Tips for stock investment to senior citizen
Senior citizens are not professionally active and would have retired from service. They might have some savings that would help them to pass the remaining years that they survive. These categories of people are the least risk takers in term of the investment. The most preferred investment option by this category people are fixed Deposit, government schemes and other maturity avenues which are the only means to protect value erosion of the money earned from hard work.
How can senior citizen invest in the stock market without worrying about the value erosion?
It would be wise enough to limit the equities depending upon how the funds would be kept aside that are not immediately required. Senior citizens have substantial experience in their field. The knowledge gained from knowing the nitty and gritty of the industries they have worked in. this knowledge can help them in to look for opportunities as well as risk. Persons who have worked in banking sectors for years have better experience.
Most senior citizens have access to a large pool of money earned by them via retirement benefits. The experts usually invest for the long term. Many experts suggest a timeline of at least 5 – 10 years. This time allows them to take a good company to overcome different market cycles and generate high returns. Mutual funds schemes allow for systematic transfer into any scheme and this would reduce time hazard.
Senior citizens have most of their saving in Fixed Deposits account. They get higher interest rates as compare to normal FDs and the interest income are taxable according to regular income tax slab rates. An income from Long Term Capital Gains would, however, be charged at a substantially lower rate of tax. Dividends are similarly tax friendly.
Stock markets are not appropriate for many citizens. However, there are many citizens who didn’t worry about their daily expenses and their children don’t depend upon on them for any support i.e., financially. Such individuals can consider stock investing.
Things to consider before entering the stock market:
- There should be enough capital to fulfil their daily needs and requirements.
- Are you ready to take the risk or not?
- The corpus which would be used for trading and investing in the stock markets.
- Investing excess money that can be lost.
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