While the year before it was estimated that financial institutions had around Rs.36 lakh crore in savings deposits, the number went past Rs.40 lakh crore in 2018-19. Even though this is an impressive rise, it is important to note that this consists of every type of savings accounts across all age groups.
Understandably, FD investments have been a popular choice with its high returns, though it is difficult for beginners to invest a high sum in such accounts.
Subsequently, Bajaj Finance has introduced Systematic Deposit Plan, which allows any investor to monthly save a sum of Rs.5,000 or above throughout a pre-set tenor in the form of Fixed Deposits. While it is important to choose the best SDP plan by comparing different offers, the major advantage of this plan is that one can save money in instalments.
It is important that investors have a clear understanding of this savings option before investing in it. The basic features of this tool, along with the advantages offered by it, are discussed below in detail. These features explain how it can effectively aid investors in growing their money by investing as low as Rs.5,000 every month.
- High returns owing to attractive rates of interest
The rates of interest begin at 7.6% per annum, making these tools one of the best savings options. It is advisable that individuals do not just compare the rates offered by different institutions, but also check the return they can expect by using an online SDP calculator.
- Investors have flexible of choice regarding their maturity tenor
A convenient feature offered by Systematic Deposit Plan is that a range of maturity tenor is offered for investors to choose from. While individuals must begin with at least 12 months of deposit, they can choose a higher tenor that can stretch up to 5 years. They should plan their savings beforehand to choose the tenor as per convenience.
- Investors also have the option to choose their date of deposit
Choice in the date of deposit is also offered to investors while applying for this plan. Typically, 3 options on the date of payment are offered. Investors have the options of choosing 3rd, 7th or 12th of every month as their date for deposit.
Vital to note, this date is chosen by the investor during the application procedure and cannot be changed after approval.
- Convenient minimum deposit amount
A major advantage why this is one of the best SDP plans available is that it allows investors to begin savings at a small investment of Rs.5,000 per month. This is especially helpful for those individuals who have started earning recently since they do not have a high amount of disposable cash at hand. It is also vital to note that investors can choose to save a higher sum every month if they can deposit a greater amount.
- Ease of payment for investors
Investors are also offered ease of payment under these schemes. While the first payment must be completed using an account payee cheque to link the financial account, subsequent payments are easily completed via NACH facility.
As one of the best SDP plans, this ensures immense convenience for the investors who do not have to manually complete the payment procedure every month.
- Premature withdrawal options in case of financial emergency
Investors choosing to save their money through these plans can withdraw their savings prematurely in case of financial emergencies. The savings tool allows investors to withdraw the sum of money invested in a specific month, ensuring that the other deposits keep generating interest. Investors must note their plan must be at least 3 months old for them to make any withdrawals.
- Option to avail lines of credit against these accounts
The best SDP plans allow investors to avail a loan against the deposited money. Since these loans are secured against the fixed deposit, the rates of interest levied are much lower than those of unsecured loans. Furthermore, these are approved considerably faster too.
- Stable returns generated
The return on such savings plans is generally stable since the rates of interest are not subject to market fluctuations. This allows investors to also estimate the return they can expect.
It is important that new earners develop the habit of investment early in their career. The best SDP plans also ensure this habit is incorporated within individuals. At Rs.5,000 per month, these plans are a convenient savings option even for individuals who do not earn a significant amount.
It is important potential investors plan their savings properly while also choosing the right plan for themselves. This includes selecting the right amount of money for their savings, as well as the choice of a tenor. Investors should use an online SDP calculator to check the return they can expect with their Systematic Deposit Plan.
Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. Check out his blog at Highlight Story