Best Returns: Short-Term FD or Flexi FD?

There are various options for a fixed deposit. We will discuss the advantages of Short term FD and Flexi FD here and the returns on bank FDs vs. company FDs.

Short Term FDs

Short term fixed deposits (FD) are the FDs in banks and NBFCs for a tenor of 7 days to 12 months. In a regular fixed deposit, the tenor along with the amount of investment is fixed. It is a one-time investment where the tenor and the maturity terms have been decided on the date of deposit. It does not get influenced by market conditions and is known as an extremely safe investment.

Fixed FD

Flexi FDs

Flexible FDs are available at banks. These are more flexible than regular FDs and are somewhat similar to a recurring deposit (RD) where the tenor and the amount are fixed, and the fund is to be deposited in installments on a regular frequency - either monthly or quarterly.

However, in the case of a Flexi FD, the investors have the option to vary the installment amount. Even the number of monthly deposits can be varied, unlike regular FDs. Deposits can be made anytime and any number of times in a month.

Short term FD vs. Flexi FD

Fixed deposits differ from bank to bank. FD interest rates lie between 4-7%. The difference in returns when compared to a normal bank FD will be equal to the deposit amount difference. Since your deposit amounts will fluctuate each month, the higher the amount, the more the interest earned.

If you have a Fixed deposit of Rs. 1 lakh in any bank for 1 year at the rate of 5 percent. You will earn an interest of Rs. 5,000 on a regular FD.

In a Flexi-deposit - the overall interest earning will be less than Rs. 5,000 if your regular monthly deposit is less than (Rs 1lakh/12) for one year.

If you’re looking for short term FD, Bajaj Finance FDs are one of the better options with attractive interest rates. Senior citizen fixed deposit interest rate offered by Bajaj Finance is 7.35%. Interest earned on your FD, calculated using the Bajaj interest rate calculator, will show you how much more it is than any banks’ interest rates for the same tenor and same amount. Most company FD list names offer higher than banks but Bajaj Finance stands out in terms of both, high interest rate and stability of returns certified by high ratings from CRISIL and ICRA.

Systematic Deposit Plan- `Unprecedented Flexibility to Invest in an FD

Bajaj Finance has introduced the first-of-its-kind FD plan, known as the Systematic Deposit Plan which allows you similar flexibility of making between 6 to 48 deposits (starting at Rs. 5000 only) within a tenor of five years maximum. You have the choice of number of times you can deposit rather than reducing the deposit amount. Each deposit will be treated separately and the interest rate of the deposit will be as prevailing on the date of the deposit.

Advantages of Short Term Deposits 

  • Better cash inflow - An ideal option for transitory income and you can choose with a high interest rate starting from 12 months with Bajaj Finance FD
  • Greater liquidity - The available tenor is between 12 and 60 months. Choose that suits your financial needs. You can ladder between various tenors from 1 to 3 years and keep a inflow of maturities intact.
  • A High Return on Investment - With Bajaj Finance you can earn returns on investment up to 7.35%.
  • Smaller minimum deposit amount - Bajaj Finance FDs can be started with a minimum Rs.25,000 in. No need to wait for accumulating bigger amounts as you can invest in SDP with as low as Rs. 5000 per month.
  • Loan Against FD – With this feature, you can avail a loan against FD without breaking the FD, while continuing to earn high returns on it.

A certain portion of your portfolio should be in a stable and high yielding investment option. You may also be looking for an alternative with low risk and low returns –such as in the case of a fixed deposit. However, a regular FD account with a bank will not give you a high rate of return. You can go for high-yielding Company Fixed Deposits such as Bajaj Finance FD which offers interest rates up to 7.35%. While a short term FD can help you grow your money and beat inflation, a flexi FD plan such as the Systematic Deposit Plan offers you unprecedented flexibility to invest in an FD starting at just Rs. 5000 per month, and enjoy the prevailing interest rate, as on the date of the deposit, along with all other benefits of FD.

Author Bio:

Gaurav Khanna

Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. Check out his blog at Highlight Story.

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