Do you have a low-risk tolerance? Do stock market volatilities bother you? Don’t you have enough time at your disposal to actively manage your investment portfolio? If the answer to all of the above questions is in the affirmative, then fixed income instruments are most suited for you.
Fixed-income instruments comprise bonds, debentures, and FDs (Fixed Deposits). FDs are the most popular of all. In India, FDs are issued by banks, post offices, and NBFCs. Now, you may wonder where to invest.
Post office FDs are similar to bank FDs. The interest rates on post office FDs were revised on April 1, 2020. NBFC FDs, on the other hand, usually offer higher interest rates than bank or post office FDs.
In this article, we will limit our discussion to post office FDs and how they fare in comparison to Bajaj Finance FDs. This may also help you in making an informed decision on where to invest.
1. Investment tenor
Post office FDs are issued for a period of 1 year, 2 years, 3 years, and 5 years. On the other hand, Bajaj Finance FDs are issued for tenures ranging between 12-60 months. Thus, with Bajaj Finance FDs, you have higher flexibility than post-office FDs.
2. Minimum investment amount
You can open a post office FD with a minimum investment of Rs 1000. You can invest in multiples of Rs 100 with no upper limits. On the other hand, a Bajaj Finance FD can be booked with a minimum principal amount of Rs 25,000. The maximum investment amount is capped at Rs 1 crore.
3. FD renewal
Post office time deposits have a time period within which they can be renewed. A 1-year FD has to be renewed within 6 months of maturity, a 2-year FD within 12 months of maturity, and a 3/5 -year FD within 18 months of maturity.
Bajaj Finance FD can be auto-renewed online with a single click. You will also get an additional return of 0.10% p.a. when you renew your FD online.
4. Premature withdrawals
The minimum lock-in period for post office FDs before you can exercise the premature withdrawal option is 6 months. Conversely, you can foreclose your Bajaj Finance FD account after a minimum lock-in period of just 3 months.
5. Interest rates
The post office fixed deposit interest rate applicable to 1-year, 2-year, and 3-year deposit is just 5.5% p.a. On a 5-year deposit, you can earn a post office fixed deposit interest rate of 6.7% p.a. The interest on post office FDs is payable annually but compounded quarterly.
Bajaj Finance offers two types of FDs - cumulative and non-cumulative. The interest payable on cumulative deposits is within the range of 6.15% p.a. - 7% p.a., based on the investment tenor you choose.
On non-cumulative deposits, you can expect a minimum return of 5.98% p.a. and it can go up to 7% p.a. depending on the investment tenor and interest payout frequency you choose. Bajaj Finance FD offers you monthly, quarterly, half-yearly, and yearly interest payout options.
Moreover, online investors aged below 60, will gain an extra return of 0.10% p.a. irrespective of the FD type or FD duration they choose. Senior citizens will get an additional return of 0.25% p.a. on both the FD types and for all investment periods. In short, the Bajaj Finance senior citizen FD rate goes up to a lucrative 7.25% p.a.
In short, while the post office fixed deposit interest rates are decent, the Bajaj Finance FD rates are certainly more attractive.
If you are still confused about where to invest, then a look at the above information clearly tells you that Bajaj Finance FD scores more than post office FD on most parameters. Thus, Bajaj Finance FD is a better choice than a post office FD for growing your money.
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