How to Use Savings+ for Short-Term Goals

Savings+ is a unique facility from Bajaj Finserv Asset Management Limited that allows investors to transfer surplus funds in their savings accounts to the Bajaj Finserv Liquid Fund or the Bajaj Finserv Overnight Fund. Surplus funds are what are typically left in your bank account after paying bills and meeting other expenses. Instead of letting this money stay idle in the bank, Savings+ allows you to seamlessly invest it in these short-term debt mutual funds that are relatively stable and offer better return potential than most savings accounts.

• Table of contents

1. Understanding Savings+
2. Using Savings+ for short-term goals

Understanding Savings+

Once you sign up for Savings+ on bajajamc.com, the facility displays your current account balance as well as the surplus funds you typically have in your bank. You can then choose to invest any amount – starting from Rs 100 – into the Bajaj Finserv Liquid Fund and Bajaj Finserv Overnight Fund.

Both fixed-income funds invest in short-term debt and money market securities, which carry relatively low risk. Moreover, while savings accounts of most major banks offer interest rates of about 3%, the average 1-year returns of liquid and overnight funds as on June 25, 2024, is between 6% and 7% and the average three-year returns are more than 5%, as per data from the Association of Mutual Funds in India (Past performance may or may not be sustained in future). Do note, however, that returns are not fixed or guaranteed and fluctuate based on market conditions.

These schemes also offer instant redemption of 90% or up to Rs 50,000 of your invested amount – whichever is lesser. These features make Savings+ a powerful tool for investors looking for a short-term avenue with modest return potential and high liquidity.

This way, your idle money can work harder towards bringing you closer to your short-term goals.

Using Savings+ for Short-Term Goals

Here are some reasons why Savings+ is suitable for short-term goals.

• Investing convenience: Savings+ makes it easy to identify and invest surplus funds from your bank account to select mutual fund schemes. You can make the transfers through a 100% digital process from a mobile phone or desktop.
• Relatively stable avenue:Both Bajaj Finserv Overnight Fund and Bajaj Finserv Liquid Fund invest in high quality and short-term papers. This mitigates credit risk and interest rate risk, making these relatively low-risk/low to moderate risk funds. Moreover, the return potential is better than that offered by most savings accounts.
• Flexibility: You do not need to start an SIP or commit to investing a certain amount every month. You can invest as much as you want, whenever you have surplus funds.
• Encourages discipline: Investors are sent reminders to encourage consistent investing.
• Liquidity: The Bajaj Finserv Overnight Fund and Bajaj Finserv Liquid Fund allow instant withdrawal of up to 90% of your funds or Rs. 50,000 (whichever is lower). The balance amount, if redeemed, is credited to your bank account in one business day.

Conclusion

Savings+ can be a valuable tool for investors seeking a short-term investment avenue. Individuals can potentially achieve modest returns by investing idle funds in low-risk and highly liquid fixed income funds. Embracing a disciplined investment strategy with Savings+ can help you potentially meet short-term goals efficiently.

FAQs

What are the main benefits of using Savings+ for short-term goals?

Savings+ enables you to put surplus funds into Bajaj Finserv Overnight Fund and Bajaj Finserv Liquid Fund. Both are relatively low-risk/low to moderate risk debt mutual funds that can potentially provide higher returns than regular savings accounts while also maintaining liquidity. This makes Savings+ suitable for short-term goals.

How can I optimise my investments with Savings+?

To optimise your investments, invest consistently and regularly, top up your investments when you have extra funds when available and avoid making unnecessary withdrawals.

Is Savings+ suitable for both short-term and long-term financial strategies?

Savings+ can be suitable for short-term goals because it offers modest return potential, liquidity and relative stability of capital invested. Longer term investments may benefit more from equities, hybrid funds and other investment avenues that offer inflation-beating return potential and long-term capital appreciation.

Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
This document should not be treated as an 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 purposes only and should not be construed as a promise of 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.