Millennials have a lot of aspirations compared to the previous generations. They have witnessed the rise of technologies, globalization, and entrepreneurship, leading them to have a shift in their financial priorities and goals. Financial planning for millennials has become more than just saving up to get a good job or even setting up an emergency fund. They need to plan thoroughly with a big-picture mindset to achieve their financial objectives, such as buying a house, starting a business, getting retired early, etc. In this article, we will discuss the benefits of Bajaj Finance SDP Plan, its features, and how it can aid millennials in the investment process.
Understanding SDP Plans
A Systematic Deposit Plan (SDP) is a financial instrument that enables individuals to make regular and hassle-free investments in a fixed deposit scheme. It is a flexible option with a low barrier of entry and minimal paperwork process to ease the investment process. Unlike Fixed Deposits (FD) and Recurring Deposits (RD), it is not limited to only one-time or periodic deposits, providing more returns on your savings. With SDP plans, you can start investing with an amount starting as low as Rs. 5,000 as a single payment, and the tenure can range from 12 to 60 months.
Comparison between FD, RD and SDP
Fixed Deposits (FD)
Fixed Deposits (FD) is an investment option where an individual deposits a lump sum amount of money into a financial institution, such as a bank or a non-banking financial institution, for a fixed period. The interest rate on FD varies according to the tenure, but it is comparatively lower than the other long-term investments, notably equity investments.
Recurring Deposits (RD)
Recurring Deposits (RD) is a systematic and periodical investment of a particular sum of money over a defined period. RD is suitable for individuals who seek a regular investment solution towards achieving a long-term financial goal.
Systematic Deposit Plan (SDP)
Systematic Deposit Plan (SDP) is a flexible and investor-oriented unit of fixed deposits that enables individuals to invest small sums of money in regular intervals, helping them get better returns. SDP has gained popularity among millennials seeking high-interest rates and attractive returns with minimal investments.
Here is a detailed comparison between all three investment options:
All the three investments have an almost comparable interest rate, but they vary according to the tenure of the deposit. The interest rates of FD and RD are lesser than SDP due to its flexibility in tenure and easy investment options.
FD has a fixed tenure that ranges from a few days to several years, but RD is recurring and allows one to deposit in regular intervals within the defined tenure, whereas SDP provides flexibility and choice of investment intervals ranging from 12 to 60 months.
Premature Withdrawal Penalties
Withdrawal of funds before maturity in FDs and RDs will lead to a penalty charge by most financial institutions, while it is available without incurring any penalty charges with SDP.
The minimum amount for investment in FDs is generally INR 10,000, whereas RD starts with INR 1000 per month. In comparison, SDP has a lower investment threshold, starting from INR 5000, making it more accessible to most people.
FD and RD are considered to be investment alternatives with low risk. At the same time, with SDP, investment risks depend solely on the performance of the financial institution issuing the deposits.
Benefits of Bajaj Finance SDP Plans
Bajaj Finance, one of India’s leading Financial Services Company, offers a range of versatile and distinguished SDP Plans to assist millennials in their investment journey. Here are some advantages of Bajaj Finance SDPs:
Bajaj Finance SDP offers an interest rate up to 6.85% p.a.(as of August 2021). Adding to that, Senior citizens can also get an additional 0.25% interest rate. With the current stress in the economy, very few investment options are providing high-interest rates, making Bajaj Finance SDP Plans a suitable option.
SDP plans offer the flexibility of investing from 12 months to 60 months according to your investment goals and financial plans. It allows investors to readily plan their future cash flows and align them with the tenure and interest rates offered by the plan.
No Premature Withdrawal Charges
An SDP offers the convenience of withdrawing one’s savings even before the completion of the deposit’s tenure without incurring premature withdrawal charges or penalties, making it ideal for emergency situations.
Easy Investment Process
The application procedure has simplified with Bajaj Finance’s digital investment process, where one can invest in SDP plans online in just a few clicks. To invest, the individual must complete a handful of online documentation and a KYC process.
Safe and Secure Investment Option
Investing in Bajaj Finance SDP Plans provide an added advantage of a safe and risk-averse investment option. As Bajaj Finance has been rated with a credit rating of FAAA/Stable by CRISIL and MAAA (stable) by ICRA, the investments made into the SDP plans are protected against any market risks.
How to Invest in Bajaj Finance SDP Plans
There are three simple steps to get started with investing in Bajaj Finance’s SDP Plans:
Step 1: Online Application and KYC Verification
The initial step is filling up the application form with necessary personal details such as PAN, Aadhaar, and other requisite documents. With the new online KYC norms, the verification process now takes only a few hours, giving you a hassle-free investment experience.
Step 2: Choose the Tenure
Bajaj Finance SDP Plans provide an extensive range of tenures differing from 12 to 60 months. Select the tenure period which best suits your financial plan and investment goals.
Step 3: Transfer of Funds
Once you have chosen the tenure period, transfer the amount you wish to invest to the Bajaj Finance account with the help of a digital or physical mode of fund transfer.The maturity proceeds are directly credited back to your bank account upon the completion of the plan’s tenure.
1. How much can I invest in Bajaj Finance SDP Plans?
Ans: The amount one can invest in an SDP plan depends on the specific financial company’s regulations. In Bajaj Finance, a minimum sum of INR 5000 can be invested, whereas a maximum amount has no threshold limit.
2. Can I withdraw my investment amount from Bajaj Finance SDP plans before the completion of tenure?
Ans: Yes, the SDP scheme offers the convenience of premature withdrawal without any penalty or charges.
3. How is the interest calculated in Bajaj Finance SDP plans?
Ans: The interest rate for the SDP plans is calculated on a compound basis.
Considering the benefits of Bajaj Finance SDP plans described above, it provides an apt investment opportunity for millennials to effortlessly plan, invest, and grow their wealth. With no preemptive charges, flexibility in tenure, higher interest rates, and an easy investment procedure, millennials can avail of the many advantages of investing in Bajaj Finance SDP Plans. As an additional advantage, investing in SDP plans can help acculturate crucial financial habits, such as long-term goal setting, investment discipline, and financial planning to aid in their wealth creation over time.