Fixed Deposits(FDs) are among the most trusted and popular means of long-term savings. Commonplace among various financial institutions, such as private and public banks, Fixed Deposits offer guaranteed returns at very low risk and very little hassle. Hence, senior citizens find them to be a more lucrative option for long-term savings.
The Fixed Deposit rates for senior citizens are also comparatively higher than standard rates. In this blog, we will address how senior citizens can benefit from putting their money in a Fixed Deposit.
Why Fixed Deposits are a popular choice for senior citizens?
The majority of the senior citizen population does not believe in the risk-taking method of wealth generation. They want to establish financial security through high returns but at minimum risks. Under such circumstances, Fixed Deposit becomes one of the most viable ways to multiply their wealth. This is owing to the fact that:
- They offer guaranteed returns: Fixed Deposits are made at a fixed rate of interest that will not change for that amount during their tenure. This protects investors against market fluctuations and ensures that they will receive the promised amount at the end of their investment period.
- Higher rate of interest: The fixed deposit rate of interest for senior citizens is comparatively higher than that of non-senior citizens. Although the additional hike might seem very nominal on paper(up to 0.50% across various issuers), it still adds up to a lot in the long run.
- Flexible tenures: Like regular FDs, senior citizens are entrusted with flexible tenures. However, they are eligible for a lower penalty than standard premature withdrawals, which creates a heightened sense of financial security among them.
- Tax benefits: FD interest amount is eligible for taxation. However, certain Fixed Deposits allow tax-saving benefits under Section 80C of Income Tax. This can be highly beneficial for senior citizens as it helps them reduce their taxable income. Also, the interest earned on taxx-saving FDs is eligible for deduction of up to ₹50,000 in a financial year under Section 80TTB.
Tips to find the best Fixed Deposit rates for senior citizens
- Interest Rates: Compare the Fixed Deposit rates for senior citizens across various banks and financial institutions to settle on the one that offers the maximum returns over a fixed tenure.
- Tenure: Opt for a tenure that fits with your financial goals. Short-term FDs are great for liquidation, whereas for a more attractive interest rate and higher maturity amount, one can opt for a long-term FD. Always try to achieve the perfect balance between liquidity and higher returns.
- Premature Withdrawals: FDs are done with the intention to keep a lump sum of money invested for a certain period. However, unforeseen circumstances can lead you to liquidate your FDs prematurely. Some banks have a more flexible model to support such instances, either through lower penalty rates or shorter tenures. Inquiring into this can be highly beneficial.
- Check for special schemes: Some banks have special schemes for senior citizens to help them enjoy higher returns with their Fixed Deposits. This might include higher loan limits against FDs or additional flexibility.
- Use an FD interest rates calculator. Online FD interest rate calculators help you efficiently calculate your maturity amount based on the interest rate, tenure and principal amount. This helps you better plan your investment.
Conclusion
Senior citizens consider Fixed Deposits to be a mighty form of wealth management. The high returns and low risks make them an attractive way for them to save up for their retirement. It is crucial to check for Fixed Deposit rates for senior citizens provided by trusted banks and settle for the one that serves the best in achieving long-term goals.