Navigating the transition from being a salaried employee to a retiree can be challenging for various reasons. However, as a senior citizen, you get many benefits when it comes to investments, financial management and travel. While senior citizens have no monthly income after retirement, they can look for other avenues of income to fulfil their necessities and to take care of emergency expenses. The pension income might be enough to take care of the day to day expenses, but a good investment scheme with handsome returns can ensure that they are able to navigate through any financial emergencies that they may encounter. While there are many lucrative investment options available for senior citizens, one of the most profitable and preferred options by senior citizens is Fixed Deposits.
Here are a few reasons and features of fixed deposits that make FD an ideal investment option for senior citizens:
Deciding the duration of the fixed deposit is important before investing in any bank or financial company. It provides flexible tenors ranging from three months, six months, one year extending up till ten years. It is recommended that senior citizens go for a tenor of 5 years to be able to maximize the returns. One of the best options for getting flexible tenors is Bajaj Finance, which provides tenors ranging from 12 to 60 months. This makes it possible for senior citizens to avail multiple fixed deposits with different tenors. This concept, known as FD laddering can ensure that the short-term as well as long-term goals of the investor is taken care of.
Higher Interest Rate
The interest rate for a senior citizen is always higher compared to others. Some banks and Non-Banking Financial Companies (NBFCs) give interest rate till 7.75%, however, you are likely to get a higher interest rate from NBFCs like Bajaj Finance. This reputed financial company offers interest rates as high as 9.10% for senior citizens. This can be beneficial when you opt for a fixed deposit with a longer tenor. Moreover, Bajaj Finance even allows individuals to start an FD from just Rs. 25,000 along with higher interest rate and steady returns. The interest rate does not change depending on the market fluctuations and usually the interest rate set at the beginning of the tenor remains the same throughout the tenor.
Under Section 80TTA of the Income Tax Act, senior citizens can get an exemption up to Rs. 10000, of interest income. Now, under Section 80TTB, senior citizens can claim an exemption up to Rs. 50,000 from all kinds of bank deposits. While 10% of the interest income will be deducted as TDS, if the income is more than Rs. 10000, senior citizens can be exempted from tax for income of up to Rs. 3 lakhs under Section 80C of the Income Tax Act. Hence, along with having a good and reliable investment option, senior citizens will also be able to claim a good proportion of tax exemption.
One of the benefits that senior citizens can get out of Fixed Deposits, include the fact that they get assured returns. When you are retired, and have a fixed amount of money to spend for the rest of your life, you want to make sure that any investment option that you go for is safe and reliable. Fixed Deposits offer interest income in addition to the principal amount making it a lucrative investment for retirees. You can be assured that you would be able to get returns without worrying about any kind of market volatility. Due to its stable nature, Fixed Deposit is one of the best ways to gift an investment to your parents or grandparents.
Considering the above benefits, Fixed Deposits emerges as one of the best investment options for senior citizens. Especially, if you decide to go for a company like Bajaj Finance, which has a MAAA rating from ICRA Rating and FAAA/Stable rating from CRISIL. Moreover, the ease of being able to manage your fixed deposits remotely through an online account makes it easier for senior citizens to avail it.