The fall in interest rates across different investment instruments, has been reminiscent of the Global Financial Crisis (GFC), we witnessed in 2008. Along with a series of repo rate cuts, the interest rates on small savings schemes have also been cut by 70-140 basis points for the first quarter of FY 20-21. These events led to several financiers reducing interest rates on fixed deposit and savings accounts. But, even as central banks grapple the debt of increasing credit risk of corporate debts, further reduction in rates may be required to keep liquidity taps running during these times.

Thus, even after coming under the spotlight amidst increasingly volatile equity markets, the steady fixed-income instruments are in the eye of the storm. However, the worst-hit by these reducing interest rates have been senior citizens and retirees, who depend on monthly incomes for meeting their regular expenses. Falling interest rates can reduce the amount of monthly income they can earn, by investing in fixed-income instruments. Despite the challenges, senior citizens can look for several other investment avenues that offer assured high returns, even during these times.

How senior citizens need to plan their investments?

These are challenging times that warrant cautious financial planning, especially for senior citizens looking to strike a balance between day to day living expenses, impending medical expenses, and funds for contingencies. Thus, there is a greater need to create a balanced portfolio comprising investments that can yield fixed monthly income along with a steady corpus to cover life goals and emergencies.

With the reduction in interest rates for savings schemes, and the discontinuation of taxable bonds by RBI, fixed deposits are back in the focus, because of the assurance of guaranteed returns. However, due to the reduction in FD interest rates by financiers, FD rates offered by banks are averaging around 4%.

The table below shows the interest rate comparison between interest rates offered by bank FDs, and various other small savings schemes (with an option for monthly/quarterly payouts):

Looking at the above alternatives, we can observe that investing in a NBFC Fixed Deposit can offer higher returns. But, as most NBFCs have been facing liquidity issues, it is important to go for well-capitalized and strong companies like Bajaj Finance. The company is currently offering rates of up to 7.85% on a five-year deposit.

As one of the top-rated fixed deposit in the country, the benefits of investing in a Bajaj Finance Fixed Deposit go beyond the lure of attractive interest rates. With the highest rating of FAAA by CRISIL and MAAA by ICRA, it is one of the safest options for senior citizens to grow their savings. Additionally, the company has a deposit book of more than Rs. 20,000 crores, with the trust of 2,35,000 happy FD customers.

How can senior citizens get higher returns with Bajaj Finance FD?

While Bajaj Finance offers new customers with attractive FD interest rates of 7.60%, senior citizens can get higher growth of savings with 0.25% higher interest rates. Bajaj Finance offers senior citizens attractive interest rates of up to 7.85% and the facility to invest as per their convenience. With doorstep document collection facilities, or an end-to-end online FD process, senior citizens can enjoy greater convenience when investing in this FD.

With flexible tenures from 12 to 60 months, senior citizens can also choose the frequency of periodic payouts, to help them generate monthly income to meet recurring expenses. Hence, the lumpsum amount received during retirement can be used to invest in a high-interest yielding option like Bajaj Finance FD for maximum benefits.

To understand the benefits of investing a lumpsum in Bajaj Finance FD, let's assume that a corpus of Rs. 10 lakh needs to be invested for 5 years. However, as a senior citizen, you need to strike a balance between growth of savings, and funding recurring expenses with periodic income. To achieve this, consider dividing the investment amount, to allocate one portion in a FD with interest payout at maturity, and another portion in a FD with monthly interest payout.

Since the interest payouts need to be of considerable value to serve as monthly income, let's allocate a higher portion of the total investment amount, i.e. Rs. 7 lakhs while choosing the option to get monthly payouts. Check the table below to see your monthly payout amount.

For the remaining Rs. 3 lakhs which is set aside for building a corpus for the future, investing this amount for 5 years with interest payout at maturity, will fetch higher interest rate, as shown in the table below.

Thus, from the above tables, it can be deduced that Bajaj Finance FD offers one of the highest interest rates, for senior citizens. Consider investing a larger corpus to gain higher benefits. You can also consider renewing your deposits to get additional 0.10% returns on your investment. You can also consider planning your investments with Bajaj Finance FD Interest Calculator, using which you can determine the maturity amount, maturity date and also find out your monthly interest amount.

Also, in case of emergencies, Bajaj Finance enables investors to withdraw prematurely, upon completion of minimum 3-month lock-in period. You can also avail an easy Loan against FD in such situations to fund emergencies and continue reaping the benefits of steady returns.

A smart investment with a highly placed company FD can yield assured high returns for immediate as well as future needs. You can also create a series of multiple FDs staggered at different time maturities to allow a continuous flow of income.