Fixed deposits are investment instruments, offered by both Government-backed and private financial institutions, where an individual can invest for a pre-determined period for asset appreciation. FDs are arguably one of the most popular investment options in India, offering assured returns at a high rate of interest when compared to an ordinary savings account.
According to statistical returns released by the Reserve Bank of India, the share of fixed deposits accounted for 57.7% of all investment options during the financial year 2017-2018.
Unlike other investment instruments, FDs are not market-driven, which makes it ideal for risk-averse investors. Moreover, investors can also opt for fixed deposits offered by Indian Postal Services, which is provided against sovereign guarantee backed by the Government of India.
Post Office FD
Post Office FD, or Post Office Time Deposit Account, is one of the many different types of savings instruments offered by Indian Postal Service. It offers risk-free and reliable return against investment, along with several beneficiary features that make it extremely popular.
Time Deposit Accounts are offered with tenors ranging between 1, 2, 3, and 5 years, with Post Office interest rates ranging from 6.9% to 7.7% (as of July 2019.)
These types of FDs enjoy interest rate revision on a quarterly basis and can be invested with a minimum investment amount of Rs.1000. Moreover, individuals can also benefit from the nomination facility and enjoy tax benefits if they opt for 5 year tax-saving FDs.
Other than this option, prospective investors can also choose from FDs offered by Non-Banking Financial Institutions, like Bajaj Finance, which offers several unique benefits as well.
Bajaj Finance FD
Bajaj Finance Fixed Deposit offers higher interest rates while packing several customer-oriented features and benefits to allow maximum wealth accumulation. Online application facility and account access, as well as provision for auto-renewal makes it suitable as a long-term investment.
Which one to choose – Bajaj Finance FD or Post Office Time Deposit Account
Prospective investors can select the best saving schemes in India for various risk profiles by comparing the features and benefits offered by these fixed deposits. Let’s take a look.
1. Rate of interest
The rate of interest is a crucial determinant between these two investment instruments. Time deposit accounts offer either 6.9% or 7.7%, depending on the investment tenor rate. Whereas Bajaj Finance offers interest at 8.10%. A higher interest rate can help accumulate more wealth during the investment period.
Bajaj Finance also provides an additional 0.25% interest over and above the standard rate of interest, which can help senior citizens accumulate higher return from their retirement corpus.
2. Minimum investment amount
Investors can open a Time deposit account with a minimum of Rs.1,000, which can go higher in the multiples of Rs.100. Bajaj Finance requires a minimum deposit of Rs.25,000 to open a fixed deposit account.
3. Investment tenor
Time deposit accounts allows an investment tenor of 1,2,3, and 5 years, whereas Bajaj Finance FDs allow an individual to select any investment period between 12 to 60 months. Both allow investors to capitalise on their funds according to their unique financial requirements.
4. Systematic Deposit Plan
Bajaj Finance offers the Systematic Deposit Plan, a flexible variant of their Fixed Deposit which allows an individual to invest in small monthly deposits. Investors can choose between 6 to 48 monthly deposits, depending on the investment period spanning between 12 months to a maximum of 60 months. The Systematic Deposit Plan allows investing a larger sum without paying the entire amount at the time of opening an FD account.
Post Office Time Deposit does not provide any such facility.
5. Loan against FD
Investors with a Bajaj Finance FD account can avail a loan against FD. The most common reason for taking a loan against FD is to meet emergency financial requirements without liquidating the FD account. Account-holders can avail as much as Rs.4 lakh as an advance as an instant online loan.
Such facilities are not available against Time deposit accounts.
6. Stability and credibility
Post Office Time Deposits are backed by the Government of India, certifying assured returns at the pre-determined rate of interest even during market fluctuations.
Bajaj Finance FDs carry the highest stability ratings, certified MAAA by ICRA and FAAA by CRISIL. It is considered as one of the safest instruments available to investors.
The choice between Post Office FD and Bajaj Finance Fixed Deposit depends entirely on the preference of an investor. Both offer excellent growth opportunities; however, compared to post office interest rates, Bajaj Finance offers higher interest, which can help amass a larger corpus over the same investment period. Prospective customers should carefully consider the benefits extended to them to enjoy a hassle-free experience while investing.