Advertisement

How Bajaj Finance FD compares against market-linked investment instruments?


How Bajaj Finance FD compares against market-linked investment instruments?
SHARES

The stomach-heaving lows and exhilarating highs of the stock market indices in the past few months have resulted in high uncertainty in terms of market-linked instruments. There has also been a widespread global meltdown with a very pronounced impact in India, which is reflected by a steep fall of 23.9% in the GDP. Even as seasoned stock traders are trying to cash in on the twists and turns, with high-risk investment strategies, riding the high market volatilities during this time is not advisable.

Diversification of risk is a better approach, and investors need to start diverting a portion of their savings towards a fixed deposit, which is preferred due to the assurance of guaranteed returns.

Future of market-linked investment avenues

The events of this year have exacerbated the fall in returns for most market-linked instruments in the past few months. As a result, the returns on some of the popular avenues like ULIP, ELSS, hybrid funds, and debt mutual funds have drastically fallen.

Here’s a look at the average returns for some of these instruments in the past year, compared with returns offered now.

  • Types of Market-Linked Instruments
  • Average returns in September 2019
  • Average returns in September 2020
    • ULIP
  • 8.81%
  • 0.79%
    • ELSS
  • Between 8% and 16%
  • Between -2.00% and -0.11%
    • Hybrid Funds
  • Between 5% and 10%
  • Between -4.5% and 0.80%
    • Retirement Funds 
  • Between -5.30% and 13%
  • Between -0.30% and 1.60%
  • From the above table, you can see how there’s an average drop of 5-6% in the returns on most market-linked instruments. In addition to the fall in returns, these instruments are replete with risks of loss of principal, limits on fund liquidity and high costs of investment.

    Why should you consider investing in a Fixed Deposit?

    Investing in market-linked instruments warrants an in-depth understanding of economic cycles along with the examination of raw data. Even the most experienced investment managers may end up losing huge sums of money. On the other hand, investing in a Fixed Deposit comes with no such risks. Despite a flurry of repo rate cuts by the RBI, you can reap the benefit of attractive FD rates in India by choosing the right issuers.

    For instance, Bajaj Finance Fixed Deposit is offering assured returns of up to 7.10%, with an additional rate benefit of 0.10% for online customers and 0.25% more returns for senior citizens.

    Bajaj Finance promises the highest safety of your deposit, with the highest safety ratings of FAAA by CRISIL and MAAA by ICRA, which is an assurance of guaranteed returns. With a deposit book of more than Rs. 20,000 crores and 2,35,000 unique FD customers, Bajaj Finance is one of the most trusted FD issuers in India. It is the only NBFC in India with ‘0 unclaimed deposits’, which reflects on the company’s commitment towards timely payment and default-free experience for depositors. 

    What makes a Bajaj Finance FD better than other investment avenues?

    When choosing where to invest, you may have several considerations and the choice of investment can vary as per your investment needs and goals. However, Bajaj Finance Fixed Deposit is an investment that works best for all investors, regardless of their risk appetite. 

    Here are some factors to keep in mind when choosing where to invest, with comparisons to help you decide.

    • Return on investment

    When compared with other market-linked instruments, Bajaj Finance FD offers one of the highest returns of up to 7.35%, which are assured. However, the returns on other instruments are very low, which sometimes slip into negative returns too.

    Investment option

    Average returns (Present day)

    Bajaj Finance Fixed Deposit

    6.5% to 7.35%

    ULIP

    0.79%

    ELSS

    -2% to 0.11%

    Hybrid funds

    -4.5% to 0.80%

    Retirement schemes

    -0.30% to 1.60%

    Debt Mutual Funds

    4% to 6.5%

    Additionally, you can be assured of guaranteed returns, when investing in a Bajaj Finance FD, but the same cannot be said about other market-linked instruments.

    • Ease of investment 

    Investing in a Bajaj Finance Fixed Deposit is extremely easy, and you can lock into attractive returns from the comfort of your home. There is also no need to constantly monitor your investments, which is the case with market-linked instruments. There may also be fee for fund management in case of most of these instruments like mutual funds, ELSS, etc.

    In fact, planning your investments is also easier with Bajaj Finance, as you can simply use the FD return calculator to know your returns beforehand. While there are several calculators available for predicting returns on your mutual funds, ELSS, equities, etc. the results often estimate that may vary greatly from the final returns on your investment.

    • Liquidity and premature withdrawal 

    In case of emergencies, you can withdraw prematurely from a Bajaj Finance FD after completion of lock-in period and also consider taking a loan against FD. Here’s a comparison of other investment avenues with Bajaj Finance FD in terms of withdrawal options.

    Investment option

     Premature withdrawal

    Bajaj Finance Fixed Deposit

    Available after initial lock-in period of 3 months

    ULIP

    Limited flexibility with lock-in period of 5 years

    ELSS

    Permitted after lock-in period of 3 years

    Several other mutual funds and equities are more liquid, with option to buy and sell at your will. However, this may also mean that you may need to incur losses when selling. On the other hand, premature withdrawal with FD is possible without any loss of principal, though the interest amount may be reduced.

    In addition to these factors, the safety of your investment is always a top priority. If you’re looking to balance safety with attractive returns, it is best to choose a Bajaj Finance FD. It offers the highest flexibility in terms of tenures, periodic payout options and nature of the investment.

    Not only can you invest a lumpsum amount starting Rs. 25,000 with this FD, but also make small monthly contributions with Systematic Deposit Plan (or SDP). For those seeking the convenience of monthly investment options with assured returns, SDP can be a great savings option. With savings starting Rs. 5,000 per month, you can choose to grow your savings with any of the two variants – Monthly Maturity Scheme or Single Maturity Scheme.

    Thus, investing in a Bajaj Finance FD offers the best of all worlds. You can lock-in to the prevailing high-interest rates and make a smart choice today. Simply invest in a Bajaj Finance online FD and book your deposit within a few minutes.

    RELATED TOPICS