I am often asked by friends and relatives for financial advice prior to their retirement from their jobs. Most of them get impressive gratuity and a substantial amount of Provident Fund and other retiring benefits.

Some of the questions that I have been asked are:

What is the best way to invest where one can get a monthly or quarterly return to enjoy a good lifestyle?

What gives one the best tax rebate? 

How can one maintain a decent standard of living without having to do another nine to five job?

I am outlining some of the best investment opportunities from my own experience:

A) Fixed Deposits in Commercial Banks or Non Banking Financial Institutions (NBFIs).

Shop around for good rates and also good reputable banks where the rate may be slightly lower, but you know your money is safe. At the moment, the commercial banks have put a ceiling on the highest rate a bank can pay, but this may change subject to the liquidity situation prevailing at a given time. 

There are a few solid NBFIs offering better rates, as they do not have to conform to the rules of the commercial banks. Also they are slightly more flexible in the way they structure their Fixed Deposits. You can ask for a monthly or quarterly interest earned from the Fixed Deposits with tenures of one or more years. The interest you earn can be credited to your current or saving account. This way your principal amount remains intact and you spend only the earnings from it. 

B) Investing in Government Savings Bond (Shanchaya Patras) also gives you a good return. Just before submitting your tax return, there is always a rush to invest in Shanchaya Patras, which not only gives you a good return but also allows you a tax rebate. There is a limit to how much you can invest in these bonds, but make sure if you have the fund, utilise the full amount.  

C) Some NBFIs have introduced low risk Share Market products, which are expected to get you better returns than saving instruments.This investment also qualifies for a tax rebate.

D) Remember a penny saved is a penny earned, so however good a lifestyle you may want to lead, wastages should be avoided.  Try to get into the habit of budgeting your routine expenses so that one month's excess for whatever reason may be compensated with a little frugalityin the next.  

I have talked about several options, but one should always remember that all eggs should not be put in the same basket. In other words, find a happy balance of multiple savings instruments and institutions to give you the best mix of earnings and security. 

A word of caution - always be wary of offers of very high returns.

Keep in mind how a well-respected financier, Bernie Madoff, cheated unsuspected investors of huge sums of money. 

Madoff used a so-called Ponzi scheme, which lured investors in by guaranteeing unusually high returns. He convinced thousands of investors to hand over their savings, falsely promising consistent profits in return. He was caught in December 2008 and charged with fraud, money laundering, perjury, and theft.