SBI Annuity Deposit: The highlight of this scheme is that you not only earn interest, but the bank also returns a portion of your principal amount, along with interest, each month. This means it's a "safe formula" for those who want to lock in their monthly income while avoiding stock market risk.

SBI Annuity Deposit : If you receive a fixed amount every month after retirement, your support in old age becomes even stronger. People often invest their life savings in fixed deposits (FDs).FD), but in times of falling interest rates and inflation, relying solely on interest is proving increasingly difficult to sustain a household. If you're looking to park your gratuity or provident fund money in a place that generates fixed income like a pension, the State Bank of India's (SBI) Annuity Deposit Scheme could be a game-changer.

The beauty of this scheme is that you not only earn interest, but the bank also returns a portion of your principal amount, along with the interest, every month. This means it's a "safe formula" for those who want to lock in their monthly income while avoiding the risks of the stock market.

Vinay Mishra retired at the age of 58. He then invested his gratuity amount of Rs 10 lakh in a lump sum in SBI's annuity deposit scheme, eliminating the worry of his monthly income. Here's how the math of this scheme works for you:

Understand through calculations

Vinay invests his gratuity amount of Rs 10 lakh for 5 years, or 60 months. Currently, SBI offers an interest rate of approximately 7.50% for senior citizens. However, rates can change from time to time, so keep this in mind.

Total Investment: Rs 10,00,000

Annual interest rate: 7.25%

Tenure: 60 months or 5 years

Annuity (estimated): Rs 19,919.36 per month

This ₹19,919.36 consists of two parts: the interest earned on his ₹1 million (1 million rupees) and a small portion of the principal. After five years, Vinay will have received his entire ₹1 million (1 million rupees) back in installments.

How does the magic of annuity work?

The SBI Annuity Deposit Scheme is quite different from a regular fixed deposit. While an FD locks your money in, you only receive interest. In an annuity scheme, the bank divides your deposit into ins

Who will benefit the most?

This scheme is a great option for those who receive a lump sum and don't have any other regular source of income. However, it's important to keep in mind the TDS rules.

Senior Citizens: They get 0.50% to 1% higher interest rate than normal citizens, which increases their monthly EMI.

Children's education: If you want a fixed amount every month for your child's higher education, you can plan for 5 or 10 years annuity.

Tax Planning: Since a major portion of the amount received in this scheme is your own principal, only the interest portion is liable to tax.

Key features of the scheme that you should know

Minimum and maximum limits: There is no upper investment limit for this scheme. The minimum investment should be enough to earn you at least ₹1,000 per month.

Tenor Options: You can invest for 36, 60, 84 or 120 months (3, 5, 7 or 10 years) as per your convenience.

Loan facility: If you find yourself in dire financial need, you can take a loan of up to 75% of your annuity balance. Once you take out the loan, your monthly installments are credited to your loan account.

Nomination Facility: Nomination facility is available in this, and in case of unfortunate death of the depositor, the scheme can be closed prematurely and the entire amount can be handed over to the nominee.

If you're looking for a safe investment and "sure money" every month, the SBI Annuity Deposit Scheme is an excellent option. A monthly income of approximately ₹20,000 on an investment of ₹10 lakh not only covers your daily expenses but also keeps you safe from market fluctuations. Before investing, be sure to visit your nearest SBI branch to confirm the latest interest rates, as even a 0.10% change in the interest rate can impact your monthly income.

Disclaimer: This article is for informational purposes only and should not be construed as investment advice in any way. News Crab advises its readers and viewers to consult their financial advisors before making any financial decisions.

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