Understanding Savings+: How to make your idle money work for you

Your monthly salary is credited to your bank account. After paying your bills and meeting other expenses, the balance amount, if any, stays idle in your savings account. Over time, it is either spent, or remains untouched, accumulating minimal interest over the year.

Bank accounts are essential money management tools and are among the safest avenues to park funds, but they offer little by way of earning potential. Most banks offer just 3-4% interest on savings account. Current accounts, meanwhile, do not earn interest.

However, there is another way that risk-averse investors, or those with surplus funds that they need easy access to, can get savings plus the potential to earn reasonable returns while maintaining relative safety of capital and high liquidity.

Savings+ by Bajaj Finserv Asset Management Limited can help investors put surplus money lying idle in their savings account in relatively low-risk and highly liquid fixed-income instruments. Read on to find out how Savings+ can help idle money management to potentially earn higher returns than what your savings account can offer.

• Table of contents

• What is Savings+?
• Why Savings+ is an attractive investment option
• Who should consider Savings+?
• How to put extra money in Savings+
• Benefits of Savings+ for idle money investment
• Strategies for maximizing Savings

What is Savings+?

Savings+ by Bajaj Finserv Asset Management Ltd is a unique investment solution that helps investors combine relative stability with the potential for reasonable returns. It enables investors to seamlessly invest the surplus funds lying idle in their bank accounts into the Bajaj Finserv Liquid Fund or Bajaj Finserv Overnight Fund.

Both are low-risk fixed-income funds with a very short maturity period and the potential to offer returns higher than what a savings account typically offers. Savings+ thus seeks to bridge the gap between saving and investing.

Read Also: How to Use Savings+ for Short-Term Goals

Why Savings+ is an attractive investment option

Through Savings+, investors can potentially earn higher returns on their idle money than they typically would in their savings account. The money is invested in funds, which has a portfolio comprising money market securities with a maturity of one day, and liquid funds, which invest in fixed-income securities with a maturity of up to 91 days.

These mutual funds are relatively stable because of the high quality of underlying securities and low maturity. They also have better return potential than savings accounts. For instance, liquid funds generated an average one-year return of 7.16%* as on May 17, 2024, as compared to the 3%-4% fixed returns in savings accounts of most major banks. However, savings accounts are virtually risk-free and offer guaranteed returns, whereas the returns on liquid and overnight funds depend on market performance.

*Past performance does not guarantee future returns. Past performance may or may not be sustained in future.

Savings+ thus helps conservative investors combine the benefits of both avenues by choosing how much or little to invest in the money market.

Investors can link their bank account to Savings+ to see their surplus funds and choose how much to invest. They can also invest additional funds whenever they wish to – they do not need to adhere to a fixed schedule or invest in a fixed amount every month.

Liquidity and redemption

A significant advantage of Savings+ is its high liquidity. Savings+ offers instant redemption of up to 90% of your investments, or Rs 50,000 – whichever is lower. The balance amount is credited to your bank account in one business day, if redeemed.

Who should consider Savings+?

Savings+ is a suitable investment option for a wide range of individuals, especially those seeking to balance relative stability with reasonable return potential. It can be considered by conservative investors, those just starting on their financial journey, or anyone looking to build an emergency fund through a relatively stable investment avenue with modest return potential.

How to put extra money in Savings+

Savings+ facilitates easy investment of idle funds in the Bajaj Finserv Overnight Fund or Bajaj Finserv Liquid Fund, both of which offer high liquidity and entail relatively low-risk.

To invest, you can visit the Savings+ page on www.bajajamc.com and link your bank account. Then, you will receive information on your current account balance and the amount of idle money you typically have in your account. Based on this information, you can decide how much and where to invest.

Investors get regular reminders about the idle money in their accounts and can choose whether to invest and how much to invest in a particular month based on your expenses and balance funds.

The insta redemption facility allows you to withdraw 90% of your funds, or Rs 50,000 – whichever is lesser – in minutes. The balance amount, if redeemed, will take one business day to be released to your account.

Benefits of Savings+ for idle money investment

Overnight funds are debt mutual funds that invest in fixed-income securities with a maturity of one business day. Liquid funds, meanwhile, invest in fixed-income securities with a maturity of 91 days. These include commercial papers, certificates of deposit and treasury bills.

Unlike savings accounts, which offer guaranteed but fixed returns, liquid and overnight funds are linked to market performance. However, they are not as volatile as equity and relatively safe among fixed-income instruments too, owing to their low duration, the high rating of the underlying securities and high liquidity. Moreover, these funds have the potential to earn higher returns than traditional savings accounts.

Additionally, Savings+ gives you the flexibility of lumpsum investing – where you can choose how much and when to invest – as well as regular reminders to encourage disciplined investing. The liquidity and insta redemption facility can make Savings+ a suitable way to maintain a corpus for emergencies, unplanned expenses or months when you need extra funds. It can also potentially be used to save money for short-term goals.

Overnight funds

Here are some tips that can help you make the most out of Savings+:

• Maintain investment discipline: Even though you have the flexibility to invest when you want to, try to set up an SIP-like routine of setting aside a fixed amount every month as far as possible. Invest more money when you have extra: In months where you have more idle money, consider topping up your Savings+ investment.
• Don’t redeem money unless you need it: While the liquidity and insta redemption facilities are advantageous, try to use your investment for its intended purpose. If it is an emergency corpus, use it only for important and unforeseen expenses. If it’s for a short-term goal, such as a big expenditure, avoid dipping into it before that.
• Have a larger investment goal in place: Liquid and money market funds are suited for short-term goals or for a rainy-day corpus, but they do not typically have the potential to generate long-term capital appreciation that equity funds do. The return on these funds is also typically lower than that of fixed-income instruments with longer durations. A well-rounded investment strategy should factor in long, mid as well as short-term goals.

Read Also: From saving to investing: Transitioning your funds with Savings+

Conclusion

Savings+ by Bajaj Finserv Asset Management Limited can help investors combine savings plus return potential. Through Savings+, you can invest surplus and idle funds in your savings account into the Bajaj Finserv Overnight Fund or the Bajaj Finserv Liquid Fund. The liquidity and relative stability of these funds makes them a suitable investment avenue for short-term goals or an emergency corpus. Routine reminders to set aside funds helps you inculcate disciplined investment even as you have the flexibility to choose how much and when to invest. However, unlike a regular savings account, Savings+ does not guarantee fixed returns.

FAQs

What is the minimum balance required to open a Savings+ account?

You do not need to create a separate Savings+ account to invest. You can use the Savings+ facility to put money into Bajaj Finserv Liquid Fund or Bajaj Finserv Overnight Fund through your existing bank account. A minimum investment of Rs. 100 is required in the fund of your choice. For detailed scheme-related information.

Are there any fees associated with Savings+?

There are no transaction fees to invest through Savings+.

Can I set up automatic transfers through Savings+?

No, you can need to invest via lumpsum whenever you wish to.

How often does interest accrue on Savings+?

There is no fixed interest on your Savings+ investments. The mutual fund scheme that you invest in via Savings+ will have a Net Asset Value that will be updated daily based on the value of the underlying assets at the end of the business day.

Are my funds in Savings+ insured?

There is no insurance and no guaranteed returns. The funds invested via Savings+ via mutual funds are subject to market risks.

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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.