When it comes to investing their hard-earned money, senior citizens have several options to choose from. Two of the most popular investment options for senior citizens are the Senior Citizens’ Savings Scheme (SCSS) and Fixed Deposits (FDs). While both these options have their own advantages, it can be confusing to decide which one to choose.
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Senior Citizens’ Savings Scheme (SCSS) is a government-backed investment scheme designed exclusively for senior citizens above 60 years of age. The scheme offers a fixed interest rate for a tenure of five years, which can be extended by an additional three years. Senior Citizens’ Savings Scheme is a safe investment option and provides regular income to senior citizens.
Lock-in Period: The 5-year lock-in period may limit liquidity options for seniors.
Interest Rate Fluctuations: SCSS interest rates may vary depending on prevailing market conditions, impacting overall returns.
A Fixed Deposit, also known as term deposit, is a type of investment where you deposit your funds for a fixed period, ranging from seven days to ten years. The amount you deposit, and the tenure are fixed at the time of investment. Fixed Deposits usually offer a fixed interest rate, and the return on investment is guaranteed.
In reaction to the Reserve Bank of India (RBI) raising the repo rate, numerous banks and NBFCs increased the interest rates on fixed deposits.
Both SCSS and Fixed Deposits offer assured returns. Interest rates for the Senior Citizen Savings Scheme (SCSS) are up to 8.2% p.a. for the second quarter of FY 2024–25. The Bajaj Finance fixed deposit currently provides up to 8.65% p.a. returns to senior citizens for a special tenure for 44 months which is one of the most competitive returns in the market.
SCSS has a fixed tenure of 5 years, which can be extended for another 3 years. FDs, on the other hand, offer flexible tenure options, allowing investors to choose the duration that aligns with their financial goals. For short term goals, the Bajaj Finance FD works wonders as you can open an FD for a tenure anywhere between 1-5 years and renew depending on the need.
While SCSS has a lock-in period, FDs offer some liquidity options. Premature withdrawal of SCSS may attract penalties, while FDs may also have penalties, but you can choose a Bajaj Finance Non-cumulative FD with regular payouts to have access to regular income.
Both SCSS and FDs offer tax benefits. The interest earned on SCSS is taxable, but seniors can claim deductions under Section 80C. Similarly, FDs with a tenure of five years or more are eligible for tax benefits under Section 80C.
Both Senior Citizens’ Savings Scheme (SCSS) and Fixed Deposits (FDs) have their unique features and benefits for Indian seniors seeking stable investment options
The decision between SCSS and FDs ultimately depends on the senior's financial goals, risk tolerance, and liquidity requirements. Considering individual preferences and consulting with a financial advisor can help seniors make a well-informed investment choice, ensuring financial security and stability during their retirement years.
Note: Bajaj Finance does not offer tax saving FD, but you can always invest in Bajaj Finance FD to earn high returns.
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