AI, particularly AI with deep research options (e.g., Perplexity, Gemini, Grok, etc.), can handle the most complex questions and provide amazing answers. Perplexity Pro (free for iitm users) even has an option to search from only academic sources, which I use if I ask it health-related questions.
Please note: I fully understand that AI can make mistakes, and one should not take it too seriously. I have personally noticed this myself many times. It can take a paragraph from a research journal ‘out of context’ and project it as an answer to our question. At the very least, it saves me incredible time and points me to useful links. Also see: Is AI rapidly killing attention to detail?
The point of this article is that things are changing quite fast. AI models are becoming better and better at a rapid pace. I am no expert, but this means more low-level white-collar jobs could be at risk. I recently posted on X about this, suggesting to ” build a strong emergency fund to handle job loss and invest as much as possible to build wealth” We may be destined to learn that AI can make big mistakes the hard way, which would mean some jobs or even careers are disrupted along the way.
It is one thing to use AI as a casual aide or assistant to save me time on research that I will not act on. It is quite another to use it for serious advice, particularly financial advice.
So, I took a non-personal question from the Facebook group Asan Ideas for Wealth and used Perplexity Pro Deep Research mode to answer it.
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“One of my neighbours recently retired from a central government job.
She has received a retirement corpus of ₹1.2 crore and will be receiving a monthly pension of around ₹50,000. She is looking for safe and stable investment options for her retirement corpus and pension. (Please note: She is not interested in investing in stocks, mutual funds, real estate, or gold)”
The question was entered without editing, and Perplexity Pro’s response is below. Before you peruse it, let us discuss the titular question.
Is AI emerging as a low-cost, conflict-free, fee-only advisor?
I believe this to be true because financial planning and investment advice are largely formulaic. If the AI has learned the ropes (and it has), it should be fairly simple to produce a financial plan that is generally not wrong. Many financial advisors tend to get touchy and defensive about it, but the writing is on the wall.
Young people with uncomplicated finances are already relying on AI advice. They won’t pay for professional advice anyway. The problem is, older techies who are the primary clients of fee-only financial planners may want to DIY using such paid AI tools. They are smart enough to discern the advice provided by these tools and they would prefer sharing their personal data with a code than a human advisor.
I don’t claim that AI will put human advisors out of business. However, they are fast emerging as a player and are likely to eat into the already small market share of paying clients.
AI advice from a generic tool (not a bot trained on a small subset) is naturally unbiased and free from conflict of interest. Of course, it could also be wrong, but human advisors make mistakes and insert disclaimers into the financial plan documents.
For a person unwilling to work with a flat fee only SEBI registered investment advisor, is AI better than getting advice from someone pushing products for commissions? It will depend largely on the person.
If the person can dig deep and evaluate the advice, then AI can work. But then again, how many AI users (including me) would do that?!
That aside, I think AI is emerging as a low-cost, conflict-free, fee-only advisor that SEBI cannot regulate. The consequences of this remain to be seen.
I don’t claim it is perfect—it is not. However, it is far better than the random comments in a personal finance forum and just about as good as an ‘average’ human advisor.
A human advisor would probably have answered better than AI, but you can know that only after you pay for their services! Using AI is a lot cheaper!
Now, let us look at the advice given by Perplexity Pro Deep Research for the question above. What do you think? You can share your comments on X – @pattufreefincal.
References are redacted in this version. A pdf file with references is available for download below.
Note: We do not recommend using AI for creating financial plans for seeking investment advice. We are merely stating the reality of things as they stand.
Safe Investment Options for a Recently Retired Central Government Employee
The transition to retirement brings a critical financial shift, particularly when it comes to managing a substantial retirement corpus. For a recently retired central government employee with ₹1.2 crore and a monthly pension of ₹50,000, identifying safe and stable investment avenues becomes crucial. This report explores government-backed and low-risk investment options ideal for senior citizens seeking financial security without venturing into stocks, mutual funds, real estate, or gold.
Senior Citizen Savings Scheme (SCSS)
The Senior Citizen Savings Scheme stands out as one of the most attractive investment options for retirees in India. This government-backed scheme specifically caters to individuals above 60 years of age, offering both security and competitive returns.
Key Features and Benefits
The SCSS currently offers an interest rate of 8.2% per annum for the April-June 2025 quarter, making it one of the highest interest-earning government schemes available. This rate is revised quarterly but has remained stable at 8.2% since January 2023, demonstrating relative consistency. The scheme has a maximum investment limit of ₹30 lakh, which can be utilized fully given the retirement corpus available.
With a five-year tenure and the option to extend in multiple blocks of three years each, SCSS provides both medium-term commitment and flexibility. One of its most appealing aspects is the regular income feature-interest is calculated and paid quarterly, directly credited to the investor’s account on the first day of April, July, October, and January each financial year.
The SCSS also offers tax benefits under Section 80C of the Income Tax Act, allowing deductions up to ₹1.5 lakh annually. The investment process is straightforward, requiring just a visit to any authorized bank or post office with proper documentation.
Post Office Monthly Income Scheme (POMIS)
The Post Office Monthly Income Scheme provides another reliable option for generating regular income from the retirement corpus.
Structure and Returns
POMIS offers an interest rate of 7.4% per annum as per the latest rates for April-June 2025. The scheme has an investment ceiling of ₹9 lakh for single accounts and ₹15 lakh for joint accounts, with a fixed five-year tenure. The minimum investment amount is ₹1,000, and investments must be made in multiples of ₹1,000.
The distinctive feature of POMIS is its monthly income provision, calculated using the formula: Monthly Interest = Amount Invested × Annual Interest Rate/12. For example, an investment of ₹9 lakh would generate a monthly income of approximately ₹5,550 (₹9,00,000 × 7.4%/12).
This scheme is particularly beneficial for retirees seeking predictable monthly cash flows to supplement their pension. The invested principal is returned at maturity, while the monthly interest serves as regular income throughout the investment period.
RBI Floating Rate Savings Bonds (FRSB)
RBI Floating Rate Savings Bonds offer another secure investment avenue with competitive returns.
Features and Current Rates
These bonds currently yield an interest rate of 8.05% for the period from January 1 to June 30, 2025. Unlike fixed-rate bonds, the interest rate on these bonds is adjusted every six months, providing some hedge against interest rate fluctuations.
The bonds have a maturity period of 7 years from the date of issue, making them suitable for medium to long-term investment horizons. There is a minimum investment requirement of ₹1,000 with no upper limit, allowing flexibility in allocation from the retirement corpus. Interest earned on these bonds is subject to taxation according to the investor’s income tax slab.
A notable advantage of these bonds is their backing by the Government of India, ensuring capital safety. However, they cannot be transferred to another person, maintaining exclusive ownership with the original investor.
Post Office Time Deposits
Post Office Time Deposits offer fixed returns with varying tenure options, providing flexibility in investment planning.
Tenure Options and Interest Rates
The current interest rates for Post Office Time Deposits for the April-June 2025 quarter are:
- 1-Year Time Deposit: 6.9%
- 2-Year Time Deposit: 7.0%
- 3-Year Time Deposit: 7.1%
- 5-Year Time Deposit: 7.5%
The 5-Year Time Deposit offers the highest interest rate among the time deposit options and qualifies for tax benefits under Section 80C. These deposits can be opened with a minimum amount of ₹1,000, with no upper limit on the maximum investment.
Post Office Time Deposits can be particularly useful for creating a laddered investment approach, where funds are invested across different maturity periods. This strategy ensures liquidity at regular intervals while maintaining overall returns.
Pradhan Mantri Vaya Vandana Yojana (PMVVY)
The Pradhan Mantri Vaya Vandana Yojana is a pension scheme specifically designed for senior citizens aged 60 years and above.
Pension Benefits and Structure
This government-backed scheme is operated exclusively through the Life Insurance Corporation of India (LIC). While the original scheme was extended until March 31, 2023, it’s important to check the current status and features of any subsequent extensions or similar schemes.
PMVVY offers various annuity options with different payout structures. The scheme has a ceiling on maximum pension for a family, considering the total amount across all policies under this plan. It can be purchased both offline and online through LIC’s website, providing convenience for senior citizens.
The scheme offers the security of regular pension income with the backing of a government scheme, making it suitable for risk-averse retirees.
Tax-Free Bonds
For those looking to optimize tax efficiency while ensuring capital safety, tax-free bonds provide an attractive option.
Tax Advantages and Issuers
Tax-free bonds are issued by various government entities and offer the unique advantage of completely tax-free interest income. Several issuers like National Highways Authority of India, NTPC Limited, National Housing Bank, and others offer these bonds with varying interest rates and maturity dates.
For example, a bond from National Highways Authority of India maturing on February 5, 2029, offers an interest rate of 8.75%. Similarly, a bond from Housing & Urban Development Corporation maturing on February 8, 2032, offers 7.64%.
The tax-free nature of these bonds makes them particularly valuable for retirees in higher tax brackets. While the interest rates might seem lower than some taxable options, the effective post-tax returns can be significantly higher.
Strategic Investment Allocation for the Retirement Corpus
Given the ₹1.2 crore retirement corpus and monthly pension of ₹50,000, a strategic allocation across different schemes can help maximize returns while ensuring safety and regular income.
Recommended Allocation Strategy
- Senior Citizen Savings Scheme (SCSS): Allocate the maximum permissible amount of ₹30 lakh to benefit from the high interest rate of 8.2%. This would generate quarterly interest of approximately ₹61,500 (₹30,00,000 × 8.2%/4).
- Post Office Monthly Income Scheme (POMIS): Invest ₹15 lakh in a joint account (which could be opened with a spouse if applicable) to generate monthly income of approximately ₹9,250 (₹15,00,000 × 7.4%/12).
- RBI Floating Rate Savings Bonds: Allocate ₹30 lakh to these bonds to benefit from the current 8.05% interest rate while providing some protection against interest rate changes.
- Tax-Free Bonds: Invest ₹25 lakh in tax-free bonds from reputable government issuers to ensure tax-efficient returns over the long term.
- Post Office Time Deposits: Create a ladder of time deposits with ₹20 lakh spread across 1-year, 3-year, and 5-year deposits to ensure liquidity at different time points while earning interest rates between 6.9% and 7.5%.
- Pradhan Mantri Vaya Vandana Yojana: Consider allocating the remaining ₹0 lakh to PMVVY for additional pension income, subject to verification of the scheme’s current status and features.
Conclusion
For a retired central government employee with a corpus of ₹1.2 crore and monthly pension of ₹50,000, these government-backed investment options provide a balanced approach to ensure capital safety while generating regular income. By diversifying across schemes with different interest payment frequencies (monthly, quarterly, and annual), the retiree can establish a consistent income stream to supplement the existing pension.
The recommended allocation strategy would generate approximately ₹9,250 monthly from POMIS, ₹20,500 monthly equivalent from SCSS (quarterly payouts), ₹20,125 monthly equivalent from RBI Bonds, and additional returns from tax-free bonds and time deposits. Combined with the existing pension of ₹50,000, this creates a substantial monthly income while preserving the principal amount.
These investment options perfectly align with the requirement for safety and stability without venturing into stocks, mutual funds, real estate, or gold. As interest rates are subject to periodic revisions, it would be advisable to review the portfolio annually and make adjustments as necessary to optimise returns within the safety parameters.
The response document with reference links can be downloaded.
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