With the world around us changing at a fast pace, there are always new investment options to be found in the market. However, there are some investment options that have stood the test of time for not just specific individuals and families, but for entire generations. One such investment option that continues to be not just a popular option but also particularly useful for senior citizens, is a fixed deposit or FD.
Are you a senior citizen and wondering about fixed deposits? Are you looking for the particular benefits of FDs for senior citizens? Here is a look at the specifics in greater detail:
What is a Fixed Deposit?
Fixed deposit is a type of financial instrument that is offered primarily by banks and financial institutions. When you open an FD, you essentially deposit a certain amount of money with the bank or financial institution and it is then ‘locked’ for a fixed period of time. During this time, the deposited amount grows at a steady rate of interest, which is higher than most savings accounts. There are also specific fixed deposits for senior citizens that can be easily applied for by Indian citizens above the age of 60.
So while fixed deposits can be a useful investment option for a variety of individuals, they can be particularly beneficial for senior citizens in certain specific ways:
Here are some of them:
- Higher Interest Rates:
Possibly one of the greatest benefits of FDs for senior citizens is that most banks and financial institutions offer special interest rates on fixed deposits geared towards this age group. These interest rates almost always tend to be higher than the regular interest rates, meaning that senior citizens can make the most of this advantage. These interest rates can be as much as 50 basis points higher than the usual rate and thereby translate to higher earnings for you.
- Safe Space for Financial Growth:
There are a number of investment options available in today’s time that can help your money grow, but many of them can be market-linked and are thus subject to market-related risks. As a senior citizen, it can be extremely worthwhile to have an investment option that is protected from such fluctuating risks and provides guaranteed returns. This purpose is effectively served by fixed deposits since they are typically not market-linked and are ideal for investors with low-risk tolerance such as senior citizens.
- Provides Regular Income:
Even with the most well-planned savings, the post-retirement life can often be in need of regular, supplementary income. With fixed deposits for senior citizens, you can receive such an income in the form of regular interest payouts from your FDs. You also have the option of selecting the frequency of this payout which can range from monthly, quarterly, half-yearly, and yearly. This way, you can conveniently select the time periods in which you might wish to receive the payouts from your FDs in a way that best suits your lifestyle.
- Safe Space for Financial Growth:
Another one of the useful benefits of FDs for senior citizens is in terms of the tax treatment they offer which differs greatly from regular taxation on fixed deposits. Regular fixed deposits can provide tax exemption to the average investor on interest earned of up to Rs. 40,000. This is substantial, but senior citizens can claim even more. As per Union Budget 2018-2019, senior citizens can now claim tax exemption for interest earned on FDs (and other bank deposits) for up to Rs. 50,000.
- Provide Another Financial Option:
Fixed deposits for senior citizens can even offer benefits other than its interest payouts, high returns, and tax-saving advantages. If a need ever arises for you to raise financial assistance, you can even claim a loan against your current fixed deposits. In this way, fixed deposits provide a way for you to access a more liquid and immediate financial option.
So if you are a senior citizen, hopefully, this will give you a more comprehensive idea of the various benefits that you can enjoy by opening a fixed deposit specifically for senior citizens.
The first step in the process of finding a fixed deposit that provides you the benefits you need is to align yourself with the right financial institution. To that end, RBL Bank, with as many as 9.08 million trusted customers nationwide, is certain to be an ideal choice. With a long reputed history spanning as far back as 1943, RBL Bank can provide you with not just fixed deposits but a wide range of financial services to meet your every requirement.