How A Senior Citizen Invest in Share Market in India?

Returns on all traditional assets like fixed deposits, National Savings Certificates (NSCs), post office schemes cannot beat inflation.

Senior citizens who have retired from work have the lowest risk-taking capacity. And stock trading is risky, so the question arises – is it fine to invest in the share market for them? The answer is yes, it is absolutely fine. There are ways to make the share market suitable for senior citizens as well, even if they are not professionally active in the stock market. Here are the ways:

Investment Approach for Senior Citizens

1. Pooled Investment Approach

It is always best to make investments into collective vehicles like mutual funds. It is the basket of stocks that helps to diversify the risk involved in the share market. Ideally, experts suggest investing in mutual funds of large-capitalization stocks.

2. Quality and Dividends

Retirees should invest in high-quality stocks having a proven record of paying regular dividends. It will generate a regular income annually in the form of dividends. They can save tax on dividends and most importantly, quality stocks are known for capital protection if invested in the long term. Although, you need to do some research, follow-up, and monitor the company’s performance. An investor needs to open Demat and trading accounts first to start investing in the stock market. Demat account opening procedure is quite easy and you can open your accounts online.

3. Disciplined and Planned Approach

Experts suggest making a wise decision by limiting the exposure to equities. Only a certain part of total funds available with a senior citizen say 20%-25% that can be spared for at least 5 years, should be invested into equities and related investments.

Benefits of Share Market Investments

• Investments in the stock markets are not rigid like many traditional investments with lock-in periods and penalties on withdrawals.
• Expenses like health care and living expenses will be increased with time. Inflation makes it hard to meet all your needs. Stock market returns on your investments can beat inflation.

Demat Account Opening Procedure

As mentioned, a Demat account is mandatory to make investments in the stock market and can be opened online. Following are the steps to open a Demat account:

1. Choose Depository Participant (DP)

You need to open a Demat account with a depository participant (DP). Choose a DP whose services and features fulfill your needs and requirements like advisory and research reports requirements.

2. Fill in Demat Account Opening Form

Once you have selected a DP, visit their website and fill in your basic details in the Demat account online form.

3. Submit KYC Documents

To open your online Demat account, you need to upload copies of your PAN card, Identity proof, Aadhar card, Address proof, bank account details, income proof if any. Keep your all documents ready to open your Demat account conveniently.

4. In-Person Verification Process

Senior citizens need not go anywhere for the verification process. Most stockbrokers offer the facility of online verification through a video call.

5. Sign the Agreement Copy

After successful verification, your stockbroker, you will be asked to sign the agreement copy containing rights of investors and duties of stockbrokers. This too can be done online through Aadhar based design.

6. Get your Demat account number

After these steps, the stockbroker will provide your login credentials to log in to your online Demat account and your Demat account number.

Hence, it is an easy process to open Demat and trading accounts that makes investing in the stock market convenient. Retirees can also take advantage of inflation-beating investments.