Tips to invest a lump sum for a pensioner

POSTED BY Red Devil ON February 25, 2013 10:42 pm COMMENTS (10)

Hello friends,

I am asking this query on behalf of my uncle and family. He is 60+ and recently got 40 lacs on selling a property. He wants to invest this money so as to ensure a decent monthly/regular income as well a decent growth on the amount. I suggested investing in share markets but he is quite traditional when it comes to investment plans. He isn’t willing to take up any higher levels of risk. Could you please let us know the options he can explore?

PS: His monthly expenditure and other basic requirements including health are not dependent on the return from this amount.


10 replies on this article “Tips to invest a lump sum for a pensioner”

  1. Red Devil says:

    Thanks Ashal. I will check with my uncle on the capital gains part.

  2. Dear Red Devil, then you mean to say by purchasing that 1 BHK flat, capital gains can be set off? Please calculate the exact details.

    Coming back to original query of Investing 40L Rs. I w’d like him to invest 5L Rs. * 8 FDs in the bank of his choice. Being Sr. Citizen he is eligible for higher interest rate & as on date many banks are offering 9.5 to 9.75% ROI for 5-10Y band. Which is higher than SCSS & POMIS rate.

    Out of those 40L Rs. He may opt 20L Rs. Fd for compounding & remaining 20L Rs. for mly income purpose. From this mly income he may invest either a part or full into an Eq. fund to combat inflation in the long run.



  3. Dear Red Devil, the property in question was – a land piece? a flat? A shop?Agriculture land????

    Please clarify.



    1. Red Devil says:

      Hi Ashal…It was a house in an independent plot.

  4. Forgot that post office senior citizen savings scheme has a limit of 15 lakhs for investment.
    The monthly income scheme can also used for a limit of 9 lakhs for a joint account.

    1. Red Devil says:

      Thanks FFC.

      The limit is 15 lakhs for quarterly return scheme and 9 lakhs for monthly return scheme for a joint account, am I correct? It seems he will be inclined towards FDs for a good share of the remaining amount.

  5. Most of the money (say 60%) can be invested in post office senior citizen savings scheme
    9.3% pre-tax interest paid each quarter which is a pretty good deal especially since monthly monthly expenses are already taken care of.

    Some 10% in tax-free bonds for tax free income.

    Some 15% can be invested in FD to allow the money to compound safely for future. He can exit them when tax rates are lower.

    Rest 15% can be invested in a balanced mutual fund like HDFC prudence or balanced for better compounding and tax-free returns (as of now)

    Do ask him to make a will if hasn’t.

  6. Dear Red Devil, what about the tax calculation on long term capital gains on sell of property?



    1. Red Devil says:

      Thanks Ashal.

      My uncle has some more amount, with which he plans to buy a 1 BHK very shortly, which he plans to rent out. Isn’t that enough to avoid the capital gain taxation? Please let me know if there are any other clauses in short/long term capital gains which we need to take care.

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