How to double interest earned on investment

Savings program for seniors How to double the interest income from the investment every year

Senior savings plan: This is how you double the interest income from the investment every year

Photo: BCCL

The Senior Citizen Savings Scheme (SCSS) is a government-sponsored savings program designed to provide older people with a low-risk, steady income stream and tax benefits. Retirees can invest up to 15,000 rupees as a lump sum individually or collectively. It is available in all banks and post offices in India.

An interest rate of 7.4% is payable for the April-June quarter of the program. The program is open to people aged 60 and over.

Individuals who have retired under the Voluntary Retirement Scheme (VRS) or Old Age Pension at the age of 55-60 may open an SCSS account within one month of retirement. Such individuals may open an SCSS account only if the source of the investment is retirement benefits within one month of receiving retirement benefits. However, the Treasury, in a circular dated 26 May 2020, scrapped the one-month clause for those who retired during the 2020 lockdown period nationwide due to the Covid-19 pandemic.

The program expires in 5 years and after the due date the account can be extended for a further three years by submitting an application in the prescribed format within one year of the due date. In these cases, the account can be closed at any time after the end of a renewal year without any deduction.

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The maximum amount that can be deposited in this system is Rs 15 lakh. An individual may open more than one account in their name or jointly with their spouse at any post office subject to the maximum investment limit of Rs 15 lakh by adding funds to all accounts.

If a senior invests a sum of Rs 15,000 for a period of 5 years at the current interest rate, the quarterly interest would be Rs 27,750 which equates to an annual interest of Rs 111,000. At the time of maturity, the total interest on the investment would be Rs 5,55,000. The total amount received at maturity is Rs 20,55,000 (principal plus interest for 5 years).

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Now the interest earned can be doubled by joint deposits with a spouse. In the case of a joint account, the allowable maximum investment limit also doubles to Rs 30 lakh and with it the interest rate earned in 5 years. Thus, the annual interest earned by the elderly couple amounts to Rs 2.2 lakh per year.

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