We all want our retirement to be worry-free. After a lifetime of hard work, we want to put our feet up and enjoy the people and things we love. So how can fixed deposits (FDs) help retirees to achieve just that? First, if you need a fixed deposit refresher, check out this previous blog post. Now, let’s dive into the ways that FDs can help retirees.
Unlike other types of investments such as stocks or mutual funds, FDs offer guaranteed returns. You can set your FD portfolio up in such a way that you receive regular payouts. Retirees can therefore be assured of a steady income, long after they receive their last monthly salary.
Your risk appetite may be higher when you’re younger; but most older people want safe and reliable investments. FDs are considered to be one of the safest investment options as they are not subject to market risks or volatility. That makes them an ideal investment option for retirees who are looking to protect their savings and avoid any potential losses.
Many retirees’ biggest fear is running out of money. FDs help retirees preserve their capital, even as they earn interest. If it’s important to you to leave some money to your children or grandchildren, FDs can also be a useful saving tool.
Can Be Used For Medical Emergencies
We have recommended creating a separate rainy day fund to use in case of emergencies. However, medical expenses may increase as you age and you can always break a fixed deposit if you really need the money. Alternatively, you can use the FD as loan security and take out a loan instead. Either way, if you decide to open a fixed deposit, you’re insulating yourself from the financial shock often associated with major medical procedures.
Easy to Manage
Most people’s dream retirement doesn’t involve the management of complex financial instruments. FDs are easy to open and maintain, with minimal paperwork required.
Retirees can customize FDs to meet their unique needs. You can assess the value of short- and long-term FDs as they relate to your individual situation. If you’re sixty-five, you may have different financial plans than if you’re ninety. And you’re not limited to a single FD either. You can choose to invest in both a short- and long-term FD or engage in a strategy called fixed deposit laddering, where you invest smaller amounts of money in FDs with varying terms.
So fixed deposits help give retirees a low-risk, easy-to-manage way to maintain a steady stream of income while also giving them flexibility, helping them preserve capital, and providing financial assistance in times of medical crisis. That’s a pretty good deal. However, the best FD or combination of FDs for you will depend on your financial goals, risk appetite, and overall financial situation. Talk to a financial advisor to help create the financial portfolio best suited to you and minimize post-retirement stress. We’re rooting for you to have a worry-free retirement full of everything you love!