Systematic Deposit Plan and its advantages

Learn about SDP and how it is a secure and flexible scheme that aligns with your investment goals.
Systematic Deposit Plan
3 mins
03 April 2024

SDP stands for Systematic Deposit Plan. It is a financial investment product offered by some banks and financial institutions in India. SDP is similar in concept to Systematic Investment Plans (SIPs) in mutual funds, but instead of investing in mutual funds, it allows individuals to invest in fixed deposits in a systematic and disciplined manner.

Specifically, Bajaj Finance SDP has emerged as a popular saving option for the Indian audience due to its unique features and potential for wealth creation. Investors can deposit a fixed amount at regular intervals, usually monthly, into a fixed deposit account. The duration and frequency of the deposits are pre-determined based on the investor's preferences. Each deposit made through the SDP creates a separate fixed deposit with its maturity date, allowing the investor to enjoy the benefits of having multiple fixed deposits with different maturity periods.

The main advantages of an SDP are:

Disciplined Savings: By automatically depositing a set amount on a regular basis, SDP aids investors in developing a disciplined savings habit. It motivates people to continuously save and invest, which might help them reach their financial objectives. With Bajaj Finance you can start investing in a SDP with a minimum amount of Rs. 5,000.

Fixed Returns: SDP offers fixed returns, in contrast to investments in market-linked securities like mutual funds. Investors have predictability and stability because they know in advance what interest rate they will receive on their fixed deposits.

Variety: Investors gain from variety in terms of maturity periods as each installment creates a distinct fixed deposit. As different fixed deposits mature at various dates, this can assist in managing liquidity demands more effectively. There is also the benefit of higher SDP rates on special tenures of 18,22,33,42 and 44 Months offered by Bajaj Finance.

No Market Risk: Fixed deposits, which are thought to as secure and low-risk investments, are what SDP invests in. Since there is no exposure to market volatility, it is excellent for those who are afraid of taking risks.

Flexibility: Depending on their financial objectives and needs, investors are free to select the SDP's period, frequency and deposit amount. Since SDP works like a recurring monthly option, you get the benefit of the latest interest rates on each monthly deposit with Bajaj Finance SDP.

It's important to note that the interest earned on fixed deposits is subject to taxation as per the investor's income tax slab. Additionally, premature withdrawals from the fixed deposits created through the SDP may attract penalties, depending on the terms and conditions of the bank or financial institution offering the SDP.


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