Senior Citizen Scheme: Where to invest PPF money for better returns, SCSS or SWP – see calculation
Retirement Planning To ensure that your retirement life is hassle free, it is better to plan in advance so that you do not have to depend on anyone for your financial needs in old age. There are many schemes available for retirement pension. But today we will compare Senior Citizen Scheme and SWP. We will know which of these two is better for retirement?
After 30 to 40 years, everyone starts planning for retirement. Although PF is deducted from the salary of every employed person. Which is received in the form of pension after 60 years or after retirement.
If we pay attention, the amount received under EPF may hardly be sufficient for all the expenses after many years from today. In such a situation, you can prepare a great plan for retirement by investing in different places yourself.
In this retirement planning, we have included PPF, Senior Citizen Scheme and Mutual Fund SWP. Along with this, you have the option to choose either Senior Citizen Scheme or SWP.
How to do retirement planning
After the age of 35 to 40, save some part of the salary for retirement. You can save Rs 5000 every month for retirement. Now you have to decide where to invest the Rs 5000.
If a person starts saving at the age of 40, then he can get the benefit of extra income from SWP even before 60 years. However, except for special conditions, no investor can take advantage of the Senior Citizen Scheme before 60 years.
So, during the calculation, we have considered the age of the investor as 45 years.
Calculation
Choose PPF in the first 15 years
If an investor starts PPF even at the age of 45, then he starts getting a good income at the age of 60 even without earning. Here we have chosen PPF for the first 15 years. Because it provides tax exemption. Its login period is 15 years. Along with this, guaranteed returns are available under PPF.
Calculation for 15 years
Investment amount – Rs 30,000 per year
(Save Rs 5,000 per month)
Investment period – 15 years
Return on investment – 7.1 percent
If Rs 30,000 is invested in PPF every year for 15 years, then the total amount you will get according to 7.1 percent return will be Rs 8,13,642. At the same time, the total return will be Rs 3,63,642 and the total investment amount will be Rs 4,50,000.
How to earn extra income at the age of 60
Now the amount received from PPF can be invested in either Senior Citizen Scheme or SWP. Let us understand the calculation of both.
Income from Senior Citizen Scheme
- Investment amount – Rs 30 lakh
- Return received – 8.2 percent
If an investor invests in Senior Citizen Scheme for 5 years. So according to 8.2 return, you earn Rs 6000 every third month. Under the scheme, you will get Rs 4,23,0000 after 5 years. At the same time, the total return is going to be Rs 1,23,000.
You cannot invest more than Rs 30 lakh in this scheme.
Earning from SWP
SWP is a type of mutual fund. If an investor invests Rs 80 lakh in it for 5 years. So at the rate of estimated return of 12 percent, you get around Rs 6 lakh on maturity. Under this, you can avail income of Rs 10,000 every month.
What is better for you depends on your needs and choice. The main difference between SWP and SCSS is that the return in SWP depends on the fluctuations of the market. On the other hand, guaranteed returns are available in Senior Citizen Scheme.
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