In-depth Guide To Understand The Benefits Of Systematic Deposit Plan

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The huge spectrum of financial services can be difficult to understand for a new investor. As a newbie earner, it is easy to get confused between various investment options and choose the one which is best for you. As a first time investor and saver, it is better to go for simple savings plans. Most people end up looking at fixed deposits as their choice of investment for creating wealth. You can earn up to 7.75% with a bank fixed deposit. Company FDs offer 1-2% higher interest rate as compared to bank FDs. However, as a new investor, the availability of a huge corpus for investing in FD can be of concern.

A Financial Product for Promoting Ease of Saving

To address this concern, Bajaj Finance has introduced Systematic Deposit plan (SDP) – a monthly savings plan designed for investors looking to make small, monthly investments in fixed deposit. SDP is a new feature offered under the regular fixed deposit plan, wherein an investor can make small monthly deposits in a series and avail the same benefits as available for an FD.

Let us look at the various features and benefits of SDP in detail –

  • Variable interest rate – SDP offers you the benefit of availing the interest rate prevailing on the date of each monthly deposit for that particular deposit. Therefore, unlike FD or RD, you can benefit from any revision in interest rates during the tenor of the investment.
  • Minimal investment amount– This is the best SDP plan to invest for investors looking at regular small monthly savings. You can start easily with minimum Rs 5,000 per month.
  • Flexibility– You can choose tenor ranging from 12 to 60 months for a SDP. However, the number of monthly deposits can range from 6 to 48. Upon the maturity of each monthly deposit, the monthly deposit amount along with the interest earned on that particular deposit is deposited in your account.
  • Ease of investment – The first deposit needs to be made through a cheque. However, you have the convenience of making the subsequent deposits via a NACH mandate through your account. You can choose a date of investment from any of these three dates – 3rd, 7th or 12th of every month.
  • Withdrawal – The option of premature withdrawal (after 3 months) is available.
  • Loan – You can easily avail a loan against SDP while still maintaining the investment as-is and continuing to earn interest on it.
  • Documentation – All you need to submit is basic KYC documents along with a cheque and NACH mandate.
  • Zero penalty- In case you have insufficient balance in your account and the NACH mandate does not go through, you will not have a deposit that month. Worry not as there is no bounce penalty on this.

Great tool for a newbie investor

If you have just started earning and are still settling in learning how to budget, this is the best SDP plan to invest as it does not penalise you if you do not deposit every month. Moreover, you will still reap all the benefits of a fixed deposit. While SDP plan works just like a regular fixed deposit, it gives more flexibility as compared to an FD as it is primarily a monthly savings tool.

Jyoti Dhiman
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