We often portray retirement as a period of leisure and relaxation. But in reality, it can be a challenging experience. First, you have to learn to live without a regular paycheck, which can feel like the end of the world if you did not do your homework before retiring. However, there is no need to panic because there are methods to earn extra money after retirement without giving up your time.
Ways To Earn Money After Retirement
P2P lending can provide good returns for you as a money lender with some risk tolerance and free cash. Compared to other types of passive income, such as real estate, P2P lending takes less capital, to begin with. While the stock market can provide handsome returns, there is always a risk of a bear market. Amid a bear market, you might have to wait years to regain your losses.
With peer-to-peer lending platforms like LenDenClub, you can get annual returns of up to 10–12%* p.a. Just Invest and wait for your tenure to end, that’s it!
Senior Citizen Savings Scheme (SCSS)
Indian retirees search for programs that provide the best security and a consistent income. Many believe that the safest senior citizen investment plans are those that a sovereign guarantee supports. People view those plans that the Indian Government supports favorably.
The minimum investment for the scheme is INR 1,000. You can invest a maximum of INR 1.5 lakh. The scheme’s lock-in period is five years. Investment in the scheme is tax-exempt under section 80C of the Income Tax Act, 1961. However, you attract tax on the interest income. If the interest amount exceeds INR 50,000, you attract TDS.
The Government of India has been selling the Senior Citizen Saving Scheme (SCSS) since August 2004. It is an entirely risk-free debt product. It provides the security of an income for the investment duration and is only for people aged above 60 years.
Pradhan Mantri Vaya Vandana Yojana (PMVVY)
The government started the Pradhan Mantri Vaya Vandana Yojana, available to all older citizens, in 2017. The Pradhan Mantri Vaya Vandana Yojana is a retirement and pension program. The Life Insurance Corporation (LIC) runs and manages the scheme. Once you invest a large sum of money in this program, it is an instant annuity plan that gives you, the investor, a fixed sum.
The scheme’s interest rates change every year. Earlier, the scheme used to carry a constant instant rate for the entire duration of the investment. It is available for people aged 60 years and above.
Post Office Monthly Income Scheme (POMIS)
The Government of India supports the Post Office Monthly Income Scheme. India Post offers this scheme. You will receive a fixed monthly interest rate with this senior citizen investing choice. This low-risk monthly income plan offers significant financial protection to preserve your retirement. The authority overseeing this scheme revises interest rates every quarter. You can transfer your POMIS account from one post office to another.
Mutual funds pool the capital of many investors and spread it over various asset classes, including equity and debt. Fund managers run them and they make sure the fund achieves its investing goals. As we have already noted, most fixed-income investment instruments can only provide returns on par with inflation or returns that are marginally above the inflation rate. But, returns from mutual funds can generate returns much higher than inflation.
After retirement, your risk tolerance declines, and the security of your capital takes precedence. Investing primarily in equity-oriented mutual fund schemes may expose you to volatility that you are not comfortable with. So, you can either invest in hybrid mutual funds with minimal equity exposure or debt mutual funds. You can decide based on your risk tolerance and short-term objectives.
Government infrastructure firms, including NTPC Limited, Housing and Development Corporation, NHAI, and Indian Railways Finance Corporation, issue tax-free bonds. The bond has a term of more than ten years. Additionally, there is a lock-in period until the investment matures. These bonds’ interest rates vary from 5.5 to 6.5 percent. The annual interest payment from the bond issuer and the complete interest amount are tax-free.
Since the government is behind the program, tax-free bonds are low-risk investments. Therefore, the likelihood of default is negligible. The program also guarantees regular income in interest payments and gives capital protection. As a result, it is the best investment choice for retirees.
Investors can still sell the bonds on the stock exchange even when there is a lock-in period. However, bond returns depend on the bond’s purchase price because they trade in low volumes.
Bond sale gains are subject to Section 112 taxation. Profits from the sale of the bond before its one-year term are subject to the investor’s income tax rate bracket. Let’s say you sell the bond a year later. If that is the case, the long-term capital gains will attract tax at a rate of 10% without the benefit of indexation and 20% with indexation.
Investors mostly finish their financial obligations when they are closer to retirement age. Also, the majority of them would have made retirement plans. Therefore, all they require is an additional reliable source to compensate for any of their losses post-retirement. Additionally, they must consider growth in the form of capital gains.
Elderly investors usually are not ready to take on any more risk to make a few more rupees. However, even at 60, some investors have a high-risk tolerance. Therefore, the greatest investment plan will enable senior citizens to benefit from capital growth while providing a reliable source of income.
Senior citizens should therefore pick the most significant investment opportunities in India that fit their needs. Financial gurus advise investors to make informed judgments armed with the knowledge of the numerous investment options accessible.
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