With the current scenario of interest rates on Bank deposits, time has come to review the fixed income component of your regular income from deposits. You can observe from the following chart that in coming 5 years, the interest rates are going to come down to 4-5% levels, which may have a direct impact on your lifestyle.
INTEREST RATE PROJECTIONS FOR NEXT 10 YEARS
India Interest Rate Forecast - SEPTEMBER 2015 - www.tradingeconomics.com Interest Rate in India is expected to be 7.00 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Interest Rate in India to stand at 7.00 in 12 months time. In the long-term, the India Interest Rate is projected to trend around 4.50 in 2020, 4.00 in 2030 and 4.00 percent in 2050, according to our econometric models. | |
Year | INDIA | CHINA | EUROZONE | USA | AUSTRALIA | U.K |
2015 | 7.25 | 4.6 | 0.05 | 0.25 | 2 | 0.5 |
2016 | 7 | 4.6 | 0.15 | 0.5 | 2 | 0.75 |
2017 | 6.5 | 4.75 | 0.25 | 0.75 | 2 | 1 |
2018 | 6 | 4.8 | 0.5 | 1 | 2 | 1.5 |
2019 | 5 | 4.9 | 1 | 2 | 2 | 2 |
2020 | 4.5 | 5 | 1.5 | 3 | 2 | 3 |
2021 | 4 | 5 | 1.5 | 3 | 2 | 4 |
2022 | 4 | 4.75 | 1.5 | 3.25 | 2 | 4 |
2023 | 4 | 4.75 | 1.5 | 3.5 | 2 | 4 |
2024 | 4 | 4.5 | 1.5 | 3.75 | 2 | 4 |
2025 | 4 | 4.5 | 1.5 | 4 | 2 | 4 |
Immediate Annuities – the way out: You may be aware that Immediate Annuities sold by Life Insurance Companies offer annual return of around 6.90% to 7.25% (depending on the age of the Life Assured) immediately after the payment of premium (Single) – and the Interest payable is FIXED for the life time of the Life Assured with Return of Purchase Price. These policies have another added feature – Annuity at the same rate to the nominee after the death of Life Assured with return of purchase price to the nominee.
If you are looking for a fixed monthly income at present rate for the rest of your life, please buy an Immediate Annuity Policy before the Life Insurance companies withdraw these schemes and insulate yourself from Bank Interest rate fluctuations. The following chart shows the probable gap between FDs and Immediate Annuity:
g-term, the India Interest Rate is projected to trend around 4.50 in 2020, 4.00 in 2030 and 4.00 percent in 2050, according to our econometric models.
Other unique features of Immediate Annuities:
The following are the other benefits available in immediate annuities:
- Age at entry is 30 years
- Annuity starts when you are 40 yrs of age or above (if opted for)
- This ensures stable income for you as long as you live
- Ideal for those who do not receive any pension from their employers
- And for those, who want a stable income till they live
There is NO TDS at source
The following are the approximate Annuity rates of two major Life Insurance companies. For exact information, you may consult your personal financial advisor:
Name of the Life Insurance company | Minimum amount of Monthly annuity in Rs. | Maximum Annuity Rs. | Age 40 yrs | Age 50 yrs | Age 60 yrs | Age 70 yrs |
LIC OF INDIA | 500 | NO LIMIT | 6.93% | 7.0% | 7.1% | 7.26% |
HDFC LIFE | 1000 | NO LIMIT | 6.19% | 6.49% | 6.78% | 6.91% |
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