Fixed Deposits – An Able Financial Planning Tool For Senior Citizens
As individuals grow older and approach their retirement years, financial planning becomes a crucial aspect of their lives. Senior citizens, in particular, need to be mindful of their finances, as they are often reliant on their savings and investments to support their lifestyles. Fixed deposits (FDs) are a popular investment option among senior citizens , as they offer a steady and secure return on investment and work well as a retirement planning tool. Let’s see how fixed deposits can help senior citizens with financial planning.
Firstly, fixed deposits provide senior citizens with a guaranteed return on their investment. Unlike other investment options, such as mutual funds or stocks, where the returns are subject to market fluctuations, FDs offer a fixed rate of interest. This makes them a reliable investment option for senior citizens who prefer low-risk investments.
Unity Bank makes FDs and easier choice with one of the best rate of interests for senior citizens under its Shagun Deposit scheme. The highest interest rates are for tenures of 181-201 days, 501 days and 1001 days respectively. In fact, for 1001 days, the interest rates* go up as high as 9.5% for senior citizens.
Secondly, fixed deposits are easy to manage. Senior citizens can choose the term of the deposit, the amount to be invested, and the frequency of interest pay-outs according to their needs. They can also choose to reinvest their matured FDs to enjoy higher interest rates.
Thirdly, fixed deposits offer tax benefits to senior citizens. According to the Income Tax Act, senior citizens (aged 60 years and above) are eligible for a higher exemption limit on interest income earned from fixed deposits. This means that senior citizens can earn tax-free interest up to a certain limit, which helps them save on taxes and increase their net returns.
Fourthly, fixed deposits can be used to generate a regular source of income. Senior citizens who have retired from their jobs can use their savings to invest in fixed deposits and earn regular interest income. This income can be used to support their daily expenses or to supplement their retirement income.
Lastly, fixed deposits are a secure investment option. DICGC or the Deposit Insurance and Credit Guarantee Corporation, a subsidiary of the Reserve Bank of India provides insurance coverage for depositors in the event of a bank failure. All Unity Bank fixed deposits are insured for up to Rs. 5 lacs by DICGC making it a safe investment option.
FDs in some cases are the best investment option for senior citizens. They provide a guaranteed return on investment, are easy to manage, offer tax benefits, can be used to generate regular income, and are a secure investment option. Senior citizens should consult their financial advisors to determine the best investment options for their needs, taking into account their risk appetite, financial goals, and investment horizon.
*Interest rates are subject to change