Getting a Diwali bonus can be like the cherry on the cake, especially during this festive time. While it may be tempting to splurge your hard-earned bonus, investing this amount is a smarter choice.
When looking for smart investment vehicles to make your money work for you, it is best to keep an eye on the returns offered by various instruments. You must also determine what your net gains are, by adjusting these instruments for inflation and taxation.
With instruments like PPF and NSC set to yield returns at 7.9% for the October to December quarter, and recently reduced repo rate of 5.15%, you may be on the hunt for options that offer returns over 8% so that you can address your goals and responsibilities in a timely manner.
Here’s a look at a few options that you can consider, given these parameters.
Your investment in direct equity is routed through stocks and exposes your portfolio to volatility. When you invest for a long timeframe, equity can be promising and yield superior returns. This means if you purchase a stock and hold it for at least 5 years, you could be looking at 20–40% annualised returns.
Venturing into direct equity is viable only if you pick the right stocks. To start with, you will need to open a demat account through a brokerage firm or bank. Moreover, you will have to monitor the economy and its trends on a daily basis to be able to take a call on when to buy/sell stocks.
Equity mutual funds
Investing in equity through mutual funds is a better solution, especially if you’re a beginner. This is because your investment in mutual funds is managed by professional fund experts. When compared to direct equity, mutual funds pose fewer risks, albeit with lower returns. Here, your annualised returns over a period of 5 years will be around 20%. What’s interesting is that you can opt for ELSS and cash in on 5-year returns of about 13% along with tax benefits.
Non-convertible debentures (NCDs)
Companies issue NCDs to generate funds, however, unlike IPOs, NCDs generate fixed returns. The returns may not be stellar when compared to direct equity, but you can expect returns of up to 11% coupled with superior security. These factors make NCDs an attractive option for investors across the board. Nevertheless, with an NCD interest rate risks aren’t wholly mitigated and you must evaluate safety by inspecting the company’s credit ratings. Opt for NCDs only when you have 100% assurance of returns.
NBFC fixed deposits If you don’t want to take on risk or wish to balance your portfolio, pick fixed deposits. Select a trusted NBFC to earn higher interest rates and ensure the safety of your returns. You can earn up to 8.70% with the Bajaj Finance Fixed Deposit. The rates differ across customer profiles, with senior citizens profiting the most, courtesy of a 0.25% rate boost.
Here’s how much you can earn via the Bajaj Finance FD.
The standout advantage of an FD is safety and Bajaj Finance excels in this domain. Carrying ICRA’s MAAA, CRISIL’s FAAA and S&P Global’s BBB rating, the company promises a default-free experience, which is why it has a total deposit book of Rs.16,000+ crores and about 2,50,000 customers.
Additionally, you can benefit from timely liquidity by opting for regular payouts. This is beneficial if you’re a senior citizen looking for a way to replace your salary. Here’s a look at the returns in store for varying payout frequencies.
The Bajaj Finance FD also offers convenient features like auto-renewal, whereby you can re-invest for a second term automatically by simply opting for auto-renewal at the time of booking your FD. Additionally, the multi-deposit facility lets you invest in several deposits using a single cheque and hence ladder your investments effortlessly.
With guaranteed returns of over 8% up for grabs, it’s in your best interests to invest now to lock in the high interest rates. To do so, request a callback by filling a short online form. An authorised representative will get in touch with you to help you complete the formalities.