Financial security is critical in retirement. Uncertain finances can hamper your peace of mind and ensure you do not enjoy retirement. Proper investment and money management can bail you out, delivering the post-retirement life you need. While retired individuals can invest in several securities, a risk-free investment is preferable. This is where fixed deposits (FDs) come into the picture.
What is a fixed deposit?
A fixed deposit (FD) is an investment instrument that offers a higher interest rate than a regular savings account. The interest rate is fixed for the deposit duration, which means you know exactly how much interest you will earn. FDs are a popular choice for people who want to grow their savings without taking too much risk.
Why should senior citizens opt for a fixed deposit?
There are many reasons why senior citizens should opt for a fixed deposit. A fixed deposit offers a higher interest rate than a savings account. It is especially beneficial for senior citizens living on a fixed income and who need to maximise their interest earnings.
FDs also provide security and stability. With a fixed deposit, senior citizens know their money is safe and do not have to worry about their money losing value. Additionally, they can choose to have their interest payments deposited into their account monthly, which can help budget their expenses.
Benefits of a fixed deposit
Before deciding if a fixed deposit is suitable for you, consider some advantages and disadvantages. The most significant advantage of FDs is that you will earn more interest on your money than in a regular savings account. It can help you reach your financial goals faster.
Secondly, your money is safer in a fixed deposit than in a market-linked investment. You will earn interest, even if the market crashes.
However, there are also some disadvantages to consider before investing in an FD. One drawback is that you will not be able to access your money during the deposit term. It means you will need to have another source of funds if you need to cover an unexpected expense. Also, you may be charged a fee if you withdraw your money before the end of the term.
How to open an FD?
It is easy to open a fixed deposit account for senior citizens. All you need is a valid ID and proof of address. You can open an account at any bank or NBFC online within minutes.
Once you have opened your account, you will need to deposit money. The amount of money you need to deposit depends on you and the bank or NBFC’s policies. Once your money is deposited, it will earn interest. Depending on the characteristics of the FD, the interest will be deposited back into your investment or paid to you regularly.
A fixed deposit comes with many benefits but choosing the correct type of account is essential. Most banks will have a special scheme for senior citizens, promising higher FD interest rates. You can use an FD calculator to help you shortlist the best FDs and invest accordingly.
