Choosing the right senior citizen investment plan post-retirement is all about reducing your exposure to risk.
A secure investment will ensure that you live comfortably in your golden years. In India, multiple generations have trusted fixed deposits, making it the most popular instrument in the country.
However, in recent times, mutual funds too have emerged as a favourable option, especially in the form of SIPs (Systematic Investment Plans). While they promise higher gains, they come with their share of risk. So, when you’re in your 60s, opting for senior citizen FDs over mutual funds is certainly a safer bet.
Here’s how you can compare the two to see why an FD is the right choice for you.
Degree of safety
When you compare mutual funds and FDs in terms of risk, FDs emerge as the clear winner. Mutual funds are risky as fund managers invest your money directly in the market to help it multiply via capitalising on market fluctuations. Even though mutual fund investments promise high returns, in comparison to FDs, they offer high-risk too.
On the other hand, fixed deposits are completely risk-free as they aren’t linked to the market. In case of FDs, the investment is parked for a tenor of your choice, and earns interest at a rate promised by your issuer at the start. So, a fixed maturity is guaranteed in case of an FD.
Earning potential
You can fetch higher interest earnings of up to 12% on your mutual fund investments. However, this is subject to market risks so the assurance is minimal. While FDs offer a marginally lower interest, it is something you can count on, making an FD a better option for a retiree like you.
Moreover, if you choose the right senior citizen FD, you can gain higher interest earnings. Ones from NBFCs, for example, offer higher rates of interest than banks. You can choose Bajaj Finance’s Senior Citizen Fixed Deposits in this regard and gain from FD interest rates of up to 8.75% on your investment. For ease and convenience, use an FD calculator to decide the amount you want to park in a senior citizen FD.
Timeline of investment
The lock-in period for mutual funds varies according to the type you select. Tax saving or ELSS mutual funds come with a longer lock-in period of 3 to 5 years. On the other hand, high-risk, non-tax saving options come with a minimum lock-in period of 1 year. However, you can invest in a FD for a tenor of your choice, be it a few days or several years.
Liquidity for urgent needs
Tackling an emergency situation that requires finances immediately can be challenging, especially once you retire. Here, having an FD at your disposal helps you seek funds immediately. You can liquidate a mutual fund too, but ending it before its maturity will incur a penalty. On the other hand, FDs are a handy option as you can use them as collateral and get a secured loan against it. Also, this option allows you to avail funds from the same financial institution at a competitive interest rate, and with a flexible tenor.
It is easy to see why you should lean towards stable and secure investments such as fixed deposits as a senior citizen or retiree. So choose between cumulative and non-cumulative FD basis your needs and invest accordingly.
What are the best investment options to grow your wealth in India in 2019?
There are lots of option where investors can invest in 2019 & can get higher return.
9 Benefits of Financing your Child’s Education with a Loan Against Property
Different loan options are available for helping you finance your child’s education. One of them is Loan against Property. Read to know about its benefits for making a better decision.
Are credit cards better than personal loans?
Unsecured loans are the easiest way of availing finances. Even though all financial institutions offer various unsecured advances, the most popular ones are (a) personal loan, and (b) credit card.
