It’s important not only to have funds set aside for emergencies but also to invest them wisely to ensure they grow enough through time to maintain financial security when one retires or enters their golden years.
Fixed deposits for senior citizens are a beneficial investment not only because they are easy to manage but also provide some extra benefits such as higher interest rates and tax savings.
Unlike market-linked investments like mutual funds, where you do not know the returns over time, FDs allow people certain certainty about their return on investment with options including monthly or quarterly payments.
What are Fixed Deposits
Fixed deposits, or FDs, are one of the safest and most popular investment options. Fixed Deposits are essentially a type of deposit where an individual puts money into a financial institution for a fixed time period – generally up to five years.
A fixed deposit is a type of investment where you agree to deposit a sum of money for a set period of time. In return, the bank will pay you interest on the deposit. The main advantage of a fixed deposit is that it offers security and peace of mind since your money is guaranteed to grow over time. Another benefit is that you can earn higher interest rates than you would with a savings account. Finally, fixed deposits are flexible investments, allowing you to choose how long you want to invest and how much money you want to invest.
Senior Citizens have been opting for this form more than any other investment option. because it offers them both higher returns and protection against inflation.
Here are some exceptional benefits that Fixed Deposits offer to senior citizens:
Tax Relief: Seniors can avail of the tax-saving aspect offered by Fixed deposits. However, in order to get a higher return, you need to lock your money for longer time periods which is not advisable because it may take too long before one gets a compounded interest on their savings. For example, PNB Housing FD allows you to save tax after a five-year lock-in period.
Monthly Income: Monthly income to meet your expenses is a major concern for seniors. Fixed deposits allow you to choose the amount, period, and frequency of payments which makes it easy to plan out monthly expenditures in advance.
Periodic Interest Earnings: There are plenty of options available in Fixed Deposits like one year, two years, or any number of years as per your comfort. The interest you earn is calculated on a quarterly basis and it continues to accumulate even though the money remains locked.
Easy Loans: Fixed Deposit holders can avail of easy loans against the fixed deposit, up to 75% of the total cumulative value of the FD which is a boon for senior citizens.
Emergency funds: FDs are not only great for savings but also work as a great emergency fund. However, it will lead to the loss of the accumulated interest as per the financial institution’s policy.
The main benefit that comes from investing in a Fixed Deposit is always safety at its core, but there’s much more.
Fixed deposits can be more lucrative than many other financial instruments. An FD is good for saving income for the long term such as for your child’s higher education.Investing in a fixed deposit is one of the safest investment options as it gives you lesser risk to your finances and is entirely tax-free.
