Points to Consider When using FD to Fund Your Retirement


Fixed Deposit accounts (FDs) are among the most preferred investment methods because of their low risk compared to other instruments such as mutual and equity funds. FDs are an excellent way to secure your future without worrying about the fluctuations in the market.

Creating an FD account is an excellent way to secure your future because of its option to get your returns periodically, helping you manage your monthly expenses.

Here are some essential points to consider before investing in an FD account:

●    Safety

FDs assure returns making it a secure instrument of investment. Various Credit rating agencies have rated various corporates and HFCs that provide the instrument to help you choose wisely. It is better to opt for a corporation with higher ratings such as ‘AAA’ or AA+/Negative for opening a fixed deposit account as it assures you the highest FD rates in the market.

●    Minimum Deposit

Different financial institutions have different maximum and minimum deposit amounts for the FD account. You must opt for a financial institution that provides you a suitable minimum deposit amount matching your requirements. For example, PNB minimum deposit amount is set at INR10,000.

●    Interest Rate

Depending upon the customer’s requirement, they can choose a cumulative or non-cumulative way of interest payment. Cumulatively, you can choose to receive your returns on a monthly, semi-annual, or annual basis, depending on your needs. The non-cumulative way is better for people looking to gain returns on their investments in the long term. Another critical point to consider is that HFCs and corporates often provide the highest FD ratesin the market.

●    Tenure

The average period set for the deposit by the corporate is between 1 year to 10 years. It is essential to carefully select the tenure period as the account’s closing prematurely will attract a penalty on your returns. In the case of the account’s premature cancellation, the corporate will charge you depending upon the tenure’s duration. So, it is necessary to plan and choose the tenure that fits your requirements to avoid unnecessary deductions.

●    Nomination

It is essential to exercise the nomination option in fd if you are the sole depositor. In the event of the depositors’ death, only the nominee can claim the entire sum amount with the relevant interest.

●    Tax Deduction at Source (TDS)

If the interest income from the particular corporate fixed deposit account is more than INR 5,000, the company has to deduct tax from the amount. The limit of an HFC for the TDS is INR 5,000.

●    The Advantage for Senior Citizens

A corporate fixed deposit is a suitable investment method for the senior citizens as it can provide them safe returns monthly as an alternative for regular income in their retirement. HFCs and corporates offer higher interest rates of about 0.25% for senior citizens.


For all of the reasons mentioned above, Fds is a suitable investment method to secure the retirement period without worrying about a regular source of income. Also, because of its low risk and guaranteed returns, FDs are popular means of investment.