A savings tool allowing individuals to save a small amount every month, Systematic Deposit Plans offer unique features. Primarily offering a plan which helps in building a considerable corpus for the future, systematic deposit plans allow individuals to achieve their financial plans and goals by slow saving along with high returns.
Why is Systematic Deposit Plan Better than Other Monthly Saving Schemes?
Some of the monthly saving schemes offered by the government and financial institutions include Public Provident Fund (PPF), Post Office Monthly Income Scheme (POMIS), recurring deposits, etc.
The reasons which directly contribute to making Systematic Deposit Plan a better option when compared to these monthly schemes are discussed below. –
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High-Interest Rate:
A high rate of interest is offered on Systematic Deposit Plans which ensure that the revenue generated is substantial. While the interest on such plans begins at 7.6% per annum, the interest rate can go higher up depending on numerous factors like the age of an applicant, an existing customer of the same institution, etc.
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Choice of Deposition Frequency:
A major advantage offered in this monthly saving scheme is that investors can choose the frequency at which they want to deposit in this plan. Interestingly, while monthly investment options make it mandatory to deposit an amount monthly for a specified period, investors choosing these policies can opt for any number between 6 and 48 deposits.
Noteworthy, investors are offered three dates of which they must select one for their deposition date. These options are 3rd, 7th and 12th of the month.
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Low Amount:
Individuals even at the beginning of their career can begin saving in systematic deposit policies since it allows even a small sum of Rs.5,000 as the periodic deposit amount. With no higher limit on the deposit amount in this monthly saving scheme, any individual can begin investing in this monthly saving scheme to reach the financial goals of the future.
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Choice of tenor:
Any individual considering such plans must invest for a minimum of 12 months. The higher limit for depositing in this policy stretches to 60 months, allowing investors to choose according to their convenience and financial goals.
Additional Benefits Offered on Systematic Deposit Plans
Additional benefits which are offered on this monthly saving scheme also contribute to making it one of the best savings options. Unlike the previous features, however, these benefits enhance the customer experience rather than contributing to its return.
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Hassle-Free Payment:
These savings tools are linked with the financial account of an investor with the documents submitted during the application procedure. Individuals applying for Systematic Deposit Plans from financial institutions like Bajaj Finance must make the first deposit with an account payee cheque, which helps in linking the two accounts.
Once both these accounts are linked, investors do not have to worry about making a deposit. The deposition is automatically completed on the date selected by the investor.
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Ease of Withdrawal:
In case of financial emergencies, investors can easily withdraw any particular number of deposits, as long as 3 months of their maturity tenor has been covered. This allows the other deposits to generate interest at the same rate as decided while applying for such policies and can be checked by using a systematic deposit calculator.
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Loan Options:
Any individual saving in systematic deposit plans can also avail a loan using this account as collateral. As a secured loan, the interest rate levied is also affordable which makes it even more convenient for the investors. In the case of financial emergencies, the least costly among loan and withdrawal should be considered.
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Minimal Requirements:
A major reason which makes this monthly saving scheme one of the most investor-friendly options is that it has simple eligibility criteria and document requirements.
While every adult Indian citizen can avail this savings plan, they must provide the following documents –
- Recent passport-sized coloured photograph.
- Government-issued photo-identity proof like Aadhaar card, voter ID, driving license, passport, etc.
- PAN card of the applicant.
- NACH mandate of the financial account to be linked.
- Account payee cheque.
The multiple reasons discussed above vividly explain what makes these plans one of the best periodic saving schemes. Both in terms of return offered on the savings as well as that of customer experience contribute to this plan being a premium option.
Potential investors should decide on their total savings amount, the frequency of deposition and their maturity tenor beforehand. Once all these details are decided, it is advisable to use a systematic deposit calculator to estimate the exact return on the savings. Potential users can also use this online tool to plan their financial goals and invest in this savings tool accordingly.