents to invest in the SCSS and PMVVY, instead of their cash-lying ideal. And it’s also govt. backed one, so they no need to worry about their principal invested.
I am not telling you it’ll take care of everything… At least a small sum of the amount will be received from these schemes every month for their expenses, in case there are any additional expenses that they can’t manage… Their son/daughter (you) is there to give a hand.
It’s like a passive income for them… their hard-earned money is earning for them now safely, without any risks.
If you have anything to say to me or want to comment on this post, feel free to leave a response here.