Retirement is a critical phase of life. Only proper financial planning can ensure a stress-free post-retirement life.

As a reliable form of investment, fixed deposits are often chosen by investors to grow their wealth steadily, without the risk of constant fluctuations or negative returns. The investor can deposit a lump sum amount at a predetermined interest rate as offered by the financial institution.

On choosing a cumulative FD, investors get the principal plus the accrued interest on maturity of the deposit. And on choosing a non-cumulative FD, investors can enjoy periodic interest payouts at their chosen frequency. Non-cumulative FDs often serve as a great option for retirees and senior citizens, since they can enjoy a steady stream of income.

Features of Fixed Deposit Schemes

• Fixed deposits are generally considered a relatively stable investment option compared to market-linked instruments.
• The interest rate is fixed at the time of booking for the chosen tenure.
• Tenure options may range from a few months to several years, depending on the financial institution.

Who are eligible to apply for a Fixed Deposit Scheme?

1. Indian residents.

2. Minors.

3. NRIs.

4. Sole proprietorship.

5. Companies.

6. Individuals or joint investors.

7. Senior citizens.

8. Partnership firms.

Here, we discuss the type of fixed deposits you should buy before retiring.

Cumulative Fixed Deposit

When you go with a cumulative fixed deposit scheme, interest earned will get compounded along with the principal amount. The whole amount an investor will get when the fixed deposit gets matured. Try to invest in multiples like ₹1000 and ₹2000.

Non-cumulative Fixed Deposit

If you go with the option of a non-cumulative fixed deposit scheme, interest earned on the principal amount is payable in instalments. It could be monthly, quarterly, half-yearly or yearly instalments. This investment option suits well with those who are looking for a regular source of income.

Conclusion

Planning for retirement requires balancing stability, liquidity, and long-term growth. Fixed deposits can play an important role in a retirement portfolio by providing predictable returns and capital preservation, particularly for individuals with a low to moderate-risk tolerance.

When selecting a fixed deposit, investors should evaluate factors such as credit ratings, tenure options, liquidity needs, and interest rates before making a decision.

Shriram Finance offers fixed deposit scheme with multiple tenure options and online tools that allow investors to estimate maturity values before investing. Investors can review the terms, interest rates, and eligibility criteria on the official website before making an investment decision.