New Delhi: The central government is currently running various schemes that are benefiting people on a large scale. The government also offers specific schemes for senior citizens that they can easily avail themselves of. If you wish to earn a good income and build a substantial corpus after retirement, we are here to share an excellent option with you—a truly fantastic opportunity.
We are going to discuss Fixed Deposits (FDs) and the Senior Citizen Savings Scheme (SCSS) for the elderly. Before investing, you can compare the two to clear up any confusion and determine which is better. Here is a quick overview of the details for both schemes.
FD vs. SCSS: Which offers higher interest?
You can compare the interest earned on a ₹10 lakh investment in government-backed FDs versus the Senior Citizen Savings Scheme. For instance, suppose you have ₹10 lakh; the question is, how much money will you actually receive in a year? This comparison provides the clearest picture. One clear observation is that if you secure an FD with an 8.3% interest rate at a small finance bank, the earnings could slightly exceed those from the Senior Citizen Savings Scheme. However, the SCSS still outperforms most FDs offered by major public and private sector banks.
Find out the income on an investment of ₹30 lakh.
An individual can invest a maximum of ₹30 lakh in the Senior Citizen Savings Scheme. If you invest the full amount, you can easily earn an annual interest of ₹2,46,000. This translates to ₹61,500 being credited to your account every three months. This is why many retirees choose this scheme to secure a regular income.
Which scheme offers better security?
The most significant difference lies in the level of security guaranteed by each scheme. The Senior Citizen Savings Scheme is backed by a Government of India guarantee. In contrast, regarding bank FDs, the situation differs; FD investments are covered by DICGC insurance only up to ₹5 lakh. It includes both the principal amount and the interest. If you have a large sum of money, the SCSS is also considered a more robust option in terms of safety.
What are the tax benefits?
The interest earned under both schemes is taxable. If you opt for the old tax regime, both schemes may qualify for tax benefits under Section 80C; the overall Section 80C limit applies to these investments. If safety is your top priority, the Senior Citizen Savings Scheme is an excellent choice.
This scheme also proves beneficial if you require a fixed monthly income. However, if you wish to invest an amount exceeding ₹30 lakh, you would need to consider Fixed Deposits (FDs). If a reliable bank offers FDs with higher interest rates for senior citizens, that option could also be considered.
How to make the final decision?
You might be wondering which option is best for senior citizens and where you can earn the best returns. The SCSS offers customers an interest rate of 8.2% backed by a government guarantee, with payouts credited to the account every quarter. On the other hand, if your primary goal is simply to maximise interest earnings, FDs from certain small finance banks might offer slightly better returns.
