The PPF accounts of me (73 years) and my wife (67 years) have matured recently. We both were in private jobs. Hence I am not getting monthly pension. We get some interest income from bank FDs. Kindly advise where can we invest this PPF maturity proceeds safely so that we can get monthly/quarterly interest at better rates than bank FD rates which is maximum 6% so far without any risk to capital .
It has become really very difficult for senior citizens to survive in the era of low interest rates, especially when they have no way to supplement their interest income. In my opinion you have the following three options to invest the maturity amount of your PPF account giving better returns and that too without any capital risk.
Firstly, both of you can invest in Senior Citizen Savings Scheme (SCSS) individually. Interest on SCSS is payable quarterly. Presently the interest rate is 7.4% per annum. Although the interest rate for SCSS is announced every quarter by the government, the interest rate is fixed for the entire tenure of 5 years at the rate applicable at the time of deposit. You can make one or more deposits under SCSS but at any point of time the deposits in all the accounts opened under SCSS cannot exceed the limit of Rs.15 lakhs. If you wish, you can extend the tenure by two more years at the time of maturity.
15 lakhs each in the second SCSS, both of you can additionally pay Rs. 15 lakhs personally in the Pradhan Mantri Vaya Vandana Yojana (PMVVY) It is an annuity plan with return of premium. This scheme is managed by the Life Insurance Corporation of India for the Govt. Presently in PMVVY also you get 7.4% return per annum for its tenure of ten years. You have the option to go for monthly, quarterly, half yearly and yearly payment options and the effective return will change accordingly.
You can invest the remaining amount in Floating Rate Saving Bonds of Reserve Bank of India. The interest rate payable on these bonds is opposite scss And PMVVY is floating and gets changed every six months. The interest payable on these bonds is benchmarked against the interest payable national savings certificate and 0.35% higher. Presently the interest rate payable on these bonds is 7.15% per annum, with interest paid on these bonds on 30 June and 31 December every year. The tenure of these bonds is seven years. Any individual can invest any amount under these bonds without any upper monetary limit.
Balwant Jain is a tax and investment specialist and can be contacted on Twitter at jainbalwant@gmail.com and @jainbalwant.