Apart from the pension that you receive on a monthly basis, there is no steady source of income once you retire. And there might be times when the medical expenses would exceed your bank balance and your savings. But there is a way out of this. The best way to prepare yourself for such a situation is to invest your money at the right time.
There is a fixed deposit facility available for senior citizens called the Senior Citizen Fixed Deposit. This type of investment is very popular amongst the senior citizens as it is a low-risk investment. There are a lot of things that you should keep in mind before investing your money in this scheme.
Here is a list of things you should keep in mind before investing your savings in senior citizen fixed deposits:
1. Eligibility criteria:
Only people who have crossed the age of 60 years can avail this scheme. People who have taken voluntary retirement and fall between the ages of 55 to 60 years can also avail this scheme. If you choose to invest in cash, then the maximum amount that you can invest in INR 1 lakh. You can invest more than INR 1 lakh only if you invest by cheque.
2. The upper limit:
The maximum amount of money that you can deposit cannot exceed INR 15 lakhs. If you have a large amount that you want to invest, the better option would be to open multiple fixed deposits so that you can continue getting benefits from all your investments.
3. Multiple accounts:
As mentioned above, you can open multiple fixed deposits. The maximum limit for every account is INR 15 lakhs. You can even open a joint fixed deposit with your spouse. If you ever have a financial emergency you can break just one fixed deposit and continue getting benefits from the rest.
4. Appointing a nominee:
The Senior Citizen Fixed Deposit scheme allows you to appoint a nominee who can continue to get the benefits of the fixed deposit if you are not around.
5. Interest offered:
The Senior Citizen FD Scheme provides with the highest rate of interest. The current rate of interest for banks is 8.5%. If you open a fixed deposit with a Non-Banking Financial Company (NBFCs) you will get a higher rate of interest.
6. The term of fixed deposit:
The maximum tenure of this scheme is 5 years. You also have the option of extending the tenure of this scheme by 3 years but you will have to do so within a year of maturity of your fixed deposit.
7. Closure of fixed deposit:
You can close or break the fixed deposit before the end of the tenure. Some banks charge a penalty for the premature closure of the fixed deposit.
8. Transferring your account:
If you are unhappy with the current rate of interest that you are receiving, you can transfer your fixed deposit from one financial institution to other.
9. Tax benefits:
If your yearly income of the interest rate exceeds INR 10, 000 then you will have to pay a tax depending on the tax bracket that you fall into
10. Overdraft facility:
You also have the option of taking a loan against your fixed deposit through an overdraft facility. If you do not have any money in your bank account and you have an emergency, then you can also take a loan based on your fixed deposit. This is known as an overdraft facility. But there is a limit on the amount of money that can be drawn. In addition, you will also need to pay some interest.