WWhen individuals want to invest safely with known returns, people usually look up to Fixed Deposits as an option. However, there is a tax efficient option with much better returns after tax for Fixed Maturity Plans by Bajaj Finserv. While FMPs and FDs offer stability, the main additional benefits that FMPs offer over FDs are savings in terms of tax and less interest rate risk. Let’s see how Bajaj Finserv’s FMPs outperform FDs and why the former may be a better bet for investors today.

Fixed term plans vs. Fixed Deposits: What do investors have to look forward to?

They are kind of closed MF online investment where money is locked up in interest-bearing securities such as bonds and government debt for a predetermined period, usually one to five years. FMPs invest in securities with matching maturities that provide stability and tax efficiency.

This in turn makes Bajaj Finserv’s FMPs a flexible investment that combines interest rate security with mutual fund tax benefits and thus proves to be an attractive alternative to traditional FDs.

Important differences between FMP and Fixed Deposits

• Tax efficiency: Another significant benefit of FMPs is the issue of tax treatment. Provided such investments are held for more than three years, they would qualify for long-term capital gains tax which is traditionally lower than rates applicable to FD interest. Additionally, FMPs offer the indexing benefit; the purchase price at which the investment has been held is adjusted for inflation, reducing the taxable gains.
• Yield and interest rate exposure: FDs ensure that the fixed rate will always be available during the service period. FMPs invest in securities that match the market interest rates prevailing at the time of investment and thus earn benefits if interest rates rise. In this way, it can make FMPs in addition to FDs during rising interest rate regimes.
• Liquidity and flexibility: FDs are relatively more liquid as one can withdraw the amount early but will have to pay a penalty. FMPs are closed-end funds that are locked in until maturity. However, Bajaj Finserv also provides FMP in various employments which can be accommodated according to the investment horizon.
• Market-linked return: While FMPs tend to return a little differently than others depending on the market, returns for FDs are entirely on a fixed basis. When interest rates rise, FMPs can benefit from higher yielding bonds. This is one of the main market-related advantages that FDs cannot offer.

Bajaj Finserv fixed term plans Tax benefits

Since the tax efficiency of FMPs is good, it definitely makes them an engaging choice for taxpayers. How Bajaj Finserv’s FMPs help optimize tax efficiency

• LTCG: The FMPs held for more than three years attract LTCG tax, which would be relatively lower than the tax rates on FD interest and would reduce the tax burden on higher bracket taxpayers.
• Indexing advantage: FMPs provide indexation benefits where the investment cost is adjusted for inflation, which reduces taxable gains and eventually it also reduces the tax liability. It is one of the definitive advantages of FMP that offers a distinct tax advantage.
• No TDS: FMPs rarely command TDS, and this gives investors an opportunity to let the returns earn without being taxed immediately. That would enable it to reap the maximum return on the entire investment.

The tax benefits of Bajaj Finserv’s FMPs very close to investors’ heart to align stable returns with effective tax planning.

Returns comparison with the MF calculator

Investors can use Bajaj Finserv MF calculator to know how FMPs compare to FDs. This calculates an estimated return on investment in the FMP by taking inputs such as investment holdings and rate of return to determine the return. In this way, investors can make accurate comparisons for their investments.

Now let’s see how to use the MF calculator to compare FMP and FD:

• Enter investment amount: Enter the amount invested in FMP. This is the basis on which the estimated return can be calculated.
• Expected return: Enter the yield based on current market conditions for FMPs.
• Tenor Select: Three years or more to calculate returns with LTCG and indexation benefits.
• Estimated return preview: The calculator provides Maturity Value projections, which help investors make an informed decision between investing in FMPs and FDs.

This tool will help investors confidently analyze how Bajaj Finserv’s FMPs stack up against the conventional FD in terms of growth and tax benefits.

Who should choose FMP over FD?

FMPs as well as FDs provide security and fixed returns. However, Bajaj Finserv’s FMP is designed keeping in mind the profile of specific investors.

• Tax strategic investors: The higher tier taxpayers get LTCG tax benefits and indexation benefits and are therefore more attracted to an FMP rather than an FD.
• Long-term investors: Investment horizons of three years and above will reap the maximum tax benefits and thereby be suitable to meet education or future prepayments.
• Inflation-conscious investors: FMPs would provide inflation-adjusted returns adjusted to market conditions to curb erosion of FD returns due to inflation.

Bajaj Finserv’s FMPs are therefore suitable for investors looking for predictable growth and tax savings, making them an effective way to manage medium-term goals.

Why Bajaj Finserv’s FMPs can be a better option

Bajaj Finserv’s FMP is a combination of tax efficiency, stability and returns that are linked to the market in an adaptive way compared to FD. The entity provides LTCG tax as well as indexation for all individuals who have an investment in the higher tax bracket. In addition, the MF calculator can also calculate the yield, which provides a crystal clear picture for decisions. It is also easy to process online MF from Bajaj Finserv without complicating the procedure.

Conclusion

While FDs are always a safe bet, Bajaj Finserv FMPs represent an upgrade in terms of tax efficiency as well as inflation-adjusted returns, esp. Using the MF calculator to project returns, here’s how an investor compares favorably with FDs even after tax. For investors looking to optimize returns while managing the tax impact, Bajaj Finserv FMPs present an attractive option in sync with the growth and tax planning requirements of investors.

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