SCSS (Senior Citizen Savings Scheme) Account

SCSS (Senior Citizen Savings Scheme) Account

What is it?
This is an account that one can open in the Post Office.
As the name suggests, its for Senior citizens.

Current interest rate is 9.2%

Max amount that can be invested in 1 account: 15L
Min amount: 1000 Rs
Maturity: 5 years
Can I have more than 1 account: Yes, but max in one account is 15L
Nomination available: Yes
Transferrable: Yes
Can it be extended: Yes (for 3 years)
TDS deducted: Yes

Note: Interest is paid quarterly.

So for 15L deposited, at a rate of 9.2%, the interest for the year is 1.38L (34500 paid quarterly).
So if you have 4 accounts (15L*4 = 60L), you will get 1.38L quarterly.

You can use this as a pension for yourself.

Will this be the interest when I am 60?
Good question, I am certain it won't be. Depending on your age, this scheme may not even be around at that time :)

Thoughts?

Recurring deposit to generate monthly pension

Recurring deposit to generate monthly pension

We have an article which highlights how to use RD for generating a retirement corpus.
However, we can use RD to also generate a monthly pension.

How?

Create a RD for 10 years (1000 per month). Note that you need to create a fresh RD every month for 12 months.

Assumptions:

• The investor is 30 years old and needs to retire when he/she is 60 years old.
• 10 year RD rate is 8.25%

Plan:


Create a RD for 10 years (1000 per month). Note that you need to create a fresh RD every month for 12 months.





Thus at the end of twelve months, the monthly outgo will be 12000 per month.
At the end of ten years, for the next one year, you will get a pension of 186201 per month.

One can put this amount in any other long term investment option (like NSC/FD etc) and restart another RD scenario for the next 10 years.

 Just my thoughts. Do share if you think there are better avenues.