All You Need to Know About Senior Citizen Fixed Deposits
Every individual looks forward to retiring to a relatively easier life. Senior citizens therefore look for investments that not only assure the safety of their savings, but also guarantee substantial returns with the added advantage of liquidity for their needs. Most people after hanging their boots on reaching 60 years of age just want to relax and make their money work for them. Their source of income now limited, and they are not inclined to taking any risks resulting in any erosion of their income. If you are one of those, who after a long innings at work, want to supplement your pension, you may consider investing in senior citizen fixed deposits.
Our Handy Guide Lists Why Senior Citizen Fixed Deposits Should Be The First Preference For Those Over 60:
Safety At Its Peak:
Every fixed deposit comes with a bundled up protection feature. Regulated by the Reserve Bank of India, fixed deposits are insured up to Rs.1 lakh under the Deposit Insurance & Credit Guarantee Scheme of India. This makes bank fixed deposits safe investments compared to equities which are sensitive to market fluctuations. Even when it comes to FDs offered by companies or corporates, an FD scheme is a highly safe and low-risk investment. Simply check the agency stability and security ratings on an FD offered and your investment is sure to be safe.
A glance at your fixed deposit receipt or even using an FD calculator before you even invest will let you know how much you will earn at the end of your selected tenure. A return with a fixed percentage is one of the several brownie points senior citizen fixed deposits offer. This is not available in other financial instruments such as mutual funds where the rewards you get are based on estimates or sometimes even guesswork based on past performance. The fixed return on fixed deposits is possible largely due to their stability.
Higher Interest Rates:
Stability is not the only positive characteristic senior citizen fixed deposits have. Non-banking financial institutions (NBFCs) offer a higher rate of interest on FDs for senior citizens. Bajaj Finserv, for example, offers an additional 0.25% interest rate for senior citizens opening a Fixed Deposit account, making the interest rate 8.30%. To understand how you can best leverage senior citizen fixed deposits with Bajaj Finserv, use the FD calculator and know exactly what your savings will earn.
Good Degree of Liquidity:
Fixed deposits have one important safeguard against cash crunches: liquidity. They can be broken whenever you are in need of funds. Some banks and non-banking financial institutions allow you to close your fixed deposits and withdraw the principal amount within a few hours, while others disburse the money in a couple of days. However, liquidity in senior citizen fixed deposits comes at a price. Premature withdrawals attract a penalty where you will end up with an interest rate lower than the one mentioned in your deposit certificate.
Fixed deposits not only bring you guaranteed returns on your investment, but also allow you to avail of tax benefits. Under section 80C of the Income Tax Act, you can save up to Rs.3,00,000 in tax if you are aged above 60. To enjoy this rebate, all senior citizens need to do is declare their interest income while filing their IT returns every fiscal year.
The Current Scenario For Senior Citizen Fixed Deposits:
Banks and non-banking financial institutions today are attracting senior citizens with varying interest rate fixed deposits. Bajaj Finserv aces the competition with their fixed deposits with an interest rate of 8.10% on senior citizen fixed deposits. You can deposit any amount starting from Rs.25,000 and opt for a tenure ranging between 36 and 60 months. With minimal documentation senior citizens will find opening an FD with Bajaj Finserv a breeze.