Systematic Deposit Plan is a feature of fixed deposits which are considered one of the safest investments with high returns in India. This quick savings tool is similar to a SIP but without any associated risks attached. Individuals without a lump sum corpus available yet can use this savings tool easily. Offered exclusively as an additional feature of their Fixed Deposits, the Systematic Deposit Plan is one of the easiest ways to accumulate a large corpus of funds with minimal investment.
Benefits of a Systematic Deposit Plan:
Here’s a list of benefits of the deposit plan that facilitates effective savings –
Safe saving option: Since the Systematic Deposit Plan is not exposed to any market risks, it is considered to be among the safe investments with high returns in India. As the risk of losing out money is limited, individuals can maximize their chances of generating steady returns with regular investment.
Substantial returns: What sets a Systematic Deposit Plan apart from a regular fixed deposit is its rate of return. Unlike a regular fixed deposit, in this plan, each deposit made is considered individually with a distinct maturity period.
Additionally, the rates of interest against such deposits are as per the prevailing rates and accrue income accordingly. It means the prospect of earning a high return is often strong with these deposit plans.
Zero bounce charges: Most financial institutions like Bajaj Finance do not levy a penalty on their customers when missing out the scheduled date of deposit. This helps to eliminate the risk of paying charges unnecessarily and helps to save more in due course.
Therefore, by opting for a deposit plan that is lenient about untimely deposits, you can enhance your scope of savings significantly.
Nevertheless, individuals should try to deposit their savings on the scheduled date to avoid dishonoring the terms of the NACH mandate and paying an unwanted penalty (if any.)
Liquidity: Often, individuals have to dip into their emergency savings or retirement funds to meet other crucial financial requirements. Though such a practice allows them to access liquid funds, it tends to erode their savings significantly.
Contrarily, account holders are entitled to access liquid funds by taking advantage of the plan’s loan against deposit and premature withdrawal facility.
Both such facilities tend to follow certain norms and guidelines. Individuals should find out about such guidelines in detail to understand how to make the most of these facilities.
What makes it a better savings tool?
When compared to a regular fixed deposit, a competent Systematic Deposit Plan proves to be a better savings tool.
1. Opportunity to mobilize small savings:
As a Systematic Deposit Plan allows individuals to save a minimum amount of money each month, it encourages individuals with limited income to use a residual amount as low as Rs.5,000 for investment. This, in turn, helps them to mobilize their small savings and build a substantial corpus with the same. Individuals who prefer regular fixed deposits often miss out on this opportunity as it requires them to make a lump sum deposit.
2. Disciplined habit of savings:
Being a monthly deposit plan, it helps to develop a disciplined approach towards regular savings. Eventually, such a habit proves effective in planning finances better and further helps to manage them effectively.
3. Opportunity to generate better earnings:
Since each deposit is likely to attract a different rate of interest, depositors have a better chance at generating significant earnings. Individuals can use the SDP calculator to calculate the income accrued on one or more deposits under this savings plan. Doing so, they would be able to gain a fair idea of the estimated income against different maturity period. It would further enable them to compare and opt for a more lucrative maturity tenor.
Therefore, a Systematic Deposit Plan proves to be more efficient as a saving tool when it is compared to a regular fixed deposit.
Application and documentation process:
To make the most of one of the safe investments with high returns in India, individuals need to figure out its application process and requisite documents to apply for it at the soonest.
For instance, by following below steps, individuals can open an account with Bajaj Finance in no time–
Step 1 – Visit the NBFC’s online website.
Step 2 – Look for the ‘Systematic Deposit Plan’ option.
Step 3 – Enter essential personal details, including your name, contact information, email and address.
Step 4 – Provide details related to monthly deposit and maturity period.
Step 5 – Generate a printout of the application form.
Step 6 – Submit the duly filled form along with the required documents to a representative of the NBFC.
Likewise, provide documents like PAN card, Aadhaar card, NACH mandate, and account payee cheque to streamline the application process smoothly.
Lastly, it can be said that the Systematic Deposit Plan is arguably one of the safest investments with high returns in India. Further, by encouraging individuals to mobilize their small savings, it helps them secure their future financially.
