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How a Fixed Deposit can help you Beat Inflation in your Retirement Years

How a Fixed Deposit can help you Beat Inflation in your Retirement Years

Retirement is not just an event rather a long phase of a senior citizens’ life. Nothing is worse than watching your retirement amount falling to inflation. When you retire, you do not want to fall victim to inflation. Most of the times, retiree think that the retirement money is enough to help them sustain for the rest of their life. However, it is not true. Inflation will spear down your investment, and sooner rather than later you will realise that your savings were not enough. To make sure that your prosperity does not turn into poverty, there is a considerable step that you can take, and that is an investment.

As for investment, there are other options such as investment in equity backed mutual funds, where the returns are pretty high. However, this investment avenue is not risk-free. Another option that you can use is part of your retirement money to invest and remaining part to save, keeping in mind that you do not put the entire amount on line. The third option is that you choose the safest form of investment with considerable returns. Now having worked for so long, you might have come across the term senior citizen fixed deposit. Yes, you may know it as the FD is safest form of investment. However, what you do need to know is why it is necessary for senior citizens to opt for a fixed deposit.

A senior citizen fixed deposit investment is similar to normal FD which involves an investment of surplus funds for a particular tenure as decided between the investor and the financial institution. In this period, the amount of investment accrues a decent rate of interest which results in sizeable income. There are three things to consider when it comes to investing in a fixed deposit – the amount that you are investing, the tenure for which you are investing and the rate of interest that is being offered. This will help you get a fair idea as to how much return will you earn when your investment matures.

However, can bank fixed deposit beat inflation? Is the same question running in your head?

Yes. That is true. The rate of interest offered by the banks in the fixed deposit is not enough to beat inflation. However, the fixed deposit offered by a Non-Banking Financial Company (NBFC) such as Bajaj Finserv can. The rate of interest offered by this NBFC is more than 8%. Furthermore, for senior citizens, there is an additional rate of interest benefit of 0.25%.

Are NBFCs credible?

Not every NBFC. However, some are. When decided on a Non-Banking Financial Company, it is essential that you check their stability ratings. NBFCs such as Bajaj Fiserv are highly reputed with safety ratings of ICRA’s MAAA (Stable) Rating and CRISIL’s FAAA/Stable Rating. Thus, when it comes to safety as an important instrument for investment, such NBFCs are as good as banks.

However, can a Fixed Deposit beat Inflation?

With the steps taken by the government, inflation has been seriously affected. This is a positive sign. The inflation is being shot down, and it is impacting the overall economy. As of now, the inflation rate sits at 4-5%. Now taking into consideration, the Interest rate on Senior Citizen FD, it is more than 8%. Thus, we can see that it is considerably beating inflation.

Furthermore, it is important to know that inflation will come down in recent years and fixed deposit interest rates will improve further. Thus, a senior citizen can keep investing in a company fixed deposit and keep on yielding higher returns.

Paul Shaw
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