Fixed Deposit (FD) is more than just a financial contrivance. It’s instead a ticket to economic liberation and constant, assured income. Whether you are a young professional or a senior citizen staring at retirement, fixed deposit works well for all investors and all investment needs.
Fixed Deposit helps with retirement planning as well. How? Well, let’s discuss, in detail.
- Guaranteed returns:
If the safety of the investment is a priority, FD makes sense. Your returns are stable, contractually guaranteed. FD is not linked to the market, and hence, immune to market volatilities and risks. Your investment is hedged against defaults, as you receive INR 1 lakh each for principal and interest. Add to it RBI’s constant monitoring, FD is the safest option for senior citizens.
- Better interest rates:
FD returns are not just guaranteed but substantial as well, up to 8% subject to the lender. While FD works well for all income and age groups, senior citizens are the greatest beneficiaries. A senior citizen receives up to 0.5% fd interest rates than a general FD account holder. When this seemingly small looking margin gets the power of compounding, you end up earning big.
- Interest Payout options:
The best FD offers you two interest payout options, cumulative and noncumulative. The cumulative FD ensures interest payout at the term-end. On the other hand, the noncumulative FD gives interest earnings on a monthly, quarterly, biannually or annually basis.
- Tax relief:
Tax benefits are also gettable exclusively for senior citizens. The FDs entitle you to claim deductions up to INR 50,000 from your tax liability. Additionally, the interest payments of INR 50,000 do not incur TDS. To avail this, you are required to submit the Form-15H.
- Loaning Facility:
The FD is your ticket to hassle-free and a low-interest loan. Pledge your FD and walk away with the funds for any urgent requirement. The quantum of loan is subject to the principal deposit.
- Nomination facility:
With the FD, you are free to nominate a legal heir for the proceeds once you take leave. Just fill Form DA1 at the time of account opening and designate a nominee.
The approval process explained:
Now that you are ready to embrace FD let’s explore the eligibility criteria and approval process.
- Eligibility criteria and documentation:
The eligibility requirements are simple. Specification may vary, but any Indian above 60 years are eligible for senior citizen Fixed Deposit (FD). As far as documentation is concerned, you need to put together a passport size photograph, self- attested ID proof and address proof, and age proof. Note that eligibility and documentation requirements are bank-specific, varying from bank to bank.
- The Approval Process:
The best FD approval process is convenient, transparent and quick, accomplishable in a matter of minutes. You need to fill an application readily available on the bank’s website. Also upload the required documents (photograph and ID, address and age proofs).
Alternatively, you can visit your bank’s nearest branch with the duly filed applications, documents and cheque or DD.