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3 Investment Options In Place Of Mutual Fund SIPs

Sunil Fernandes

In the last 5 years, mutual fund SIPs largely if you have opted for equities have given modest returns. In fact, this has largely to do with the collapse in the stock markets, due to Covid-19, which has resulted in modest returns and in some cases even negative returns.

While we do not advocate closing SIPs, in case you feel that you lack the patience after all these years, you can look at options. Here are 3 investment options, whereby you can park money every month, just like your mutual fund SIPs.

1. Bajaj Finance Systematic Deposit Plan

The Bajaj Finance Systematic Deposit Plan could offer you interest rates that are much higher than bank recurring deposits or post office recurring deposits.

The interest rate depends on the prevailing interest rate on the date of each monthly deposit. So, this could really differ.

At the moment it could be near the 7 per cent mark, which would be much higher than most other options. Investors have an option to choose from the 1 year to 5 year recurring deposit. You can also choose a date to deposit, but, once that is chosen, you cannot change the same.

In case of emergency you can withdraw the deposit, however, it can be done only after a period of three months. Deposits from Bajaj Finance are AAA rated, that makes them secure as well.

2 Post Office Recurring Deposit Account

The Post Office Recurring Deposit offers you an interest rate of 5.8 per cent, compounded annually. The interest rate is better than bank recurring deposit interest rates. You will need to visit the post office to open the account. The Post Office Recurring Deposit Account can be transferred from one post office to another.

The tenure of the deposit is for a period of 5 years, however, you can close the deposit after a period of three years.

While the returns from these deposits are not great, your capital tends to be protected and you have assured returns. In the case of mutual fund SIPs, the returns are not assured, though they can be way higher than bank and post office instruments.

3. Bank Recurring Deposits

Here again, you can deposit a sum each month, just like in the case of your mutual fund SIP. The interest rates at the moment are low, but, like in the case of post office deposits, your capital is protected and returns are assured.

The interest rates differ from bank to bank and could be lower than the post office recurring deposit, especially for the larger banks. The one good advantage is that this instrument is highly liquid and you can close the account whenever you like. You also have the flexibility of choosing your amount and the tenure. The good thing is that you can open the same online, unlike the post office recurring deposit, where you would have to physically visit the post office.

About the author:

Sunil Fernandes has spent 25 years covering business and finance in India and abroad. Sunil has worked with frontline daily newspapers including Hindustan Times, Deccan Herald and Gulf Times. He has also worked with investment magazines like Dalal Street Investment Journal and Oman Economic Review. His forte remains stocks, mutual funds and tax planning.

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