New Delhi, Sept. 17 -- My mother is 60 years old and her only source of income is the interest earned on a Rs.20 lakh bank FD. 'Should she diversify into other assets such as mutual funds or post office savings? If yes, what options would be suitable?

- Name withheld on request

At 60, your mother has made a prudent choice by keeping her savings in fixed deposits (FDs). Safety of capital is crucial at this stage of life, and bank deposits provide that.

Her Rs.20 lakh FD generates around Rs.1.5-1.6 lakh annually in interest, which is well below the basic exemption limit for senior citizens - Rs.4 lakh per year under the new tax regime. Additionally, Section 80TTB allows up to Rs.50,000 of interest income from FDs to be tax-free. She can ...