The average Indian working individual often struggles with finances. That is one of the main reasons, why they should and why they do invest. Investing provides them with a reassurance that if, unfortunately, there isn’t a significant increase in their earnings; they can rely on good returns on the funds they invest.
These investments in most cases start and end with their bank. Banks are a great asset of the financial and investment system of the country. Therefore, people often confuse great with greatest and fail to look at alternative ways of growing their corpus. Most people opt for a savings account but don’t know enough about a Systematic Deposit Plan (SDP). Similarly, it is a myth that bank Fixed Deposits (FDs) are, always, the best FDs.
To explain further, let us take the example of Bajaj Finance, a non-banking financial company. The SDP is an instrument offered at Bajaj which allows you to make multiple deposits at regular intervals. It provides you stability and security while allowing you to set up a corpus in a disciplined manner over a period of time. If the idea of regular small deposits suits you better, you can get more from your investment by seriously considering SDPs.
Under this plan, you can choose to save through any 1 of the 2 sub-plans: Monthly maturity scheme and Single maturity scheme. Each scheme caters to different kind of needs and the depositors can make a choice based on their convenience.
Monthly Maturity Scheme: Under this scheme, depositors can invest in 6 to 48 deposits. They, however, choose one tenor that applies to all deposits but the maturity date differs depending upon when each deposit starts.
Single Maturity Scheme: As the name suggests, under this scheme, you receive maturity proceeds of all your deposits on the same day. The tenor of each deposit after the first one will reduce such that they confine to this condition.
However, if you are looking to lock in your funds for a longer time period- the Bajaj Finance FD is an ideal option. There are a few reasons for this:
- High Interest Rates
- Special offers to Senior Citizens
- Benefits to Pravasi Bhartiyas (NRIs)
- High Credibility and Stability
- Flexible Time Frames
- Fixed Deposit Interest Rate Calculator
- Smaller Minimum Deposit
- Digitalized Application Process
- Online Loan against FD
- Auto-renewal
But again, a Fixed Deposit apart from the interest rate changes would be constant across different companies to a great extent. This is where ways of getting more from your investment help. Laddering FDs is one such way/technique of ensuring maximum yields and returns from your investment.
Bank FD laddering is a technique which involves buying multiple FDs maturing on different time periods. It is a better way to manage liquidity. All you need to do is divide your lumpsum investment into smaller investments and spread them across maturities.
For an instance, you want to put ₹5 lakh in a bank FD. Instead of creating a single FD worth ₹5 lakh, you can break it into five smaller FDs and invest across different maturities. This way you can have five FDs maturing after one year, two years, three years, four years and five years in a row. This way you will have ample liquidity. If you need some money, you can take out and reinvest the remaining money for the next, say, five years, at your discretion.
Similarly, the second FD which will mature after two years can be reinvested for another five years. This will create a chain of FDs. This will make sure your liquidity needs are met throughout.
Therefore, if you feel that you want more than just the basic services provided by your bank; you know what to do. Firstly, diversifying your investments with companies like Bajaj. Secondly, deciding time periods of investment which will allow you to choose the apt instrument. And finally, using techniques like Laddering of FDs would help you get the most from your investment.