Why is Bajaj Finance FD Better than National Pension Scheme?

fixed deposit

There are so many financial instruments accessible in the market for investors. However, fixed deposits (FD) and the National Pension Scheme (NPS) are the most dependable investing alternatives. 

If you are confused about where to invest, here is the information regarding both instruments. Investors may analyze the characteristics and benefits of each instrument before investing their capital.

NPS (National Pension System)

The National Pension Scheme (NPS) is a voluntary contribution mechanism to invest. NPS enables you to invest in Tier 1 and Tier 2 accounts. Both the accounts have their perks and rewards. The NPS is the investment utilized by the investors to establish a retirement corpus.

An investor may pick from precisely four kinds of asset classes accessible under the NPS program. The asset classes are as follows:

  • Class G: Government Bonds
  • Class E: Equities
  • Class C: Corporate Funds

Class A: For Real Estate Investments Trust (REIT), Commercial Mortgage-Backed Securities, and Alternative Investment Funds (AIFs)

Features and Benefits of NPS

The National Pension scheme is a flexible option where investors may pick the asset class and the amount they want to invest. There are two methods to invest in it —

The auto choice is the default option for investors who find it challenging to select investments; consequently, a fund manager controls their investments by default.

The active choice is for investors who wish to take control of their investments and pick the asset classes in which their money gets invested.

Tax Advantage

The tax savings is the most compelling element of the NPS plan. Investors may receive deductions under Section 80C of the Income Tax Act, 1961, up to Rs 2 lakh per financial year.

Interest Rates

NPS is the system connected to the market. Therefore the returns on the NPS will finally rely on the success of the asset that an investor chooses to put money in.

Bajaj Finance Fixed Deposit

A fixed deposit is an investment program accessible to banks and non-banking financing firms (NBFCs). FDs are well-known for the set rate of return on the principal amount, independent of market circumstances. NBFC FDs like Bajaj Finance FDs, also dubbed corporate FDs/company FDs, give a greater rate of return than the returns on bank FDs. Bajaj Finance Fixed Deposit is known for its attractive interest rates.

NBFC fixed deposit is the best investment choice that offers low-risk and predictable returns. Bajaj Finance provides an online FD return calculator that assists an investor to have an insight into the return on investments and the amount they need to invest to accomplish the financial objective.

Comparison between NPS and Bajaj Finance Fixed Deposits

Before settling on any investment option, it is usually good to compare with the next best choice. Here, the next best option to the NPS system is nothing but fixed deposits. Let us compare the NPS plan with the Bajaj Finance Fixed Deposit scheme.

Purpose

The primary objective of investing in the NPS program is to collect money for the post-retirement period. A fixed deposit assists investors to create cash for short-term and long-term financial goals.

Investment Tenor

The NPS investors may leave only after the term of 10 years, but in the case of the Bajaj Finance Fixed Deposit scheme, one can select for the variable tenor ranging from 12 months to 60 months.

Returns

The rate of returns from NPS depends on the asset classes in which the client has placed investments, but with the Bajaj Finance Fixed Deposit, one can anticipate guaranteed rewards of up to 7.05% p.a.

Conclusion

Despite the availability of various low-risk financial products on the market, figure out what makes FD a wiser option than other investing choices.

Investing a portion of your income is vitally essential to establish a reserve for financial crises and prepare for retirement. Moreover, by participating, you can ensure that your savings increase at a pace that may beat inflation. Often, investors prefer products with less risk, including fixed investment choices like a term deposit, PPF, and government plans. While channels like mutual funds and stocks provide attractive returns, they are market-linked products, including the risk of changing returns that may result in losses. On the other side, fixed deposits are not susceptible to market fluctuations, therefore, have a reduced degree of risk associated with them.