Your parents have spent a lifetime ensuring your stability. And as roles reverse you must ensure their stability in return. Amidst an ever-evolving financial landscape, a Fixed Deposit (FD) stands out as a reliable beacon when it comes to investing for your parents’ needs. Compared to other market-linked instruments FDs offer seniors secure and fixed returns in the form of regular interest income. With the option to choose from payout options ranging from monthly, to annual to cumulative, FDs can be tailored to meet your parents’ needs.
Let us look at six reasons to prioritise Fixed Deposits for their financial serenity
Stability in retirement years
FDs provide a shield against financial uncertainties. The turbulent tides of market volatilities don’t affect FDs. With consistent and assured return rates, this fixed return ensures peace of mind during retirement years.
For instance, if your parents had invested ₹1,00,000 in an FD five years ago, they'd know the exact maturity amount today based on the interest rate offered at that time. This predictability brings a sense of comfort and enables planning for expenses, in the short to medium term.
Also Read: What is Fixed Deposit (FD) ? Advantages of a Fixed Deposit Account
Guaranteed income stream
Post-retirement, regular income sources diminish and FDs become a crucial financial instrument. With periodic interest payouts, whether monthly, quarterly, or annually, FDs ensure a regular inflow, simplifying financial planning for the elderly. The returns are fixed because the interest rate is locked in when you book the FD. Besides, most banks offer senior citizens a slightly higher rate of interest, making it a win-win proposition for them. For instance, Axis Bank offers up to 50 basis points higher interest rates on FDs for senior citizens.
As regular income avenues like salaries recede post-retirement, FDs bridge the gap. Consider it a steady paycheck without the work. The periodic interest could resemble a monthly salary, aiding in managing monthly expenses without a hiccup.
Easy to access emergency fund
Life's unpredictability remains constant regardless of age. An FD ensures that funds are accessible during emergencies. Its easy liquidity means that it can be quickly encashed or availed as an overdraft, ensuring that unexpected financial needs are catered to.
An example could be your parents' car breaking down unexpectedly or a sudden hospitalization. In such situations, the FD can act as a buffer, covering repair costs without financial strain.
Also Read: Know the different types of Fixed Deposits
Tax benefits
Financial prudence extends to how you grow your earnings. With a five-year lock-in period, the Tax-Saver FD can help them build savings while aiding with tax benefits. The invested amount
is eligible for tax exemption under Section 80C of the Income Tax Act. Besides, interest earned up to a certain limit is exempted from taxation for seniors, ensuring they keep more of what they earn.
Legacy planning and inheritance
Thinking about the future is an innate parental trait. FDs can be a significant part of their legacy. They are easily transferable and can be bequeathed, ensuring a seamless financial legacy for future generations.
Your parents can set up an FD now and will it to their grandchild. By the time the child grows up, this FD would have matured, providing substantial financial aid for their education or other aspirations.
Also Read: FD vs RD: What works best for you?
Conclusion
Our parents' retirement years should be about relaxation, not financial stress. Fixed Deposits, with their myriad benefits, make a compelling case. Axis Bank's offerings in this arena only amplify the merits. So, take a step towards cementing your parents' financial tranquillity with a trusty Fixed Deposit. The returns, both financial and emotional, are guaranteed.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision
