While thinking about whether to invest in short-term or long-term financial instruments, you must try to analyze the basic differences between them. Short-term investments are usually designed to provide you with sufficient liquidity options whereas long-term investments generally offer better returns but might not provide enough liquidity options.
For example, mutual funds offer better returns over a longer period but they might not provide enough liquidity options. On the other hand, you can invest in any of the savings schemes in India such as the post office savings scheme, SCSS, NSC, etc. that allow you to pick a shorter tenor. However, a shorter tenor might not provide the expected returns.
Some instruments can help you achieve your long-term financial objectives while satisfying your short or medium-term financial requirements. For example, Bajaj Finance FD can be a good alternative as it comes with a tenor that ranges from 12 to 60 months. Moreover, you are free to choose any duration within the given tenor as the tenor range is flexible. The following features of this FD scheme can help you manage your short or long-term investment plans:
Fixed deposits are mostly used for compounding returns (cumulative FD) or to generate a steady income flow through periodic interest payouts (non-cumulative FD). With the multi-deposit facility enables you to invest in both the FD types simultaneously by splitting your corpus.
The tenor can be different for each FD type and even the amount can be as per your investment goals. This means that a part of your corpus can be invested in a cumulative FD to grow your savings rapidly whereas the remaining part will keep generating monthly, yearly, quarterly, or six-monthly interest payouts as per your choice. With this feature, you can invest in several FDs at once to take care of your liquidity needs.
While the flexible investment options offered by Bajaj Finance FD help you a lot, it is the offered FD interest rate that makes a difference. An interest rate of up to 6.75% is good enough to fulfi your long-term objectives but it can also generate enough interest gains in a shorter period.
For instance, let’s say that you invest Rs. 25,00,000 in a cumulative FD from Bajaj Finance and deposit Rs. 20,00,000 in its non-cumulative FD. The expected returns as per various tenors and FD types are displayed in the below tables respectively:
|Investment Amount||Tenor||Interest gains||Maturity amount|
|Rs. 25,00,000||1 year||Rs. 1,60,000||Rs. 26,60,000|
|Rs. 25,00,000||2 years||Rs. 3,54,231||Rs. 28,54,231|
|Rs. 25,00,000||2.5 years||Rs. 4,50,369||Rs. 29,50,369|
|Rs. 25,00,000||3 years||Rs. 5,84,125||Rs. 30,84,125|
|Rs. 25,00,000||4 years||Rs. 8,07,724||Rs. 33,07,724|
|Rs. 25,00,000||5 years||Rs. 10,47,534||Rs. 35,47,534|
If you observe, you can make the interest generated by a fixed deposit double in 5 years or earn even higher if you just increase the tenor from 2.5 years to 5 years. You can also earn maximum returns by reinvesting your returns upon maturity. The auto-renewal feature offered by Bajaj Finance FD will help you to set this option by default.
|FD Amount||Tenor Range||Monthly interest payout||Quarterly interest payout||Six-monthly interest payout||Yearly interest payout|
|Rs. 20,00,000||12-23 months||Rs. 10,367||Rs. 31,250||Rs. 63,000||Rs. 1,28,000|
|Rs. 20,00,000||24-35 months||Rs. 11,067||Rs. 33,400||Rs. 67,400||Rs. 1,37,000|
|Rs. 20,00,000||36-60 months||Rs. 11,700||Rs. 35,300||Rs. 71,200||Rs. 1,45,000|
If you want to invest in a non-cumulative FD purely for income generation then you can pick a longer tenor as per your convenience. However, if you have some other ideas after utilizing your FDs for income generation for some time, then you can pick a shorter tenor as per your investment plans.
Also, it is safe to invest in Bajaj Finance FD as it has received the highest credit ratings by credit rating organizations like ICRA and CRISIL. Therefore, your investments will not be hit by market forces at any given point which minimizes the default risks to a great extent. Also, you will get a 0.10% extra FD rate on investing in this FD scheme through an online FD form and senior citizens are eligible for a 0.25% higher FD rate.
While investing in different instruments, you should take care of your short-term objectives while maintaining your focus on your long-term investment goals. Most instruments will not provide you with this flexibility but Bajaj Finance Fixed Deposit comes with a flexible tenor and a range of user-friendly tools and options that assist you to target both your short-term and long-term investment objectives at once. It also provides higher returns as your deposits can grow at interest rates of up to 6.75%. It is a safe investment option as it keeps your investments immune from market forces that minimizes the default risks to a great extent.