The financial industry works within a few thumb rules of investment. While there are dedicated retirement plans for your benefit, with careful planning and insightful information, you can create a secure retirement kitty by using the regular financial instruments as well. As a young professional with 30-40 years of working life under your belt, you could have afforded to experiment with risky investment options like equity and mutual funds. The rule to invest in them is “High Risks, High Returns”. However, with increasing age, financial goals, and liabilities, one tends to move towards “Low Risk, High Return” requirement. This is certainly an aberration with no easy solution.
Why choose a fixed deposit over market-linked products?
Fixed deposits with high interest rates are the ideal path to your safe and sizeable retirement portfolio.
Assurance of returns – Bank FDs offer a maximum of 5-7.7% interest rates, whereas company FDs offer anywhere above 8%. Bajaj Finance FD offers a generous 8.95% to its senior citizen customers over a tenor of 5 years. Market-linked products have no assurance of returns on equity and mutual funds. It keeps changing as per market movements.
Market cycles – Market-linked options have higher volatility than fixed deposits. Over a period of 5 years, the prices of shares and mutual funds will change on a daily level, but a fixed deposit once fixed with an interest rate will not change till maturity. No market cycles or changes in interest rates will affect the maturity amount.
High Return On Investment – With company FDs like Bajaj Finance, you can easily earn more than 50% return on investment as shown below. As a senior citizen, you can gain 8.95% for 5-year investment, which will easily give you a return on investment of 54%. This is a highly beneficial return with no risk attached. For a retirement corpus which needs to be safeguarded against volatilities, Bajaj Finance provides the best option.
|New customer||8.6%||₹5 lakh||5 years||₹2,55,299||51%|
|Senior citizens||8.95%||₹5 lakh||5 years||₹2,67,549||54%|
|Existing customers||8.85%||₹5 lakh||5 years||₹2,64,033||53%|
Guarantee of safety – With an assurance of repayment guaranteed by MAAA (stable) rating from ICRA and FAAA/Stable from CRISIL Rating Agency, it is almost as safe as a bank FD. As a senior citizen who will be investing his life earnings in the FD, safety is of utmost importance. These ratings are decided on a 14-point system based on how Bajaj Finance services its debt, its asset quality, and credit quality of clients. Lookout for this rating every time you choose a company FD.
Use the benefit of cumulative option – When you are creating a retirement corpus, ensure to use the cumulative option – which adds interest on interest and multiplies the principal. This option has no payout and results in a sizeable corpus at maturity. If you, however, need a payout for meeting general or medical expenses at a fixed interval, you can go for the non-cumulative option in the FD. You will, however, forgo the additional interest earning owing to pay out.
Use the concept of laddering for your retirement corpus – You can plan a certain amount of FDs to mature at fixed intervals once your retirement starts. A series of multiple FDs will help you create a series of maturities which you can use for your leisure or needs. With the rates of Bajaj Finance FD for senior citizens, you can plan an impressive retirement corpus even with renewals and achieving an additional 0.10% interest.
Use Online Fixed Deposit Interest Calculator to understand how much maturity amount you can earn at the end of a tenor. Or if you require a specific amount, you can adjust the amounts and tenor to seek out the investment required.