How Savings+ differs from traditional savings accounts

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Savings+ is a facility offered by Bajaj Finserv Asset Management Limited that aims to combine the convenience and liquidity of savings accounts with the potential to earn reasonable returns.

Savings+ identifies the idle money in your bank account – funds that remains after your bills, expenses and investments are debited – and helps you it in relatively safe and highly liquid fixed-income mutual funds, where investor can seek to earn higher returns than what a savings account would offer.

Read on to learn more about this facility and the difference between Savings+ and traditional savings.

  • Table of contents
  1. How Savings+ works
  2. Savings+ vs traditional savings
  3. FAQ

How Savings+ works

You can explore this facility on the Savings+ page at www.bajajamc.com. Once you link your bank account, you will see your current balance.

Through Savings+, you can invest an amount of your choice from your bank account into the Bajaj Finserv Overnight Fund or Bajaj Finserv Liquid Fund. Both are relatively stable and highly liquid mutual funds that invest in fixed income securities such as commercial papers, certificates of deposit and treasury bills. The low duration and high rating of the underlying securities mitigate some of the risks involved in debt market investments, though they are not risk-free.

Once you register, you receive reminders to invest via Savings+ but are free to choose how much and when you want to invest. Such a facility can potentially help you build an emergency corpus or find a relatively safe investment avenue where you can potentially earn more than you would if that money would lie in your bank account.

When you need funds, you can instantly redeem up to 90% of the invested amount, or Rs 50,000, whichever is lower.

You can explore this facility on the Savings+ page at www.bajajamc.com. Once you link your bank account, you will see your current balance.

Through Savings+, you can invest an amount of your choice from your bank account into the Bajaj Finserv Overnight Fund or Bajaj Finserv Liquid Fund. Both are relatively stable and highly liquid mutual funds that invest in fixed income securities such as commercial papers, certificates of deposit and treasury bills. The low duration and high rating of the underlying securities mitigate some of the risks involved in debt market investments, though they are not risk-free.

Once you register, you receive reminders to invest via Savings+ but are free to choose how much and when you want to invest. Such a facility can potentially help you build an emergency corpus or find a relatively safe investment avenue where you can potentially earn more than you would if that money would lie in your bank account.

When you need funds, you can instantly redeem up to 90% of the invested amount, or Rs 50,000, whichever is lower.

Savings+ vs traditional savings

Here are ways in which Savings+ and traditional savings differ.

Risk: Savings accounts are almost risk-free and your capital will likely be safe there. The money invested through Savings+, meanwhile, goes to mutual funds that are subject to market risk.

Returns:Savings accounts guarantee guaranteed but fixed returns and most major banks offer 3%-4% interest annually. The returns on the funds that you invest in through Savings+ are not fixed or guaranteed, but the annualised 1-year returns so far on liquid funds and overnight funds have tended to be higher than that offered by savings account.

No minimum balance: Some savings accounts charge account holders a penalty if they do not maintain a minimum balance. Savings+, or the debt instruments it invests in, have no such requirement. You also don’t need to invest every month – you can invest whenever you have funds, though it is recommended that you maintain a disciplined investment routine.

Liquidity: Most savings accounts offer you instant access to all your funds through online banking, digital payment methods, cash withdrawals etc. Savings+ is not an account – it is a route to invest in fixed-income mutual funds, which, in turn, also cannot be used to transact elsewhere. However, the insta redemption facility allows you to access 90% of your invested amount – up to Rs. 50,000. This money is sent to your bank account, when redeemed, from where you can withdraw or transact with it.

Diversification: When you invest in a mutual fund, your portfolio comprises assets from several entities, which helps you potentially mitigate risk and gives you exposure to different assets. In comparison, a savings account is a single entity.

Conclusion
Savings+ aims to bring an edge to your savings regime by facilitating convenient investment of idle money into the Bajaj Finserv Overnight Fund and Bajaj Finserv Liquid Fund. Both are relatively low-risk fixed-income mutual funds with the potential to higher returns than what a savings account typically offers. By using traditional avenues along with Savings+, you can potentially combine savings plus better return potential and revamp your financial planning and budgeting.

FAQs

What is the main difference between a Savings+ account and a traditional savings account?
Savings+ is not an account, it is a facility through which can invest money from your savings account into the Bajaj Finserv Overnight Fund or Bajaj Finserv Liquid Fund where it can potentially earn reasonable returns. A traditional savings account is a deposit offered by a bank to a customer where they can keep their money safe and earn a fixed interest. The funds that you invest in through Savings+ can potentially offer higher returns than savings accounts, but the returns are not fixed or guaranteed and depend on market conditions.

Are there any restrictions on withdrawals from Savings+?
You can redeem up to 90% of your Savings+ investments, or Rs 50,000, whichever is lower, instantly. An amount higher than that, if redeemed, will be credited to your bank account within one business day of the transaction date.

Does Savings+ offer higher interest rates than traditional savings accounts?
Savings+ invests in the Bajaj Finserv Liquid Fund and Bajaj Finserv Overnight Fund. Investments in fixed-income mutual funds. These fund categories typically offer higher returns than savings accounts in most financial years, but the returns are not guaranteed. The average returns since launch of most liquid funds, for instance, is approximately between 6%-7%* to date, according to data from the Association of Mutual Funds in India. However, the returns during the Covid lockdown years were between 3% and 4%, on average. Savings accounts offer fixed and guaranteed returns, but the range offered by major banks is usually between 3% and 4% per annum.

*Past performance may or may not sustain in future.

Can I have both a Savings+ account and a traditional savings account at the same time?
Yes, you do not need a separate account to use Savings+. The money is debited from your existing savings or current account, whichever you link to Savings+, and invested into Bajaj Finserv Overnight Fund or Bajaj Finserv Liquid Fund. So, you can retain your bank account and supplement it with Savings+ to combine savings plus investment.

For detailed scheme-related information, visit the following links:
Bajaj Finserv Liquid Fund
Bajaj Finserv Overnight Fund

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
This document should not be treated as endorsement of the views/opinions or as investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document is for information purpose only and should not be construed as a promise on minimum returns or safeguard of capital. This document alone is not sufficient and should not be used for the development or implementation of an investment strategy. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. This information is subject to change without any prior notice.