Despite the trend of lowering interest rates in the recent months, fixed deposits (FDs) continue to remain the preferred investment tool for risk-averse investors like senior citizens. Assured returns, up to 0.5% preferential rates, forced savings, high liquidity and ease of investments are some of the main reasons behind this.
At a time of heightened economic uncertainties and market volatility spurred by the prevailing Covid-19 pandemic, many senior citizens want to stay away from market-linked investments to retain and grow their retirement savings by parking them in fixed deposits. In fact, countless senior citizen depositors depend upon the periodical interest payouts of their non-cumulative FDs, offered on a monthly, quarterly, half-yearly or annual basis, for their day-to-day expenses, according to BankBazaar.
Fixed deposits are also excellent tools to build emergency funds because apart from capital appreciation, the funds can easily be liquidated before maturity to meet any urgent requirement after losing up to 1% interest income.
However, to earn higher rewards without taking any investment risk, senior citizen depositors may want to implement what is called the FD laddering technique. Under this strategy, they can break their corpus to open multiple FDs with different maturity tenures and keep re-investing the funds if feasible to create an investment loop.
For example, if a depositor has Rs 5 lakh, then instead of putting it all in a single FD, he can choose to break the corpus into five FDs worth Rs 1 lakh each where the first FD will have a tenure of 1 year, second one 2 years, third one 3 years, fourth one 4 years and the fifth one 5 years. This technique would help them benefit from any higher rate offerings in the future while minimising the requirement to pre-close a fixed deposit to meet any urgent requirement after losing interest income, BankBazaar says.
So, if you’re looking for the best FD offers for senior citizens, here are the current interest rates offered by the 10 biggest banks in the country — including the State Bank of India (SBI), HDFC Bank, PNB, ICICI Bank, Bank of India, and Kotak Bank, among others — as per their total asset size for tenures up to 5 years. Go through the rates and choose the ones that best meet your requirements.