Hi , Hope you are all well . The pandemic has hit all of us and in this harsh situations we are in sense of anxiety and fear of loosing our loved ones . This pandemic has taught all of us the importance of being physically and mentally fit and also to be financially strong in all spaces. We are talking about being financially strong because the oxygen which is available to everyone free of cost , was sold in this panic situation at a price which no one could imagine. Most of them loosed their life earned savings in saving their loved ones doing their medical aid . So , a common question for everyone now arises should we need to worry about the finance for the coming years also and how can we manage to have good savings for such situations ? .

In India , for dealing with panic situations like this pandemic and for other diseases also , people rely on small saving options liked Fixed Deposits , their saving account savings and their small investments in properties or precious metals . But do they really help in panic situations ?, the answer is absolutely ‘No’ because , whenever you have to pay for medical aid you have to bear numerous other medical and well being expenses for which these small sources of Income do not work. In this post we have tried to cover why you need a better consultation towards investment if you still think Fixed deposit or any of your bank deposits are safer for emergency needs.

Fixed Deposits : Reality of These Deposits 

You might get to notice online on various means that Fixed deposits could make you a crorepati in 20 to 40 years , but can you really wait for such long ?. Or do you have an initial amount of Rs 10 to 15 lakh to invest and wait for next 20 or 40 years to get it grow by way of compounding . Yes compounding do works in all aspects , better we say that both consistency and compounding works in all aspects , the only thing you have to keep in mind that your investment should be dynamic and must be returning . Choosing only the safer side will never work because investments without risk does not return anything .

Let’s take an example for this lets suppose you go for a fixed deposit of Rs 5 lakh and the expected rate of return for the next 10 years would be on an average be at 7% (is usually 5-6%) if we conclude from 2010 to 2020 in India and on compounding basis your investment of Rs 5 lakh would be this after 20 years :

If you calculate on compounding basis, after 10 years you will get Rs 10 lakh for 5 lakh investment which means 2x power can be said in a fixed deposit for just lending money to banks for a period of 10 years for which you cannot use it or take it back before the period if you want such returns.

But do you know , banks taking your funds investment in much more rewarding avenues which even a individual could invest. The avenue has been discussed below , but first you have to make up your mind from moving to a higher return investment from that usual fixed deposit .

Best Alternative to Fixed Deposit

Have you heard of Systematic Investment Plan (SIP), off course if you are an Indian viewing this post then you must have seen that advertisement of people saying ‘Do SIP Asan Hai !’ , and in reality it is easier and more rewarding than any other investment . What if we say that in an SIP sometimes returns offerred are upto 150% of the actual investment and till date minimum returns in an SIP was offered 2.3% which was only equal to the actual interest rate of State bank of India given on normal savings account in 2020-21. This means on an average you are on a risk of 2% of loosing the interest and not the investment value if you go for an SIP than a fixed deposit.

SIPs in a layman language are a pile of equity or debt based stocks which collectively give good , fair or low returns as per the movement of stocks it holds . For instance , an SIP of ICICI Bank includes equity stocks , if all stocks in an year are kept held and show a green in movement for the entire year , the cummulative average of all stock returns will offered to the investor at the end of the period for which the investor has invested the money.

SIP : Easy Way to Start in India

SIPs can be done through a banking channel , like if you have a bank account in Punjab National Bank , you can also open a Demat Account in your bank to invest in an SIP or choose your own Stocks in an SIP or you can also ask the expert there in the bank to open an SIP investment for you he’ll take care of it and will provide you continuous alerts on your mobile device about returns on your investment.

SIP can also be done by self where with a minimum of Rs 500 you can start your SIP with Groww app or Paytm Investment app , both places are safer but we will recommend going through your banking channel for the same . Talking about returns , just like you get returns in the Fixed deposit at the end of the maturity period of the FD Deposit, their is no such compulsion in an SIP to takeaway retunrs at the end of the maturity period , after reading all policy and premature withdrawl details you can withdraw your SIP any time and you will be paid your returns in the way of NAV Value . For instance , in ICICI SIP you invested 10000 for first year and after Six months your SIP NAV from Rs 54 becomes Rs 72 then your value of SIP of 10000 will become 13,333 Rupees and you can withdraw it in your account by witdrawing from it.

So , take expert advice while choosing a better investment option and compare before investing in any option.

Also read : Can You Trust Signals given by a Trading Software

Hope ,you liked  perspective we gave to both investment options , its now on your choice to decide whether to invest in Fixed deposit or take ahead a more returning option , SIP.