Earning an income of Rs 1 lakh every month with minimal investment risk through a government scheme is most important for many senior citizens, who value safety more than high returns. Many government options like Senior Citizen Savings Scheme (SCSS) and Reserve Bank of India (RBI) Floating Rate Bonds offer returns above 8%.
Although a senior citizen may need to invest a substantial amount in government schemes to earn an income of Rs 1 lakh every month, those who do so can have greater peace of mind compared to those who invest in riskier assets, who are often worried about the ups and downs of the stock market. In this article, we will share three expert strategies on how senior citizens can earn an income of Rs 1 lakh per month only through government schemes.
How to get Rs 1 lakh income per month
Let us know one by one about those expert strategies which show how to get income of Rs 1 lakh every month through government and other schemes. In the ET report, an investment strategy has been explained by Chakraborty V., Co-Founder and Executive Director of Prime Wealth Finserv Private Limited, let’s try to understand it…
| instrument / parameters | investment amount | Estimated interest rate | annual income |
| Senior Citizen Savings Scheme (SCSS) | ₹60,00,000 | 8.2% | ₹4,90,000 |
| Post Office Monthly Income Scheme (MIS) | ₹15,00,000 | 7.4% | ₹1,10,000 |
| rbi Floating Rate Savings Bonds | ₹75,00,000 | 8.05% | ₹6,00,000 |
| total portfolio | ₹1,50,00,000 | 8% average | ₹12,00,000 (₹1 lakh every month) |
The investment strategy explained by Ishkaran Chhabra, Chief Investment Counselor and Founding Partner of Centricity Wealthtech in the media report, is like this.
| instrument/parameters | specialty/investment limit | Return (About) | Role in Income Strategy |
| Senior Citizen Savings Scheme (SCSS) | ₹ for senior citizens30 Investment allowed up to Rs. | 8.2% | Stable income for retirees |
| rbi Floating Rate Savings Bond (FRSB) | Government bonds with floating interest rates; Interest is earned every six months | 8.05% | Protects returns when interest rates rise. |
| government securities (G-Secs) | rbi Invest through Retail Direct Portal. | market–Linked. | Time–Laddering can be done to get timely income. |
| STRIPS (Separate trading of registered interest and principal of securities) | G-Secs get from. | market–Linked. | Helps in structuring cash flows from sovereign bonds. |
| National Pension System (NPS) | Retirement investing with equity exposure | 1012% (market–Linked). | Equity can yield higher returns in the long run. |
Falling interest rates could be a problem
In the strategies mentioned above, you can see that some have recommended fixed interest government schemes, while some have also mixed market-linked government schemes like G-Secs and NPS with less risk. But even if we choose government schemes that provide fixed returns to senior citizens, there is always a possibility of a fall in the interest rates. In such a situation, your long-term strategy may not give you Rs 1 lakh monthly income, even if you have invested in low-risk government schemes.
What should senior citizens do in such a situation?
Explaining the situation, Chakraborty says in media reports that interest-rate risk is a big factor in the case of government securities and gilt mutual funds. Bond prices generally move inversely to interest rates. Therefore, rising yields may reduce the market value of existing bonds.
Other risks that cannot be ignored
Jain says in the media report that even though instruments like SCSS, MIS and PPF are supported by the government, investors should still keep in mind factors like reinvestment risk, changes in interest rates and inflation in the long run. In the media report, Chakraborty says that one can adopt a laddering strategy, in which the investment is spread over different entry points or maturities instead of keeping it in one place all at once. Chakraborty says that in such a structure, a part of the portfolio could be in small savings schemes, while the other part could be invested in government bonds of different maturities.