Raj Khosla Founder and Managing Director, MyMoneyMantra.com replies: Yes, you can invest the matured FD amount in the Senior Citizens’ Saving Scheme. The SCSS account can be opened at all designated nationalised banks in their specified branches. Do confirm with your bank if your branch is designated. The rate of interest is reviewed each quarter, thus the current rate of 7.4% may be reset after September 2020. The rate once locked is valid for the entire tenor. Interest income up to `50,000 can be claimed as a relief under Section 80TTB of the Income Tax Act.
I invest Rs 50,000 in equity funds through monthly SIPs. Most of the funds have given negative returns over the past three years and 5 to 7% over 10 years. I will need Rs 1 crore for my child’s higher education in eight years. Should I stop the SIPs and invest in VPF instead? I am in the 30% income tax slab.
Naveen Kukreja CEO and Co-Founder, Paisabazaar.com replies: Equity as an asset class does not generate consistent returns year after year. Periods of outstanding returns are usually followed by periods of dull or negative returns. This makes it important to stay invested in equity MF schemes for a long horizon, at least seven years. I will suggest you continue with your existing SIPs in equity funds. It will also allow you to reduce your average investment cost during steep market corrections like the one caused by the pandemic this year. Also, try to top-up your existing SIPs with lump sum investments during bearish markets in a staggered manner. This will further reduce your investment cost and may even help in achieving your financial goals before the target date or create bigger corpuses for your financial goals.
However, do review the performances of your selected schemes with their peer funds and benchmark indices at least once in a year. Redeem funds that have consistently underperformed in the past three years. In case you plan to send your child overseas for higher education, try to include one or two international funds in your portfolio.