Investing and financial planning is an art. It requires discipline and above all it needs to be revisited and tweaked as per changing scenarios of the economy. As we enter 2020 with hope for a progressive and growing economy, we need to account for various uncertainties. Falling interest rate is one such uncertainty and to plan for goals maturing in 2020 and short -term such as 5 years, you should certainly consider fixed income instruments.
Fixed income instruments consist of Fixed Deposits, Post Office Monthly Income Schemes, Debt Mutual Funds and Systematic Deposit Plans. If you are ready to link your returns with the market, also look at Equity-linked Mutual Funds with an SIP.
Let us look at these monthly investment schemes in detail.
- Equity and Debt Mutual Funds – While small saving schemes of the government do not require a monthly deposit, doing an SIP or monthly investment in equity and debt mutual funds always reduces the average cost of units purchased in the funds. This way your overall returns on the investment are always much higher.
- Post Office Monthly Income Schemes – While this is an income which you can earn each month, you can also invest each month and ensure that your money is parked at a high interest of 7.8% in the post office scheme. With a five-year investment plan, you can be assured of your capital.
- Fixed Deposits – You should consider FDs for their stability and safety. Bank FDs are currently giving interest rate from 5% to 7.8% at best for the longest tenors. Company FDs offer 1-2% higher returns than bank FD. If you are looking to invest your money for fixed returns, it’s a wise decision to park it in these deposits.
- Systematic Deposit Plan – These are an add-on feature of the vanilla Fixed Deposit. Bajaj Finance is one of the first companies to offer this on its fixed deposits. While earning the high-interest rates of up to 8.35%, you are also assured of an in-built laddering of deposits which are invested at the rate prevailing on the date of investment. You can easily invest with the minimum amount of Rs 5,000 each month and gain a recurrence of maturing deposits once the tenor is over. The number of deposits can vary from 6 to 48.
Do not forget to use the Systematic Deposit Calculator to know the exact maturity amounts for different deposit amounts. The Systematic Deposit Calculator is an integral part of your financial planning as you can decide the number of deposits and the investment amount that you need to invest to reach your financial goal. The flexibility to choose the number of monthly deposits is a great feature for new jobbers who might not have a surplus amount each month to invest but can still reap the inherent benefits of a fixed deposit investment.
With this monthly investment scheme, you can also look out for various other benefits such as loan against FD and premature withdrawal of a deposit (without affecting the SDP).