When it comes to parking excess money, traditional passbook savings accounts were usually the most preferred options. However, with interests hovering around the 3%–5% mark per annum, there is a need to consider better alternatives.
The ease of depositing and withdrawing money at your will led to the popularity of savings accounts. Today, several better options offer the same convenience and features at a better rate of interest.
Various alternatives to a savings account
Check out these profitable alternatives to the traditional savings account, where you can put your money to work for you:
- Liquid funds
- Payments banks
- Fixed deposits
Liquid funds come across as one of the best options for savings. These are debt mutual funds. You can invest in short-term, government debt instruments like treasury bills, government securities, and call money that pose lesser risk.
Some of the benefits of liquid funds are:
- Higher returns with an attractive interest rate
- Greater safety and liquidity, which make them ideal for emergency funds
- Reinvest in other financial instruments and maximise your savings accounts
With liquid funds, you can look for greater safety and better liquidity. These can certainly be high-return alternatives to savings accounts.
Payment banks, such as the India Post Payments Bank, are new entrants in the non-banking financial companies (NBFCs) category. As compared to a savings account, an account in a payments bank is a zero-balance account by default.
By investing in payment banks, you can gain the following benefits:
- There is no penalty for non-maintenance of balance in a payments bank account
- Wide distribution network for easy accessibility
- Greater convenience with these facilities:
1. Cash withdrawal from ATMs
2. Request a chequebook
3. Balance alerts on mobile
- Enhanced customer services with discounts and cashback
Investors can deposit a maximum of Rs. 1 lakh with such payment banks. Like traditional banks, payment banks also offer value-added services to their customers.
If your goal is to use your savings for wealth maximisation, fixed deposits are your best bet.
Parking your idle money or surplus cash in fixed deposits is a step towards wealth maximisation. Since your money is parked in a bank for a fixed tenure, FD fetch a higher interest rate than a savings account.
Company FD are even better than bank FD as they pay 1-2% higher interest than bank FD. You can also create multiple FD at various intervals to achieve a constant stream of maturing of FD. This is called laddering. It helps create a bridge between regular expenses and big-ticket expenses that might keep cropping up. Fixed deposit is a versatile instrument that allows you to choose different tenure. You can choose from 12 months to 60 months and ensure that your FD are flexible and provide liquidity.
The interest on FD can go higher, depending on the type of fixed deposit, duration, and the financial institution. Investing in fixed deposit is more rewarding, especially as you can expect an appreciation of your funds.
The precious yellow metal has always lured investors. Despite fluctuations in prices, gold has proven itself to be a stable and safe investment. There are different ways to buy gold, so it does not mean buying the metal itself. You can also purchase gold by investing in gold exchange-traded funds (ETFs) or purchase shares of a company that mines gold.
Since the world accepts gold, you can cash it easily. In periods of inflation, the value of gold increases, and has proven to be far more stable than several other financial instruments.
High yielding alternatives
In the current interest rate scenario with Bajaj Finance you can earn FD interest rates up to 8.35% for a 44 months FD if you are below 60 years of age and 8.60% p.a. if you are a senior citizen. Also, on an FD of Rs. 15,000, which is the minimum investment required, you can grow your capital by 49%, as a new investor. Senior citizens can grow their capital by 51%, by investing in a Bajaj Finance FD.
Bank fixed deposits will earn you variable interest rates depending upon the tenure. Longer tenure on the lines of five years or more will earn you higher interest, but your need for the money might arise much earlier. Alternatively, you can consider FDs with short tenures.
Bajaj Finance FDs also offer additional benefits, such as –
- Flexibility- You have the flexibility of choosing a cumulative option where you can take periodic interest payouts. You can also in a non-cumulative FD – where interest will be reinvested each year as an addition to the principal. Using these combinations can earn you a handsome corpus at maturity.
- Multi-deposit facility- You can create multiple FDs with a single lumpsum amount using this facility. All FD accounts can be managed online using Experia- your online FD account.
- Online loan against Fixed Deposit- Liquidity is the key in case of emergencies, and it is painful to liquidate your investments for it. Instead, opt for an instant online loan against fixed deposit, where you can take a loan at a marginal rate of interest, over and above your FD interest rate.
- Creating FDs using debit card - You can easily invest in FDs using a debit card.
- Auto-renewal facility - To not miss out on high rates, opt for auto-renewal feature while investing in FDs to ensure hassle free renewal.
Bajaj Finance FDs are known to provide stable and guaranteed returns with CRISIL AAA/STABLE and [ICRA]AAA(Stable) rating, so your investments are never at risk. If you wish to earn higher returns with flexibility, going for a company FD like Bajaj Finance FD will serve your purpose the best.
You can easily grow your savings by choosing to invest in a smart investment avenue, which offers higher returns on your investment capital. Amid increasing market volatility and reducing interest rate regimes, it is best to invest in a smart investment option like fixed deposits, which offer high stability and flexibility.