How can you grow your savings in 2021?

Investors with low-risk appetite have turned to investment in best saving plans and schemes such as PPF, RD and fixed deposit to ensure that their money remains safe, and grows over time.
How can you grow your savings in 2021?

The New Year brings with it a renewed sense of optimism, which is why most individuals like to make certain financial resolutions. If you are in your early 20s, you might be thinking about starting your investment journey. Those in their mid-30s or early 40s would be thinking about their child’s education, and saving for contingencies. While the reasons may be different, we are all cautiously optimistic after navigating through a tumultuous 2020.

As the financial markets continue to remain volatile, most of us are now seeking avenues through which we can grow our corpus. Capital safety and capital appreciation are the two main factors we must consider, which aren’t guaranteed by mutual funds. Traditionally, investors with low-risk appetite have turned to investment instruments such as PPF, RD and fixed deposit to ensure that their money remains safe, and grows over time.

If you are just planning to start investing, or have a long investment horizon and don’t want to invest in market-linked instruments at a time when we are witnessing extreme market swings, here are five ways to grow your savings in this new year.

Public Provident Fund (PPF)

Considering PPF is a government-backed investment instrument, you can remain assured about the safety of your investment. Recently, the government decided to keep the interest rates of small savings schemes unchanged for the quarter ending March 31st, 2021. This essentially means that PPF will continue to carry an annual interest rate of 7.1 percent.

While PPF offers a higher interest rate than most of the other investment options, it usually has a lock-in period of 15 years. You can only make partial withdrawals from your PPF account after 5 years. If you need funds during emergencies, or if you have a liquidity crunch before the five-year period, you won’t be able to count on the money you’ve invested in your PPF account.

Recurring Deposit (RD)

Recurring deposit is yet another investment instrument that is preferred by risk-averse investors. Given the current market climate, investors are now taking a more cautious approach, and if you choose to invest in a 5-year post office RD, you can get interest rates up to 5.8 percent.

Fixed Deposit (FD)

Historically, FD has been the go-to investment instrument for investors during times of market volatility -- senior citizens in particular. Fixed deposit allows investors to park their corpus, and enable it to grow overtime. While FD interest rates have gone down over the years, institutions like Bajaj Finance Limited offer some of the highest interest rates in the country. For instance, Bajaj Finance online FD offers an interest rate of 6.70 percent, and for senior citizens, it goes up to 6.85 percent. Furthermore, unlike PPF, Bajaj Finance FD does not come with any restrictive lock-in period (it only comes with a lock-in period of 3 months). One can invest a lump-sum amount, with a tenure between 12 - 60 months. For senior citizens looking for a regular revenue stream post retirement, investing in Bajaj Finance non-cumulative FD is a wise choice, as they can receive periodic interest payouts either on a monthly, quarterly, semi-annual, or annual basis.

What makes Bajaj Finance FD attractive to the young investors is that it combines the main features of SIPs of mutual funds and an RD without incurring negative returns. Through the Systematic Deposit Plan (SDP), you can make deposits on a monthly basis, with a minimum amount of Rs. 5,000. You can either choose a single maturity scheme or a monthly maturity scheme, and each deposit is treated as a separate FD which matures as per the chosen tenure. This also allows you to benefit from making the deposit at FD interest rates prevailing on that particular date.

Let us look at an example. Let us imagine that as a young investor, you can save up to Rs. 5,000 per month, and you choose to invest through SDP for a tenure of 4 years, making 36 deposits in total. Here is how much you can earn, depending on whether you choose to invest offline or online.

Note: ROI in the above calculator may vary upto 4 bps with the actual rates offered

For those looking to invest in FD, using the Bajaj Finance FD Calculator can be a smart choice as it helps you determine your returns beforehand. This can help you plan your investments better, so you can know the returns on your deposit, before you invest.

National Pension Scheme (NPS)

NPS is yet another government-backed investment instrument, and is managed by the Pension Fund Regulatory and Development Authority (PFRDA). It is also a combination of different investments, including fixed deposit, corporate bands, and liquid funds, and as such, the interest rates vary across the funds.


Traditionally, Indian households have always banked on gold as an investment instrument. Today, you don’t have to purchase jewellery, gold coins or bars to invest in gold. Alternatively, you can also invest in gold ETFs and sovereign gold bonds.

Comparing different investment instruments

While the above five options are relatively safe, and you won’t have to worry too much about the market fluctuations stagnating or eating into your investments, let us make a quick comparison, to see which option is best suited for you.

Thus, Bajaj Finance fixed deposit offers greater flexibility and convenience, and you can either opt for a cumulative or non-cumulative fixed deposit based on your requirements, or opt for Systematic Deposit Plan (SDP) with single maturity scheme or the monthly maturity scheme. Furthermore, Bajaj Finance FD is backed by the highest stability ratings (FAAA from CRISIL and MAAA from ICRA), while the institution also boasts of a zero-default experience. During times of emergencies, when you might need access to funds, you can also take a loan against your FD. If you want to ensure safety and growth of your corpus in 2021, you can rely on Bajaj Finance Limited to help you grow your savings.

Disclaimer: This content is distributed by Bajaj Finance Ltd. No TNIE Group journalist is involved in the creation of this content

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