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Mint
2 days ago
- Business
- Mint
Retirement planning: Is this advisable to invest in solution-oriented mutual funds?
If you want to save for your retirement, it is feasible as well as advisable to invest in mutual funds across categories. Equity mutual funds enable long long-term wealth creation, debt schemes provide security. Additionally, investors can also allocate some funds to long term tax-saving instruments such as PPF, Senior Citizens Savings Scheme (SCSS) and Kisan Vikas Patra (KVP) for earning higher interest and saving tax at the same time. All in all, one needs to curate a portfolio of sorts to accumulate sufficient funds for the same. But what if you outsource the entire retirement plan to a fund manager by investing in a solution-oriented fund? Those who are not aware, solution oriented mutual funds refer to those schemes which have a lock-in period of at least 5 years or till retirement age, whichever is earlier, per the Sebi's categorisation of mutual fund schemes. There are a total of 29 such schemes with total asset size (assets under management) of ₹ 31,007 crore., as on May 31, 2025. Some of the large retirement funds include UTI Retirement fund ( ₹ 4,703 crore), Nippon India Retirement Fund ( ₹ 3,156 crore), HDFC Retirement Savings Fund ( ₹ 6,503 crore) and SBI Retirement Benefit Fund aggressive plan (2900 crore), reveals the data from Association of Mutual Funds in India (AMFI) as on June 19, 2025. Investing in retirement schemes is indispensable for investors to maintain the same standard of living after retirement as they had before it. 'Gone are the days when our parents were getting regular monthly pensions from the government. Nowadays most of people are from private jobs or running their own business. In today's world, when private jobs are not secured, there is no question of a pension from the employer. And that's made Retirement Planning more crucial,' says Preeti Zende, a Sebi-registered investment advisor and founder of Apna Dhan Financial Services. Soumya Sarkar, Co-founder of Wealth Redefine, says, 'Retirement-focused solution-oriented mutual funds can be a good choice for building a retirement corpus. These funds are designed for long-term goals, with a 5-year lock-in ensuring disciplined investing and shielding you from short-term market volatility. They offer a mix of equity (for growth) and debt (for stability), customised to your risk appetite, helping you accumulate wealth over time.' Those who want to curate their own portfolio can invest in a combination of mutual funds, opines Zende. 'It is better that you use a combination of diversified equity Mutual funds like large cap, flexicap and mid and small cap, along with EPF, PPF and NPS. So this portfolio will also take care of inflation-headed return, provide downside risk to the portfolio, and some income is tax-free,' adds Ms Zende. Visit here for all personal finance updates.
Mint
3 days ago
- Business
- Mint
6 government schemes that offer higher returns than FDs
Fixed deposits (FDs) are a great way to keep your money safe. With the rising cost of living, investing your money in low-yield schemes can reduce your purchasing power. Instead, you can turn to other government-backed schemes. These options are low-risk and can be aligned with specific goals like: Stable monthly income Securing a child's future Retirement savings And most importantly, some of them even offer interest rates higher than 5-year FD returns from all banks (excluding Small Finance Banks). Here are 6 such schemes that help you protect your capital and beat inflation: For those who want a stable only income without having to dip into their principal savings, POMIS is a reliable option. Current interest rate: 7.4% p.a. (revised quarterly) Interest payout: Monthly (starts a month after initial investment) Lock-in: 5 years Premature withdrawal: Allowed after 1 year with a penalty Minimum investment: ₹ 1,000 1,000 Investment cap: ₹ 9 lakh (single) or ₹ 15 lakh (joint) 9 lakh (single) or 15 lakh (joint) Taxation: Interest earned is taxable per the individual tax slab The interest earned is the monthly income. While your principal stays untouched until maturity. However, POMIS is only for adult Indian residents; NRIs are not eligible. Comparing this with the SBI Annuity Deposit Scheme (ADS): It pays both interest and principal monthly, which means your initial investment keeps shrinking, and as a result, so does your interest income. Additionally, SBI ADS currently offers around 6.5% p.a. POMIS beats that with higher stability and capital protection. For retired people (over 60 years of age) looking for a steady income, SCSS may be one of the best government-backed options, especially if your parents have received a lump sum amount, such as a retirement gratuity or final settlement. Current interest rate: 8.2% p.a. (revised quarterly) Interest payout: Quarterly Lock-in: 5 years (extendable for 3 more years) Premature withdrawal: Allowed with penalty Investment limit: ₹ 1,000 to ₹ 30 lakh 1,000 to 30 lakh Taxation: Interest earned is taxable per the individual tax slab It's simple, you invest once and get returns every quarter for 5-8 years. All the while, your principal stays untouched. However, even if you do not claim the quarterly interest, it does not earn any additional interest. Again, compare this with SBI ADS (for senior citizens), which returns part of your principal every month. As the principal shrinks, so does the interest income. Even at 7.5% p.a., the yield is lower over time. Meanwhile, SCSS keeps your money intact and your returns steady. As a parent to a girl child, you can use SSY to build a long-term financial cushion for her education and/or marriage. The scheme offers high interest and full tax exemption, making it one of the most rewarding options for goal-based savings. Current interest rate: 8.2% p.a. (compounded yearly; revised quarterly) Maturity: 21 years from the date of investment or when she gets married (after turning 18) Contribution period: 15 years Premature withdrawal: Allowed For the medical treatment of life-threatening diseases of the girl child In the event of the guardian's death Investment limit: ₹ 250 to ₹ 1.5 lakh p.a. (either lump sum or in multiple instalments) 250 to 1.5 lakh p.a. (either lump sum or in multiple instalments) Taxation: Completely tax-free You can open an account at any time before your daughter turns 10 years old, and you only need to contribute for the first 15 years. However, the account continues to earn interest until maturity. The returns are fully tax-free. In contrast, returns from minor FDs are taxed as per the guardian's slab. You can easily open it at your nearest Post Office, State Bank of India (SBI), or any public sector bank. Note: If you miss the minimum deposit in any financial year, the account will be treated as 'Account under Default'. It offers predictable growth without market risk. So, if you are an Indian individual over the age of 10 looking for a fixed-return investment option, NSC may be ideal for you. Current interest rate: 7.7% p.a. (compounded yearly; revised quarterly) Payout: At maturity Premature withdrawal: Not allowed except in case of the holder's death or under a court order. Minimum investment: ₹ 1,000 1,000 Where to invest: Post offices across India Taxation: Interest earned is taxable per the individual tax slab Unlike FDs, there's no TDS at maturity. Your full maturity value is received without deductions. Compared to 5-year bank FDs (currently lower yielding) and evenKisan Vikas Patra (KVP) at 7.5%, NSC delivers better returns. It can also be used as collateral for loans. For fixed income and capital safety, NSC is a clear step above traditional options. This is for the investors who want to grow their savings steadily, without worrying about market volatility. It offers guaranteed returns and your full principal back at maturity. Interest rate: 7.1% p.a. (compounded annually) Tenure: 15 years (extendable in 5-year blocks) Investment limit: ₹ 500 to ₹ 1.5 lakh per year 500 to 1.5 lakh per year Tax status: Fully tax-exempt (EEE) You can invest a small amount yearly (min. ₹ 500 or the account is discontinued), let it grow tax-free, and extend the account even after maturity. PPF does not require asset allocation or monitoring. It suits conservative investors who prefer simplicity and guaranteed returns over complexity and stock market risk. NPS is designed for long-term retirement planning. It helps you build a diversified portfolio across equity, corporate bonds, and government securities. Additionally, it helps you stay disciplined with regular contributions. Expected returns: 10–14% p.a. (market-linked) Lock-in: Until age 60 Minimum contribution: ₹ 1,000 per year 1,000 per year Who can invest: Indian citizens (residents and NRIs) aged 18–70 Investments are made across asset classes: Scheme E: Equity (maximum 75% exposure) Scheme C: Corporate bonds Scheme G: Government bonds Scheme A: Alternate assets At maturity, 60% of the corpus can be withdrawn as a lump sum (tax-free). The remaining 40% is used to buy an annuity that gives you post-retirement income (this is taxable as per the individual tax slab). Unlike PPF, NPS isn't tax-free when withdrawn. But it offers broader exposure and higher return potential if you can handle some market volatility. It works best for disciplined investors who want long-term growth, not just capital protection. Source: Finology When it comes to money, safety is paramount. However, it's not enough. You also need your money to grow. These 6 government-backed schemes offer both: capital protection and inflation-beating returns. Each serves a specific purpose: income generation, child-focused savings, or retirement planning. Choosing the right one depends on your goal and time frame. But when selected wisely, they offer a safer path to wealth preservation. However, for those aiming to grow beyond preservation, long-term wealth creation needs a different approach: Finology 30. It's a carefully curated list of high-quality businesses, selected after thoroughly researching their financial strength, governance, and long-term potential. Built for investors who want to stay ahead. Finology Research Desk advocates a practical approach: separate good and bad debt, restructure when needed, and stay still, if you are not sure where you stand? Try Finology Financial Health Check-up to assess your debt situation and start correcting course. Finology is a SEBI-registered investment advisor firm with registration number: INA000012218. Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
India.com
15-06-2025
- Business
- India.com
How Middle-Class Indians Are Prioritising Financial Security Post Covid-19: Expert Sheds Light on Critical Aspects
Financial Priorities For Middle Class In India: Over the past few years, the financial priorities of Indian households—especially among the middle class—have seen a marked shift. The COVID-19 pandemic, followed by job disruptions and a surge in retail investing, has reshaped how families think about money. There's a growing focus on building financial resilience, planning for uncertainty, and moving beyond just high-return investments. From emergency funds to retirement strategies, individuals are increasingly seeking clarity and structure in their financial lives. At the same time, generational differences in attitudes toward money—ranging from capital preservation in older generations to risk-taking among Gen Z—are pushing financial advisors and platforms to rethink their approach. In an email interaction, Priyank Shah, Co-Founder And CEO of The Financialist, shares his observations on the evolving landscape of financial planning in India. He offers insights into how different income groups should approach key life goals, how inflation affects retirement planning and more. Financial Priorities Evolved For Middle-Class Indians After Covid-19, the financial priorities have shifted from just chasing returns to building for resilience and safety. The middle-class Indians are more wary of emergency funds and insurance planning. Meanwhile, the stock market boom brought new retail investors in, but it also exposed many to risk without a strategy. While tech integrations and apps made it easier for people to execute and buy products, the advisory layer guiding on what, when, and how much to execute was still missing in the system. There is a greater demand for transparent, conflict-free advice. At the same time, regulatory pushes from SEBI are pushing the industry toward trust and data-led planning. Clients are looking for holistic solutions, not just product recommendations, and want advisors who align with their goals, not commissions. Foundation Of Financial Plan: The foundation of any financial plan should begin with creating an emergency buffer, something that provides peace of mind during uncertain times like job loss or medical emergencies. Once that's in place, families should work on optimising retirement benefits available through employer schemes. One must split their goals into long-term and short term to decide their investment allocation between equity and fixed income products. Investments should be executed on the basis of the priority of these goals. One must avoid generalizing monthly investment requirements to their income as two families with similar income but different backgrounds, goals, and obligations will have different investment plans. Government-backed Schemes Like SCSS Enough For Secure Retirement? Government-backed schemes like the Senior Citizens' Savings Scheme (SCSS) offer attractive, stable returns and are a valuable component of a retirement portfolio, especially for generating predictable income. However, in today's inflationary environment, relying solely on such fixed-income instruments may not be enough. Retirees need to strike a balance. A 100% allocation to fixed income may preserve capital but risks erosion of purchasing power over time. On the other hand, a 100% equity portfolio, while inflation-beating in the long run, may be too volatile to support consistent withdrawals during market downturns. The optimal approach is a balanced allocation between equity and fixed income. Equity provides growth and helps the portfolio keep pace with inflation. On the other hand, the fixed income ensures stability and facilitates uninterrupted withdrawals, especially during equity market corrections. Products like SCSS can be part of the fixed income allocation. The remaining can be invested in traditional banking products and mutual funds. Retirement should be treated as a dynamic phase that needs periodic adjustments, not a one-time setup. Financial Roadmap Considering Inflation And Market Volatility If their emergency fund is secure, they must lay down lifestyle requirements. What does their ideal retirement look like? This includes estimating monthly expenses, healthcare needs, travel, and leisure. Once this is mapped, they can factor inflation into this and calculate their target corpus. During income earning years, risk tolerance is naturally higher. This is when the allocation of equity can be heavy through diversified equity exposure. As they approach retirement, risk tolerance becomes lower. The portfolio should gradually shift towards a more balanced mix, focusing on capital preservation and income generation. Regular reviews, rebalancing, and tax optimisation will help stay aligned to the goal while managing volatility. Financial Planning Goals Differ Between Millennials, Gen Z, And Older Generations Older generations typically aim to sustain their lifestyle with reliable income streams. Their priorities include capital preservation, healthcare funding, and legacy planning. Our advice would be to focus on steady returns and ensure cash flows align with recurring needs. Financial products like MFs which allow systematic withdrawals are ideal. Millennials are in their prime earning years with significant life goals like home ownership, children's education, and early retirement. Their higher risk tolerance allows for a stronger equity focus. They can leverage growth assets now by opting for equity mutual funds and use fixed income only for short-term needs or stability. Gen Z views wealth building differently. They're inclined to invest in themselves, pursue side hustles, and explore unconventional assets. Flexibility and access are key. They value experiences and aren't afraid to experiment with new things. This shift in mindset often brings towards riskier assets like cryptocurrency. If they have the risk appetite they can also. Wealth managers need to first understand these differences in wants and then proceed to plan for the respective group. Each generation has different fears, dreams, and risk profiles. Strategy needs to match life stage, not just income or age. Good advice cannot be one-size fits all. Partnership With Zerodha The partnership with Zerodha has changed the path of our journey, putting lots of things within reach that will help us scale. Zerodha has helped amplify our reach among digitally-savvy investors who want unbiased advice but are averse to traditional sales-driven models. Their ethos of transparency aligns with ours, and their backing has enhanced our credibility. This credibility goes a long way while onboarding new clients as they see a familiar and trusted name already next to ours. The partnership also makes it easier for us to convince prospective clients of our model and all its benefits. It also serves as a mark of validation of our expertise, over and over the credentials held by our team of CAs and CFAs.
News18
12-06-2025
- Business
- News18
Senior Citizens Savings Scheme: Eligibility, Feature, Interest Rates And Taxability
Last Updated: The investment itself is tax-deductible under Section 80C, but the interest earned is completely taxable. The Senior Citizen Savings Scheme (SCSS) is government-backed in India, introduced in 2004 to provide financial security to senior citizens who require a consistent income following retirement. It offers a fixed interest rate of 8.2 per cent (as of June 12, 2025), payable quarterly to all individuals aged 60 and above. They can invest up to Rs 30 lakhs during a 5-year period that can be extended for an additional three years. The investment itself is tax-deductible under Section 80C, but the interest earned is completely taxable. Let's take a closer look at its Eligibility Criteria, Features, Interest Rate, Taxability and more. Eligibility: The individual should have to be above 60 years of age to open a SCSS account in a Post office or a bank. Retired civilians aged 55 and up, but under 60. However, the investment should be made within one month of receiving the retirement benefits. Retired defence employees above 50 years and below 60 years. The investment criteria remain the same as the retired civilians. Accounts can be opened as individuals or jointly with a spouse. The total amount deposited in the joint account will be attributed only to the first account holder. Notably, Non-Resident Indians (NRI) or Hindu Undivided Families (HUF) are not eligible to open an account. The individual must submit their PAN Card and Aadhaar Card numbers. All the eligible individuals can invest in SCSS with a minimum of Rs 1,000 and a maximum of Rs 30 lakh. The SCSS interest rate is fixed at 8.2 per cent annually. The rate is updated quarterly and the final rate is determined by factors such as inflation, market conditions and others. The savings scheme lasts five years. You can choose to extend the term for another three years. You must submit a request to the bank within one year of maturity. You can only select to extend the tenure once. After one year of account opening, you may withdraw funds prematurely from your SCSS account. If you open a SCSS scheme, you will be able to receive quarterly disbursals. Banks make interest payments on April 1, July 1, October 1 and January 1. Taxability: It provides both tax benefits and is liable to taxation. Investments in SCSS are eligible for deductions under Section 80C of the Income Tax Act, up to Rs 1.5 lakhs per year. The interest is taxable based on an individual's tax slab and TDS (Tax Deducted at Source) applies if the interest exceeds Rs 50,000 per year. Also, senior citizens can claim a maximum of Rs 50,000 annual deduction on interest earned under Section 80TTB of the Income Tax Act. Note: An SCSS account can be transferred from a post office to a bank and vice versa. Furthermore, it is transferable throughout India. First Published: June 12, 2025, 15:12 IST
News18
12-06-2025
- Business
- News18
RBI's Repo Rate Cut: What It Means For Your Fixed Deposit Returns And Tax Outgo
Last Updated: Banks have started cutting FD rates, reducing returns for retirees and conservative investors who rely on them The Reserve Bank of India's recent decision to reduce the repo rate by 50 basis points to 5.50% has created a ripple effect across the financial ecosystem. While the move is aimed at reviving economic momentum amid easing inflation, it carries notable implications for both borrowers and savers, particularly in terms of taxation on interest income. What This Means for Borrowers Home loan holders and other borrowers on floating interest rates will be among the immediate beneficiaries. A lower repo rate typically leads to reduced lending rates, meaning lower EMIs. For instance, a Rs 50 lakh home loan with a tenure of 20 years may see EMIs drop by approximately Rs 1,500 per month, offering relief to households juggling multiple expenses. With a cumulative deduction of 100 basis points in the repo rate in 2025, banks have been steadily decreasing the fixed deposit interest rates. According to SBI research fixed deposit rates have declined by 30 to 70 basis points since February 2025. Short and medium term fixed deposits are likely to witness the most serious rate cuts. For example, a 1 year fixed deposit rate dropping from 7% to 6.5% would result in Rs 5,000 less annual interest on a Rs 10 lakh deposit. So, the situation is less favourable for fixed deposit (FD) investors. Banks have already begun lowering FD interest rates, which means that savers, especially retirees and conservative investors who depend on FDs, may earn less on their investments, according to CA Shefali Mundra of ClearTax. 'A 6% FD for someone in the 30% tax bracket effectively yields just 4.2%—barely ahead of inflation. With rate cuts, this post-tax return may drop further," says Mundra. While the repo rate cut itself doesn't alter tax laws, its effect on interest income is undeniable. As deposit rates fall, so do the absolute interest earnings, which in turn reduces the tax liability in numerical terms. However, the relative tax burden increases, as a larger portion of the now-reduced interest income goes towards taxes. Smart Strategies for FD Investors in a Falling Interest Rate Scenario As interest rates continue to decline, fixed deposit (FD) investors may need to rethink their approach to safeguard returns. Here are some strategies to consider: 1. Ladder Your FDs: Spread your investments across FDs with different maturities. This helps manage reinvestment risk and ensures liquidity at regular intervals. 2. Explore Government-Backed Savings Schemes: Consider alternatives like the Senior Citizen Savings Scheme (SCSS) or National Savings Certificates (NSC), which often offer better returns and are less influenced by repo rate changes. 3. Look into Short-Term Corporate Bonds: Top-rated corporate bonds with 2–3 year tenures may offer higher yields than traditional FDs, with relatively manageable risk. 4. Evaluate Hybrid Mutual Funds: Hybrid funds, which invest in a mix of debt and equity, can provide better returns than FDs while keeping risk moderate. 5. Keep an Eye on Inflation: With CPI inflation estimated at 3.7% for FY26, real returns from FDs may be negligible. Diversifying into equity mutual funds could help preserve purchasing power over the long term. 'The key is diversification and tax efficiency. Investors must weigh not just returns, but also the post-tax impact," adds CA Mundra. tags : Fixed deposit Location : New Delhi, India, India First Published: June 12, 2025, 08:03 IST News business » tax RBI's Repo Rate Cut: What It Means For Your Fixed Deposit Returns And Tax Outgo
