Senior citizens who are going to retire soon or have already retired need a sure source of income apart from their pension. This is why they should consider investing in fixed deposits as it can have several benefits. They are considered as a safe form of investment that has low risk and fixed return. The return will not be affected by the fluctuation in the market.

However, other forms of investments, like investing in stocks and bonds can be risky. They are prone to fluctuate with the highs and lows of the market. Senior citizens, especially those who don’t know much about the stock market should invest in fixed deposits.

What is a fixed deposit?

In simple words, in a Fixed Deposit, you put a large amount of money in the bank for a particular period of time at an agreed-upon interest rate. At the end of the time period, you will get the amount you invested, plus, the compound interest on that amount. You can say that FDs are also known as “term deposits”.

An FD is one of the safest and most popular forms of investing money. They are easy to access and most of them also provide good returns.

You must be wondering, how much interest can you gain on your investment?

Well, the rates are fixed when you open the deposit and depend on the amount of time you have agreed upon. Several different companies provide different rates of interest on senior citizen fixed deposits. You will receive the interest amount on your investment on either a monthly, quarterly, or yearly basis in your savings account. You can opt for either option.

What are the eligibility criteria for senior citizens to open an FD?

Any person who is above the age of 60 years is eligible to open a fixed deposit account. One must provide proof of their age and the fact that they are the residents of that country. Certain firms and banks also allow people who are above the age of 55 to open an FD account if they have taken early retirement. However, if that is the case, it may be subjected to the terms and conditions of that particular firm.

Some banks and non-banking firms also consider opening FDs for people who are above the age of 80 and providing them with better senior citizens fixed deposit interest rates.

Here is a list of documents that are required to open an FD account –

•       Age proof
•       Photo ID
•       Pan card
•       Proof of residence
•       Form 15H (a self-declaration form that you can submit requesting the bank or the firm to not deduct tax on the interest-only if your income is non-taxable)

What are the benefits of opening an FD account for senior citizens?

Opening senior citizens’ fixed deposit accounts have its advantages. Here are some reasons why you should consider it –

•       A fixed deposit offers good returns and is easily accessible. It is a very popular choice among senior citizens.
•       The senior citizens fixed deposit interest rate is higher than the usual rates, thus, the returns are better.
•       It is a safe investment. The money deposited grows at a steady pace without any risks involved.
•       A monthly or quarterly income can provide the senior citizens with a steady source of income post-retirement.
•       The market fluctuation does not affect the rates of interest on your investment.
•       An FD can easily be opened with a minimal amount of just 5,000, no large sums of money are required. However, it varies in different banks and firms.
•       There is no particular time to withdraw the money. You can easily withdraw before its maturity in case of emergencies.
•       The application process for an FD is quite simple which makes it easier for senior citizens. They are also eligible to deposit the form 15H with other documents which save tax deductions from their interest in case their income is not taxable.
•       There are many institutions that allow you to get a loan against your FD if your income does not match their eligibility criteria. The loan provided will be a certain percentage of your deposited amount. The interest rate on such loans varies from company to company.

Conclusion

Other investment options come with high risks and are not suitable for people who are retired and do not have a fixed source of income.  A fixed deposit is a great and extremely safe option of investment for senior citizens. They will be able to avail a higher interest rate than the market and lead an independent life while also contributing to the household income! This is the best option for senior citizens if they want to fast-track their income.