How to Grow Monthly Savings with Fixed Deposit?

Savings with Fixed Deposit

Let it be a retirement portfolio or future financial obligations. It is difficult for every earning individual to keep aside a portion of their monthly income to address such situations conveniently. It will help build a substantial corpus over time and teach discipline savings in an individual.

The Indian financial market offers various options to facilitate the same, such as a systematic investment plan. However, as it is a market-dependent instrument, the associated risk involved in losing out on accumulated corpus is high. It ensures to maximise gains in a safe environment and is also best to invest in a fixed deposit.

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Why should you invest in a fixed deposit?

A fixed deposit is one of the best convenient saving tools for an individual from the walks of life. Investing in a fixed deposit helps you protect your savings, especially amid high market volatilities and the current economic downturn.

The fixed deposit also enables you to plan your investments as per your goals so that you can grow your savings with flexible tenors and higher safety. You can also choose your tenors and the frequency of your interest payouts.

You can also utilize the fixed deposit interest calculator to determine your fixed deposit returns. It will help you calculate the FD maturity amount even before you start to invest.

However, FD works for all the investors regardless of their risk type. It also requires a lump-sum deposit. An individual who is willing to open an account needs to accumulate the necessary corpus. It may not be feasible for an individual who is just starting their career to utilise their accumulated corpus in order to meet a sizeable monetary obligation.

A systematic deposit plan or (SDP) by Shriram Transport Finance company is designed to meet the wealth-creation requirements of such customers. It is also a quick saving tool where an individual can make monthly deposits into a fixed deposit account.

Every deposit is considered individually as it earns interest at the rate prevalent on the date. Likewise, every deposit will mature independently of the other deposits.

Any individual willing to mobilise their savings in a Systematic Deposit Plan can use an SDP calculator. This tool will also help individuals to assess the interest they earn beforehand that will ensure them to deposit more strategically.

All that you need to know about Systematic Deposit Plans

It will help you distinguish the systematic deposit plan from other monthly deposit schemes or saving tools offered by the Indian financial market.

1. Low Deposit Amount: Any individual can start a systematic deposit plan for a minimum of Rs.5000. It eases the burden of accumulating a sum amount and facilitates substantial wealth creation over time.

The number of monthly deposits an individual can make is flexible, ranging from 6 to 48 for a tenor of 12 months. You can also choose any number of deposits depending on short or long-term financial obligations.

2. Assured Earnings: Every deposit earns interest based upon the prevalent rate on the respective date. The interest on each deposit constantly occurs throughout the maturity period, like in a systematic investment plan. When the rate of return fluctuates based on market conditions, it does not pose any certainty of earning for the concerned investor.

Senior citizens depositing through a Systematic Deposit Plan can earn a higher interest rate than a traditional fixed deposit account.

An individual can use an SDP calculator before deciding on the amount, deposits, and tenor to maximize their benefits.

3.Ease of Depositing: First, a systematic deposit plan can be made through an account payee cheque. Although, the subsequent payments would be automatically debited by the respective financial institution from the depositor’s account. Individuals do not need to assume the hassle of periodical payment. However, at the same time, enjoying the conveniences of systemised wealth accumulation.

A depositor will only need to produce a NACH mandate that authenticates the automated payments.

An account holder can choose to withdraw their accumulated corpus prematurely. Withdrawals will be subject to the Reserve Bank of India (RBI) regulations.

4.Simple Documentation: Open an FD account through a systematic deposit plan. An individual only needs to submit your KYC documents with a cheque for the first payment and a NACH mandate.

5.Loan Against Fixed Deposit: In an alternative to premature withdrawal, the depositors can opt for a loan against their accumulated corpus to meet any immediate financial obligations. The features allow an individual to ensure their FD account continues earning interest.

However, the systematic deposit plan poses a formidable option for individuals who want to save for their future without straining their present financial position. Compared to a systematic investment plan, it guarantees an assured return even if there is a market crash.

Conclusion:

Investing in a fixed deposit is a smart way to make your investments for a secured future. With the help of proper planning of your deposit, you can make the most of your investment.