Fixed Deposit is one of the most preferred investment options for senior citizens primarily because the risk involved is minimal. At the age of 60 years, you do not have a steady source of income since you have stopped working. Under such a scenario, you do not want to take chances by investing your surplus cash in other risk-related investment. You want security when it comes to returns and that is the reason why Fixed Deposit is an important investment avenue.
Since some time now, FD has been a favorable investment medium for senior citizens who are looking to park their surplus money safely. Fixed Deposit helps them to sustain and live free for the next 10-15 years. The investment is not just kept with the financial institution to secure it but also to improve it. This happens with the help of a decent interest that is earned on a Fixed Deposit. And for a senior citizen, this interest turns out to be a boon.
Any investor can opt for a Senior Citizen Fixed Deposit given that he is an Indian resident. Even NRIs can opt for the same. It is important to know that under Senior Citizen Fixed Deposit you are bound to get a higher rate of interest than the regular investors. The government has made this applicable to every financial institution so as to protect the senior citizens from inflation. Usually, as a senior citizen, you can expect to get +0.5% on Fixed Deposits.
Recently, Prime Minister Narendra Modi announced that every senior citizen is guaranteed to receive an interest rate of 8% if they deposit up to INR 7.5 lakhs. The special interest provision for senior citizens, as announced by the PM, is applicable for 10 years. Under this effort, the interest will be paid to the senior citizens on a monthly basis. With this, the interest on the income of the senior citizens can be guaranteed.
In recent times, various financial institutions have cut interest rate, keeping in mind the interest rate cut by the Reserve Bank of India (RBI). The demonetization drive has led to the financial institutions being flush in deposit and as a result, the credit offtake has become weak. All this will contribute to a further fall in the bank deposit rates.
If you are senior citizen looking forward to investing your surplus amount, you can look forward to investing in a fixed deposit with Non-Banking Financial Companies (NBFCs). Although the major financial institutions along with others have been asked to at least provide 8% rate of interest, with NBFCs you can avail slightly more. Furthermore, NBFCs are more flexible with their plans and policies.
What are the Current Features of Senior Citizen Scheme?
- The majority of the features in the Senior Citizen Fixed Deposit scheme is similar to regular term deposits.
- Senior Citizen Fixed Deposit comes for a period of 7 days to 10 years. NBFCs, however, offer 1-5 years of fixed deposit which is to help you earn sizeable interest with effective tenure.
- Nomination facilities have been made available for Senior Citizen Fixed Deposit.
- Interest rates for Senior Citizen Fixed Deposit are based on the tenure.
These are several points that you must consider if you are looking forward to investing in senior citizen fixed deposit. Senior Citizen Fixed Deposit is one of the best retirement investment options in India.