Timely investments and planned savings are the only way to building a substantial corpus, be it for life after retirement or for other dreams like those of building a house or simply a better life. While such options often carry a fair amount of risk owing to their dependency on market situations, there are a few options that offer guaranteed returns including Systematic Deposit Plan.
Even though there are term deposit options with fixed returns, a major limitation to most of them is that of the corpus necessary for a worthwhile investment. Contrastingly, systematic deposit plans allow individuals to save a small sum of money on a periodic basis. With high SDP interest rates, this allows investors to build a substantial corpus over time even if they do not have a large sum to invest in their savings.
What is a systematic deposit plan?
A term deposit by nature, a systematic deposit plan is a savings option that allows individuals to invest a small sum of money every month for a fixed tenor. A convenient option especially for new earners who do not yet have a substantial sum of money to invest, high SDP interest rates ensure substantial returns. While quite a few necessary factors decide the interest rate that is applicable to a systematic deposit plan, it begins at a high rate of 7.6% per annum.
Additional advantages offered
Along with substantial SDP interest rates, a few additional benefits are also offered on these savings options, making them not just convenient but also one of the best choices for investors. The numerous advantages offered on systematic deposit plans are discussed below in detail.
- Choice of tenor: As a term investment option, individuals have the option to choose the tenor for which they want to save in a systematic deposit plan. While the minimum tenor for investment must be that of 12 months, individuals have the option to choose a higher duration which can go up to 60 months. This convenience of tenor offered under Systematic Deposit Plans from reputed NBFC Bajaj Finance allows investors to plan their investment according to their financial goals.
- Convenient deposit amount: The periodic deposit amount for this savings option begins at Rs.5,000. This low sum of money allows individuals to begin investing even at the beginning of their careers when their earnings, as well as savings, are not yet high. Along with the substantial SDP interest rate that is offered, investors can be assured of a substantial corpus within a few years of beginning their savings.
- Option for premature withdrawal: The Systematic deposit plan allows investors to withdraw their term deposit prematurely in case of financial emergencies, as long as the deposit has completed 3 months from the date of investment. Furthermore, investors have the option to withdraw only a single deposit, allowing the rest of their savings to earn the eligible interest. The prevalent RBI regulations on premature withdrawal are applicable under such circumstances, which ensure a substantial return even in the event of withdrawal before maturity.
- Loan options: Along with ease of withdrawal, investors are also offered the option to avail loans using a deposit/s as collateral. In case of financial emergencies, investors can choose not to disturb their savings with high SDP interest rates and instead avail a loan against one or more deposits. Being a secured loan, typically affordable interest rates are applicable.
- Ease of payment: Investors must clear their first payment with an account payee cheque to sync their financial account with their systematic deposit plan account via the NACH facility. Once synced with the financial account, the amount of money is regularly deposited on the fixed date.
- Choice of deposition date: While remarkable SDP interest rates make this a feasible savings option, additional features make it one of the best. Individuals have the option to choose from 3 dates for deposition. The offered choices are 3rd, 7th, or 12th of the month.
Hot to calculate the return
Investors also have the option to check the return on their savings under the systematic deposit plan even before applying for it. They must decide on the investment amount, maturity tenor, and the frequency of their deposition before checking the return using an SDP calculator. Potential investors can use the details mentioned above and calculate the interest they are about to gain as well as the total sum of money they will receive on their maturity.
While the rate of interest offered on systematic deposit plans along with its features makes it one of the best savings tools, the calculator allows investors to compare their financial goals with the returns. Consequently, investors can even use the SDP calculator to check their returns in case they need to make a premature withdrawal. This especially helps by allowing investors to remodel their overall investment.