Investments become your true assets as you retire and enter into your later years. Also, it becomes essential for you to invest in safe instruments as your regular income source is no longer available.
A fixed deposit can be one of the better options for senior citizens as they are both safe and stable from market risks. To help senior citizens grow their savings at a higher rate, many banks and finance companies offer an additional FD rate to senior citizens. For instance, Bajaj Finance offers a 0.25% extra FD interest rate to senior citizens which helps them to multiply their savings without any issues.
Let’s see look at some other reasons that make fixed deposit schemes ideal for senior citizens:
Higher interest rates
On average, you will get an interest rate from 5 to 6 percent if you book a bank FD.
To book FDs at a higher interest rate, senior citizens can explore fixed deposit rates of company FDs as they are usually higher than bank FDs. Bajaj Finance offers a 7.35% interest rate to a senior citizen which is one of the highest FD interest rates in 2020. This is much higher than bank FDs and credit rating organizations have conferred high ratings to these FDs when it comes to stability and safety.
Therefore, senior citizens can book these FDs to steer their investments without any hurdles.
Not only that, but they can also invest a part of their savings in non-cumulative FDs for earning a monthly interest payout and the other part can be locked-in cumulative FDs of longer tenor to ensure smooth growth of savings.
For example, if a senior citizen wants to invest Rs. 20,00,000 in 5-year FD plans then Rs. 15,00,000 can be invested in non-cumulative FD and the remaining amount can be locked in cumulative FD. The expected returns are shown in the below table:
|Bajaj Finance FD||Amount||Interest rate||Interest payout|
|Non-cumulative FD (monthly payout)||Rs. 15,00,000||7.11%||Rs. 8888(monthly)|
|Cumulative FD||Rs. 5,00,000||7.35%||Rs. 2,12,821(upon maturity)|
Thus you can see that both—ongoing financial needs and growth of investment can go in hand-in-hand when you choose these FDs.
Periodic interest payouts
As the regular income flow stops after retirement, senior citizens should invest in the instruments that provide a regular payout to cover their monthly expenses. Fixed deposits allow them to select periodic interest payouts to pay their utility bills, medical expenses, etc.
For example, Bajaj Finance FDs can provide them monthly, quarterly, six-monthly, or yearly interest payouts as per their financial needs.
Senior citizens no longer have to step outside or wait in queues to open an FD account as many financiers are providing an online application process. However, only some financiers like Bajaj Finance offer a complete online procedure where even the document verification can be done online using an online cKYC procedure.
To apply online, an online FD form is provided and an additional 0.10% FD rate is offered if you make an online investment in Bajaj Finance FD.
Senior citizens can also use FD as an emergency fund in times of medical or financial emergencies. An online loan against FD is available with Bajaj Finance FD at a marginal rate of interest, over and above the interest rate of the FD.
Senior citizens always prefer to invest in fixed deposits as they offer high returns and protect capital as well. However, recently, the bank FD rates have been reduced and to continue earning high interest rate, senior citizens can explore Bajaj Finance FD rates in 2020 as they offer fixed deposit interest rates up to 7.35%. Apart from high interest rates, these FDs are also highly rated for their stability and safety. They can get interest payouts to fulfil monthly expenses along with ensuring a steady growth in savings. They can also avail an online loan against FD and thus use FD as an emergency fund.