When interest rates are reducing, it worries investors as their income is affected. This is especially concerning for senior citizens, given they do not have other income sources due to retirement from jobs. The fall in interest rates reduces their income, which becomes a risky proposition to invest their lifelong savings. So, investing in low-risk bonds such as government bonds, RBI bonds could be considered if one is willing to invest for the long-term. If investors are looking for short term investment opportunities with low risk, they could invest in fixed deposits with different maturity periods.
Why should Senior citizens invest in a fixed deposit?
Senior citizens require a consistent flow of money after retirement. They cannot depend on assets that provide them with a bare minimum return. Thus, in such a case, a fixed deposit comes to rescue. Banks also provide extra fixed deposit interest rates for senior citizens, for example, PNB Housing finance ltd. provides a 0.25% extra interest rate for senior citizens. Along with these other benefits are the availability of loans, premature withdrawal, and monthly interest payments.
There are various banks in public and private sectors that offer different products in fixed deposits, wherein each product has its interest rate depending upon the maturity. The fixed deposit interest rates could be as low as 3.00% and could go up to 7.60% (In case of PNB Housing finance ltd.) with maturity ranging from 7 days to up to 120 months (for an amount above Rs. 10,000/-).
There is a trade-off between risk and return. Investors willing to invest in low-risk products with good returns have a longer lock-in period, and premature withdrawals could attract some penalty, which would ultimately reduce the income. So, after considering all the factors, invest savings while keeping in mind the cash flow requirements.
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