Is Investing Gratuity Funds in Bajaj Finance FD a Good Idea?
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Is Investing Gratuity Funds in Bajaj Finance FD a Good Idea?

  • Highlights

  • Gratuity funds are lifetime earnings

  • They can be reinvested in safer instruments

  • FDs offer fixed, and safe returns

  • Investing gratuity funds in FDs -good idea

Gratuity is given by the employer to its employees for the services rendered by them. It is generally given at the time of retirement, but it can be paid earlier too.

Employees are eligible for gratuity once they have completed at least 5 years of service. The employees can get gratuity earlier, in the event of death or disability.
Gratuity funds can get additional earnings if invested. People are wary of investing them in high risk instruments. Gratuity funds can be invested in fixed deposits, which are safe. Fixed deposits provide earnings at higher interest rate than that of the savings account.

Features of Bajaj Finance FDs

Bajaj Finance Fixed Deposits offer a suite of different benefits, which help you earn more out of your investments. Here’s a look at the features and benefits of Bajaj Finance FDs.

Higher Interest Rates

Bajaj Finance Fixed Deposits offer higher rates comparatively. Even if the applicant is in the higher tax bracket, the post-tax returns is higher than that of savings account.
For example, if the interest rate of FDs is 7.5%, the post-tax rate of interest (ROI) would be 5.25%, if the highest tax bracket of 30% is considered. This is higher than the savings account ROI. Unlike equity or bond-based markets, FDs offer fixed, and assured returns.

Reasons to invest in Fixed Deposits

 

High Stability

Bajaj Finance Fixed Deposits have ICRA’s MAAA (stable) rating and CRISIL’s FAAA/Stable rating. This ensures that the FDs have high credibility, and lowest risk.

Minimum deposit of Rs. 25,000

FDs of Bajaj Finance require a minimum deposit of Rs. 25000.

Payout Options

There are two schemes of Bajaj Finance FDs - cumulative and non-cumulative. These can be chosen based on the need.
In the Bajaj Finance cumulative fixed deposit scheme, the interest is compounded annually, and paid at the time of maturity along with the principal. This can be chosen for long term investment.
In the Bajaj Finance non-cumulative fixed deposit scheme, the interest is paid out at different intervals. The frequency could be monthly, quarterly, half-yearly, or annually. This can be chosen when the earnings are required at periodic intervals.

Longer Investment Duration Gets Better Yield

The tenor of Bajaj FinanceFds range from 12 to 60 months. Staying invested for longer time gets higher yield.
For example:
An investment of Rs. 1 lakh in cumulative FDs will earn an interest of Rs. 7600 in 12 months.
An investment of Rs. 1 lakh in cumulative FDs will earn an interest of Rs. 45,915 in 60 months at higher interest rate.
Bajaj Finance offers other conveniences such as - doorstep services, online application, and online account management.
It is not prudent to allow gratuity funds to stagnate in the savings account. Investing them in Bajaj Finance FDs, will provide additional earnings.

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