Fixed Deposits have been one of the most preferred form of investment for decades. Among the myriad newly available options, fixed deposits have been favourable among Indian masses. The likely reason for this preference is that they are extremely reliable investment options and provide consistent and stable returns.
The income generated by FDs is also beneficial to senior citizens over the age of 60. However, the benefits available to them are higher than regular fixed deposits and quite beneficial for senior citizens to senior citizens in their golden years.
Before investing in fixed deposits for your retirement, a few points to consider are:
Rate of Interest
The rate of interest may differ from one bank to another. A fixed deposit as an investment option depends on the rate of interest; it is advisable to split the amount available for investment in FDs into smaller amounts, each at different tenures.
To earn better rates, one should look at FDs where the interest is paid at shorter intervals like every quarter under the compound interest method. Banks and other financial institutions plan FDs for senior citizens which ultimately gives them high returns.
Interest on fixed deposits are taxable under ‘Income from other Sources’ and investors pay tax, depending on their individual tax slab. There are few types of fixed deposits which are exempt from tax, like the ones under ‘Section 80 C.’ Senior citizens can avail certain benefits or tax exemptions by filling up the Form 15H. Senior citizens are exempt from paying income tax for interest income as tax is deducted at source.
In case of early withdrawals, there are certain penalties. The amount differs in banks and other financial institutions. However, tenure flexibilities are available in some FDs and therefore you can choose the ones with the shortest time limit. This is only if you find yourself in an emergency and find yourself in need of urgent cash.
A bank or corporate fixed deposit may need at least 3 months before you could think of withdrawing any amount. Therefore, it is a long-term investment and needs to be invested in after weighing all its pros and cons.
How to choose the right financier?
Apart from traditional bank fixed deposits, one may look at corporate fixed deposits for high returns. However, it is advisable to do in some reputed firms with good rating, for e.g., AAA or ‘Stable’ rating.
Besides, one may always seek advice from a financial planner. Among the few financial institutions which gives high returns to senior citizens is Bajaj Finance’s Senior Citizen Fixed Deposit. Its key benefits include a minimum deposit amount of Rs. 25,000.
The interest rate is 8.75% for senior citizens, which is higher than most regular fixed deposits. The available tenor is between 12 to 60 months. Bajaj Finance has been rated with ICRA’s MAAA (Stable) and CRISIL’s FAAA/Stable, the highest rating in the industry. NBFCs provides an online account access to keep track of the investments and its FD calculator enables to calculate return before investing.
A fixed deposit like any other investment has its limitations and therefore, its variants now exist to provide more or different benefits which one may not get in fixed deposit schemes provided by other Banks or Non-Banking Financial Companies (NBFCs). Bajaj Finance offers the highest interest rates in India to senior citizens.
By Rahul Yadav
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