As you grow older, your risk-taking ability may reduce. Moreover, as you approach retirement, you lose a significant source of income. So, it becomes crucial to develop an income source that supports you and your family in the long run. As a senior citizen, you must plan your finances to sustain your standard of living. Investing in a fixed deposit takes care of all your money management issues - you know your returns beforehand, enabling you to make a concrete financial plan.
Let's understand what a fixed deposit is
A fixed deposit is a savings facility offered by banks and non-banking financial companies (NBFCs). In this arrangement, investors deposit a lump sum amount for a fixed period and earn interest on the deposit.
FD interest rates are predetermined for the selected tenure and remain fixed during the deposit period. In many cases, fixed deposit interest rates may be higher than other fixed-income instruments, depending on the institution and tenure.
Fixed Deposit: A Smart Investment Choice for Senior Citizens
A fixed deposit for senior citizens comes with a lot of benefits. Shriram Finance understands the importance of a fixed deposit facility for a senior citizen, and hence, provides seamless onboarding and regular customer support.
The minimum investment amount in an FD depends on the financial institution. Shriram Finance fixed deposit has a minimum investment amount of ₹5,000, so you can open a fixed deposit easily whenever needed. What’s more, the tenure of the fixed deposit can range anywhere between 12 months and 60 months. The flexibility in duration allows you to plan your finances to meet both short-term and long-term goals. Plus, with multiple payout options like monthly, quarterly, half-yearly and yearly, senior citizens can enjoy a steady flow of income.
What type of fixed deposit is suitable for you?
There are generally two types of fixed deposit facilities - non-cumulative and cumulative. Both these schemes will help you achieve a predetermined purpose. If you need cash for regular, recurring expenses, like monthly expenses, to run your household, then a non-cumulative fixed deposit would be the apt investment choice for you. In a non-cumulative fixed deposit, the interest payouts happen consistently, either monthly, quarterly, semi-annually, or yearly, depending on your selected period.
However, suppose you can manage repeat expenses without being dependent on interest income and are looking for a fixed deposit investment to meet long-term goals. In that case, you should go ahead with a cumulative fixed deposit scheme to help you earn compound interest. Compound interest, a.k.a. interest on interest, lets you make more money during the same tenure. And remember, the longer the investment tenure, the higher the interest rate offered by banks and NBFCs is. Your long-term needs like saving up for your child's marriage, meeting your child's education expenses or planning an extended vacation for yourself - you can take care of all these needs with a well-thought out fixed deposit investment.
Conclusion
Post-retirement, you must focus on being stable to sustain your current standard of living, if not improving it for the better. And a great way to grow your retirement fund is by smartly investing it in fixed deposits. Utilise all the benefits available to senior citizens, make an investment plan, and enjoy steady returns to live a happy life.