Bajaj Finserv AMC launches Savings+: All you need to know

Make better use of the surplus funds lying idle in your savings account with Savings+, a unique investment solution from Bajaj Finserv Asset Management Ltd. Savings+ makes mutual fund investments more accessible by helping investors combine the safety of bank accounts with the return potential of debt mutual funds. It enables investors to identify surplus cash lying idle in their savings account and invest it in the Bajaj Finserv Overnight Fund or Bajaj Finserv Liquid Fund.

Bajaj Finserv AMC launches Savings+

Both are relatively stable debt mutual funds that entail low/low-to-moderate risk and offer the potential to earn better returns than traditional savings accounts.

Here is all you need to know about Savings+

Features of Savings+

Easy application: All you need to do is visit the Savings+ page on www.bajajamc.com and provide your bank account details. Once your account is linked, you are shown your bank balance or the surplus funds in your account - money that typically remains once your expenses are taken care of. You can then choose how much to invest and the scheme you prefer - the Bajaj Finserv Overnight Fund or the Bajaj Finserv Liquid Fund. The minimum investment amount is Rs 100.

Ease of investment: You can invest in either fund within minutes through an end-to-end digital process. You do not need to fill out a form or submit an application. Through the Savings+ interface, the amount is invested in your chosen as per your choice.

Relatively stable investments: Both liquid and overnight funds invest in short-duration and high-quality securities, which mitigates credit and interest rate risk associated with fixed-income investments.

Better return potential: While the savings accounts of most major banks offer interest rates of a little over 3%, liquid and overnight funds have higher return potential. The category average one-year return (as on July 11, 2024) is 6.72% for overnight funds and 7.21% for liquid funds, as per data from the Association of Mutual Funds in India. However, past performance may or may not be sustained in the future. Returns are not guaranteed and will fluctuate based on market conditions.

Choose how much and when to invest: You do not have to commit to a monthly investment amount through Savings+. This facility allows you to invest however much you like, whenever you wish to. So, if you have extra cash one month, you can invest more, or if you have more expenses, you can invest lesser. However, you are sent reminders once a month to encourage disciplined investing.

Instant redemption: Bajaj Finserv Overnight Fund and Bajaj Finserv Liquid Fund offer instant redemption of up to 90% of your funds, or Rs 50,000, whichever is lesser to retail investors. The balance amount, if redeemed, will take one business day to be released to your account.

About overnight funds and liquid funds

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

Both funds invest in high-quality papers, which mitigates credit risk - the possibility that the debtor may default on interest payments or principal repayment. Moreover, the short maturity of the underlying security mitigates interest rate risk. When interest rates rise, the prices of existing fixed-income securities typically fall, leading to a decrease in the funds net asset value (NAV) and potential losses for investors.

What types of investors can consider Savings+

Savings+ can be suitable for several types of investors, including:

Conservative investors: The relative stability of liquid and overnight funds can make them suitable for risk-averse investors who want minimal fluctuation in their investment value.

Beginner investors: Those who are new to mutual fund investing can use Savings+ as a starting point. Since investors don't have to commit to an investment amount or frequency, beginner investors can set aside a small amount of idle funds to assess the return potential and their comfort with investing.

Those seeking diversification: Aggressive investors who typically invest in high-risk and high-return potential equity schemes can enhance overall portfolio stability by investing in relatively low-risk avenues.

For building an emergency corpus: Savings+ can be useful for creating a rain-day reserve owing to its relative stability and high liquidity. Investors saving up for emergencies or short-term goals can also benefit from the higher return potential of investments made through Savings+ as compared to regular savings accounts.

Those who have idle money: Investors who have a lot of surplus funds in their account after meeting expenses and investments can consider parking this cash in Savings+ to potentially earn better returns than they would by leaving the money idle in their bank account.

Savings+ strategies

Here are some tips that can enhance your Savings+ investment journey:

Maintain investment discipline: Savings+ offers you the flexibility to invest the amount of your choosing and does not require you to commit to an investment schedule. However, to inculcate discipline and regular investments, try to adhere to a routine of setting aside a fixed amount every month as far as possible.

Invest more when you have extra: Top up your Savings+ investments when you have extra funds that you do not plan to spend or invest elsewhere.

Don't redeem money unless you need it: Though you can redeem funds whenever you need to, it is advisable to stay invested until you reach your goal. If you are using Savings+ to build an emergency corpus, redeem funds only for urgent and unexpected expenses.

Have a broader investment strategy: Savings+ can be a part of a diversified investment strategy that balances risk mitigation with wealth-building potential. Mutual funds investing in equities may be better suited for long investment horizons, as they offer higher return potential over time. Hybrid mutual funds, which invest in both debt and equity instruments, may be suitable for goals that are about five to seven years away. Thus, investors should identify suitable avenues for different goals.

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.