SCSS vs Mutual Funds: While SCSS is undoubtedly one of the safest investment avenues for senior citizens, those who want to take some risks may explore mutual fund investments.
While SCSS is undoubtedly one of the safest investment avenues for senior citizens, those who want to take some risks may explore mutual fund investments for higher returns. However, any such step should be taken only after consulting a professional financial advisor.
A comparison of returns from SCSS in the last five years and a few Retirement-oriented mutual fund schemes show a big difference in income. Let’s have a look.
Before reading further, you should note that this exercise is for informational purposes only. It is not intended for recommending any mutual fund schemes mentioned below. Mutual Fund investments are subject to market risks. Whereas, SCSS provides guaranteed returns and peace of mind to senior citizens, which is more important in life after retirement from a regular job.
The maximum investment limit in SCSS was Rs 15 lakh five years back. Also, the interest rate in 2018 was 8.3% for nine months (January to September) and 8.7% for three months (October to December), according to SCSS Interest Rate History.
The SCSS calculator shows that investing Rs 15 lakh in SCSS between January 2018 to September 2018 at 8.3% interest would have given a total interest income of approx Rs 6,22,500 in 5 years. Investing Rs 15 lakh in SCSS between October 2018 to December 2018 at 8.7% interest would have given a total interest of approx Rs 6,52,500 in 5 years.
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Retirement Mutual Fund Schemes
In the last five years, as many as four retirement-oriented mutual fund schemes have given over 10% annualised returns under direct plans. As per data on the website of the Association of Mutual Funds in India, these funds are:
HDFC Retirement Savings Fund – Equity Plan: It has given 18.52% annualised returns under the direct plan and 17.03% returns under the regular plan. A lump sum investment of Rs 15 lakh in this fund’s direct plan would have given interest income of approx Rs 20 lakh in 5 years while the regular plan would have given approx Rs 17.9 lakh.
HDFC Retirement Savings Fund – Hybrid Equity Plan: It has given 14.43% annualised returns under the direct plan and 13% returns under the regular plan. A lump sum investment of Rs 15 lakh in this fund’s direct plan would have given interest income of approx Rs 14.3 lakh in 5 years while the regular plan would have given Rs 12.6 lakh.
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Tata Retirement Savings Progressive: It has given 11.31% annualised returns under the direct plan and 9.57% returns under the regular plan. A lump sum investment of Rs 15 lakh in this fund’s direct plan would have given interest income of approx Rs 10.6 lakh in 5 years while the regular plan would have given Rs 8.6 lakh.
Tata Retirement Savings Moderate: It has given 10.99% annualised returns under the direct plan and 9.39% returns under the regular plan. A lump sum investment of Rs 15 lakh in this fund’s direct plan would have given interest income of approx Rs 10.2 lakh in 5 years while the regular plan would have given Rs 8.4 lakh.
Disclaimer: The above content is for informational purposes only. Senior citizens are advised not to invest in mutual funds without consulting a financial advisor. Chasing returns in mutual funds without expert guidance may lead to losses.
