Systematic Deposit Plan – An Investment Tool for the Smart Millennial

The modern young generation’s or the millennials’’ attitude towards savings and investment is radically different from the earlier generations. Also, their spending and consumptions are quite different. While most youngsters enjoy a high salary package, the like to spend most of their money on lifestyle things rather than save for the future. However, some smart millennials understand the importance of saving and investing the surplus in different schemes and growing the wealth.

Today, you may a multitude of investment options to choose from and plan your investments accordingly. One such most popular options is the SIP or Systematic Investment Plan. This allows you to invest a small amount periodically. However, because of the market volatility, there is always a risk of losing your returns. And, to shield this risk, you can choose to invest in fixed-income schemes like fixed deposits that offer assured but low returns.

But, what if you get the benefits of a monthly savings plan and the convenience of SIP in a single investment plan? We are referring to the SDP or Systematic Deposit Plan. It is a unique savings instrument that combines the feat features of bank fixed deposits and SIP. With this savings plans, you can start investing a small amount periodically and a build a decent corpus over a period.

Let us understand why it is an ideal investment tool for the millennials.

  • Flexible pay out

The SDP offers great flexibility in terms of pay out. There are two types of systematic deposit plans – Systematic Monthly Scheme (SMS) and Monthly Maturity Scheme (MMS). And, the key different between the two s the pay-out frequency. If you invest in SMS, you receive the maturity amount on a single day. The primary objective of this scheme is to generate a lumpsum corpus at maturity, making it an ideal investment choice for short-term goals.

If you invest in MMS, the deposit term you choose applies to all the deposits you make. Every deposit you make matures on a different date and the pay-out is disbursed on the maturity date. This helps you get multiple monthly pay-out while getting adequate liquidity every month. The objective of this scheme is to generate monthly returns for the investors.

  • Number of deposits

If you invest in single maturity scheme, you can make between six to 47 deposits and with monthly maturity scheme, you can choose to make between 6 to 48 deposits.

  • Tenure range

With single maturity schemes, you can choose an investment term between 19 to 60 months for investments in monthly maturity scheme, the duration can range between 12 and 60 months. Experts recommend choosing a longer investment tenure to get high returns.

  • Auto renewal

Today, almost all the financial organisations offers auto-renewal facility for all their deposit schemes. It essentially means that your deposits will be renewed for the same period. Also, investing in SDP and growing your monthly savings is a lot easier with online process. You can start your investment from the comfort of your home and simple documentation.

Final Word

As a smart investor, you would that there are plenty of other investment schemes, which you may think is better suited for your goals, but SDP is an excellent plan to have in your portfolio. Do your due diligence to understand its features and start investing as early as you can.

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