Fixed Deposit for Senior Citizens: In today’s time inflation is increasing and along with this, many banks have also announced an increase in interest rates. In such a situation, what should be the investment strategy for senior citizens, let us know.
Fixed Deposit for Senior Citizens: Senior citizens have different needs, so the investment strategy is also different for them. After retirement, it is often advised to investors that they should invest in less risky places, so that there is no big loss of any kind. Experts believe that fixed deposits can be a better option for senior citizens. There are many benefits associated with FD, such as in this you can withdraw money at any time when needed. However, for this you will have to pay some penalty. Under FD, you can deposit any amount you want and you get assured returns in this. Along with this, you can also take loan against FD
In today’s time inflation is increasing and along with this, many banks have also announced an increase in interest rates. In such a situation, what should be the investment strategy for senior citizens, let us know.
Avoid long term FDs
For now, senior citizens should avoid investing in FDs for the long term. A short-term FD will mature in the near term, so it can be renewed to take advantage of rising interest rates. Senior citizens will not be able to take advantage of this due to locking in the long period.
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Be careful while choosing a bank
There is a difference in the interest rates of different banks. Investing in big banks is safe but the interest rates are often comparatively low. At the same time, small banks get good returns but they are considered risky from the investment point of view. So you should be careful while investing. You can split your deposit between different banks for better average returns.
Divide large sums of money into multiple deposits of different tenors
If you have made a large fixed deposit, it can be divided into multiple deposits of different tenors. This can improve your average return. You will have liquidity at different stages of life. Apart from this, you will also have the option to renew it when the interest rates rise. For example, if you have a single deposit amount of Rs 10 lakh, you can divide it into five deposits. That is, each deposit will have Rs 2 lakh. Deposit it for different tenors like one year, two years, three years etc. After each maturity, you can use the money for higher returns i.e. reinvest.
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Switch to FD with higher interest rate
If you already have a low-rate FD, wait for the interest rate to increase before making the switch. The interest penalty for premature withdrawal should be less than the interest you would get by renewing for higher rates. For example, if you exit your current FD, which pays 5% p.a., you may have to pay a penalty of 0.5%, and your effective rate comes down to 4.5%. However, if the interest rate of the new FD is 6% per annum, then you will benefit irrespective of the penalty. Senior citizen investors can claim tax deduction of up to Rs 50,000 in a financial year on interest income from FDs. Hence, the possibility of increase in interest rates can be a good opportunity for them to get higher returns.
(The author is CEO, BankBazaar.com)
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