How To Choose The Right Fixed Deposit Scheme For Senior Citizens Based On Your Savings Goals And Risk Tolerance

As senior citizens rely mostly on their retirement savings for their regular expenses, choosing the right investment options is crucial. Fixed deposit (FD) schemes are a popular choice among senior citizens due to their guaranteed returns and low-risk profile. However, with multiple options available in the market, it can be overwhelming to choose the right FD scheme that suits their financial goals and requirements. 

In the case of senior citizens, investing depends on their saving goals, investment tenure, and risk profile. FDs offer additional advantages to senior citizens besides stable returns and the safety of funds. 

Here we will discuss the key factors that senior citizens should consider while choosing the right FD scheme to maximise their returns and minimise their tax liabilities.

Bank FDs – the Right FDs for Senior Citizens

FDs with renowned banks are capable of fulfilling all requirements senior citizens are looking for. Concerned with various aspects, senior citizens find bank FDs the best option for them. Here is how FDs offered by banks are the most promising ones.

– Safety of Funds with DICGC Insurance

Individuals looking for the safety of their savings consider bank FDs. Each deposit with the bank is insured with the DICGC (Deposit Insurance and Credit Guarantee Corporation) – an arm of the RBI (Reserve Bank of India). Each fixed deposit (FD) account with a bank in India is insured with DICGC insurance coverage of up to Rs 5 lakhs. This upper cap covers both principal and interest amounts in a deposit account. Depositors can inquire about the insurance in the bank if its fixed deposit accounts are DICGC-insured. 

– Earn Interest at a Higher Rate

Interest rates are rising in the Indian economy and allowing investors to earn higher returns. Many reputed banks have increased their interest rates that go as high as 7.80% for senior citizens. Bank FDs offer special and higher interest rates to senior citizens as compared to regular or non-senior citizen FDs. As per the bank policies, the additional interest rate can be 0.50% higher for senior citizens aged between 60-80. The additional interest rate is even higher for super senior citizens of 80+,i.e., 0.75%. It helps senior citizens to earn more safe returns. One can open accounts for senior citizen fixed deposit schemes online conveniently using a savings account and earn at a higher interest rate. 

– Assured and Regular Interest Payouts as Regular Income

Assured returns are one of the primary factors that make bank FDs attractive. Senior citizens who are dependent on their investments to meet their financial needs can choose a non-cumulative FD with a bank. These FDs are offered with the benefit of periodic interest payouts. They can earn guaranteed returns on their savings and get them credited to their accounts on a monthly, half-yearly or annual basis. Depending on the choice of the depositor, bank FDs can help them with high and stable returns.

– Flexibility 

Bank FDs are flexible enough. Investors can open a fixed deposit for 1 year, 2 years, and so on up to 20 years. The FD tenure can be between 7 days to 20 years with renowned banks. 

– Premature Withdrawal Without Penalty

Senior citizens are at a stage of life when they may need urgent funds to meet emergencies. Due to the same, banks offer FDs to senior citizens without any penalties for premature withdrawal. They can withdraw funds prematurely in case of urgency. 

– Credit card or Overdraft against Bank FDs

If depositors do not want to impact their FD returns due to premature withdrawal, they can opt for a credit card or overdraft against FDs. Bank FDs are eligible to apply for a a credit card or overdraft .There is no force to withdraw funds from a fixed deposit for 1 year, or other lock-in periods to meet financial needs. Stay earning on lifetime savings.

– Tax Advantage under Section 80C

Senior citizen fixed deposit schemes can help depositors keep most of their savings in their pockets. Bank FDs for senior citizens are offered tax benefits. Interest earned from senior citizens’ FDs is tax-exempted – up to Rs. 50,000 in a financial year.

Senior citizens prioritise the protection of their funds and earning assured returns or a regular income when it comes to investing. Bank FDs are a safe and moderate avenue that fulfils these objectives. With the help of online FD calculators available on bank websites, senior citizens can accurately estimate their potential returns in different tenures and make informed investment decisions based on their financial needs. Bank FDs remain a reliable investment option for senior citizens looking for secure and steady returns on their savings.