People often picture retirement as a period of stagnancy. However, it is the time that you get to focus on yourself, your hobbies and interests. During your working life, you often miss out on certain things due to lack of time. You are required to follow your schedule, so keep your interest and hobbies for retirement. Whether it is being a photographer or baker, you can proactively engage in your hobbies once you retire from working life.
You have to be financially prepared in order to have a comfortable retirement as this is the time when your sources of income gradually diminish. Furthermore, the growing age also starts taking a toll on your health, so need to be well-prepared for healthcare expenses. Considering the current rate of inflation, if maintaining your current lifestyle becomes difficult if you do not have a solid retirement plan. Hence, many finance experts suggest investing a small portion of your savings.
Although growth-oriented investments like stocks or equities help you within a short time, they are subjected to market risk. Therefore, while approaching your retirement you can think of relying on the safer option like Fixed Deposits (FDs). FDs offer guaranteed returns which can multiply your savings over time. They are preferred by the majority of the population as a fixed income instrument.
Fixed deposit returns are not the only benefit offered you can get by investing in FDs. In fact, the FD interest rates are higher than savings account which means you can reap more monetary benefits. They also enable you to maintain a steady growth of your savings. Here are some tips to choose the right FD to plan your retirement,
Renewing FDs Regularly
You can withdraw the funds once your FD matures. However, rather than withdrawing the amount, you can simply renew the FD to earn additional interest and benefits through compounding. As the interest obtained from the initial principal gets re-invested, you can get to maximize your returns.
Choosing the Right Financer
Banks and non-banking financial companies, both offer fixed deposits. Although NBFCs offer higher interest on FDs, investing in a bank is generally considered as a safer investment. In order to ensure the safety of your investment, verify the safety ratings given to the financer by credit rating agencies.
Using FD as a Tax-Saving Tool
Previously, the interest earned on FD was applicable for TDS if it was more than In the Interim Budget 2019, the limit of tax exemption was increased to Rs. 40,000 for regular FD holders and Rs. 50,000 for senior citizens. This means you can use FD as a tax-saving tool
Unlike many other forms of investments, you can calculate the exactly fixed deposit returns. This can be extremely helpful when you are planning retirement.