We can never thank our fathers enough for their contribution in our lives with gifts, but how about doing it in a manner consistently. This wouldn’t imply that you show up with a fancy shirt or a gift card every morning, but you can certainly ensure his financial well-being on a regular basis. Once retirement sets in, people are often left with limited resources with no regular flow of income. At this juncture, the risk appetite is usually low, which makes them averse to aggressive assets, leaving them largely dependent on PFs and pension funds. A good mix of fixed and market-linked assets is what is needed to ensure optimal growth that can beat inflation.
Here are some of the investment instruments you can consider to help your father in easing off his financial burden.
Health insurance coverage
A health insurance is a necessity for everyone in this rising medical costs era. If your father has a health plan, but is not sufficient to meet his medical requirements, then you should first work towards enhancing the coverage. With age, the susceptibility to ailments becomes high, and if there is no support system to cover the treatment expenses, you are going to be drained off your savings shortly. This is where health insurance and critical insurance products come into the picture. Mind you they don’t supplement each other but only strengthen your financial position against a wider range of ailments and financial consequences that come along. You can also avail tax benefits on premium payments for senior citizens. The tax exemption allowed on premiums paid for health insurance is Rs 50,000 under Section 80D. For premiums paid against critical illness insurance, the tax exemption limit is at Rs 1 lakh under Section 80DDB. These tax benefits can be availed by anyone who is paying for the premium for senior citizens.
Invest in fixed income instruments
For secured and regular income, it’s best to put a part of the savings in fixed income assets such as fixed deposits and post office monthly income theme. The exemption limit on income from such sources is now Rs 50,000 under Section 80TTB. Also, there is no TDS deduction on interest earned from these investments.
Invest in Pradhan Mantri Vaya Vandana Yojna
The PMVVY was introduced by the government last year for citizen aged 60 years or above. This scheme is solely operated by LIC and there is an assured return of 8 per cent. Recently, the investment limit was doubled by the government from Rs 7.5 lakh to Rs 15 lakh, allowing investors to earn up to Rs 10,000 per month. Through its guaranteed returns, this scheme makes for a secured cover for the senior citizens.
Buy short-term debt mutual funds and balanced mutual funds
While you can pick a mutual fund for your father based on your income and risk appetite, it’s best to opt for liquid/short-term debt mutual funds or debt-oriented mutual funds to ensure guaranteed return while generating an interest relatively higher than fixed deposits. The calculated exposure to equity-based products in these funds will offer you inflation-adjusted return. Debt balanced funds also offer tax benefits especially to the ones in the higher tax brackets. You are allowed indexation benefits on long-term capital gains tax at 20.6 per cent, calculated on a tenure of three years or more.
The author is the CEO of BankBazaar.