When it comes to savings, a systematic plan can be the best way to achieve your financial goals and plan a secured future. There are numerous investment tools available, which can be classified as safe and risky tools, where you can put in your money and get a decent return. This surplus amount can help you in building a corpus, which can help you fulfill your financial goals and save for future emergencies. A few common investment options available in India are recurring deposits (RD), fixed-term deposits (FD), and Systematic Investment Plans (SIP).
While RD and FD are fixed-term deposit schemes offered by the banks and the Post Office, SIPs are investments in mutual funds, which are generally equity or debt oriented or sometimes both.
The systematic deposit plan, or an SDP, is another way to invest your hard-earned money to earn a good return. Bajaj Finance offers a Systematic Deposit Plan that would allow people to put their money monthly, instead of investing the whole amount in one go annually.
What is SDP?
The SDP is very similar to RDs and FDs. When you invest in a scheme of SDP, the interest rate would be fixed at the time of booking and won’t fluctuate due to any ups and downs in the market. The only additional factor for SDPs is that each monthly deposit will have its own interest rate. Therefore, if you invest for 12 months straight, your returns would vary from month to month.
The best part about SDPs that they can make you invest smaller amounts on a regular basis and return a big amount at the time of maturity.
Is it risky or safe?
SDPs are often compared to SIPs. The main objective behind investing in equity-oriented MF plans is to take advantage of market ups and downs. The stock market is very volatile and sometimes, the up market can give you a decent return, while a down market can fetch you a larger number of units with the same amount of investment.
In the case of SDPs, as the interest rates are determined once and are fixed, the investor would make sudden gains in a booming market. However, the investment is risk-proof. As per reports, every subsequent deposit will fetch a lower return than the preceding deposit on a given date.
Term and rates
The minimum amount one can put in the Bajaj Finance scheme is Rs 5,000, whereas the maximum amount is Rs 5 crore. The interest rate is different for different tenors. Depending on your financial goals, you can choose a flexible tenure. If you want to build a healthy corpus, then you can choose a longer term, which would allow your money to grow slowly and steadily.
Take a look at the table below:
|Tenor in months||General investors||Senior citizens|
|12-23||6.20% per annum||6.45% per annum|
|24-35||6.95% per annum||7.20% per annum|
|36-60||7.40% per annum||7.65% per annum|
There is a special interest rate for investors who want their money locked for a fixed period of time. Senior citizens would get 0.25 per cent more than the general investors.
Interest is paid on a cumulative basis for a given period of time. Under the cumulative scheme, the interest applicable is compound interest and calculated annually. The investors can get that amount at the time of maturity along with the principal. Tax will be deducted from the final amount as per the rules.
|Tenor||Cumulative rate at Maturity|
|15 months||6.40% per annum|
|18 months||6.50% per annum|
|22 months||6.65% per annum|
|30 months||7.05% per annum|
|33 months||7.15% per annum|
|44 months||7.50% per annum|
A prominent feature of SDP is that it offers liquidity. If an investor wants money on an urgent basis, he can prematurely withdraw the deposit. Another interesting feature is if an investor is cash strapped, Bajaj Finance won’t levy any bounce charges on missed monthly payments.
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