There are various instruments in the market that help your investments grow. Every instrument has its own advantages and disadvantages. Among them equities and Systematic Deposit Plan (SDP) are the two popular investments that are being talked about and discussed extensively among the investors. Today, we will compare these two instruments to find the better wealth generating prospect between them. 

Investment method 

In equities, you buy some shares at a particular value and wait for their value to increase. Their return rate depends on how well the shares of a particular company perform in a particular period. 

Systematic Deposit Plan from Bajaj Finance allows you to make monthly deposits starting from Rs. 5000 every month and the number of deposits can range from 6 to 48 depending upon your choice of variant and convenience. The tenor for each deposit can be up to 60 months. 

SDP has two variants viz. single maturity scheme and Monthly Maturity Scheme. The former allows you to withdraw all the maturity proceeds on the same date. It means that each successive deposit will be locked-in for one month less than the previous deposit. 

Monthly Maturity Scheme locks-in all your deposits for the same tenor allowing you to earn maturity proceeds successively as they mature one after another. Therefore, you can see that SDP is much more flexible and convenient when it comes to method of investment. 

Returns 

In case of Systematic Deposit  Plan, your deposits grow at a fixed rate throughout the tenor as per the rate of interest prevailing on the deposit date. Therefore, you know how much a deposit will earn in advance. An SDP calculator helps you to calculate the returns accurately before investing is also provided on the website of Bajaj Finance. 

On the other hand, the prices of stocks in equities fluctuate constantly making it almost impossible for you to predict your returns. 

Influence of Market 

Influence of the market on an instrument determines its returns. If the market forces are in favor then market-linked instruments like equities perform well and help you gain good returns. However, as the market forces are dependent on various factors like economy, inflation, government policies, etc. you will have to keep your chin up in case your investments take a beating. 

On the other hand, SDP (Systematic Deposit Plan) offered by Bajaj Finance is a deposit plan that lets you earn good returns by investing a fixed amount every month. It has received high ratings on being a stable and secure instrument and there is no influence of market forces on your returns.

Liquidity 

Equities allow you to sell your stocks whenever you want and the conversion of stocks into money is also quite quick these days. However, in the event of a financial crisis, you may have to sell them at a much less price if they are not performing well in that particular period. 

SDP allows you to withdraw one or more than one deposit prematurely given that the deposit has completed at least 3 months from the deposit date. Also, you don’t have to withdraw your deposits early as you can also avail a loan against your deposits. This means that SDP provides better options than equity when it comes to early withdrawals. 

You have seen the direct comparison of these two instruments on the basis of the above mentioned factors. Therefore, it is your choice to select the option that is convenient according to your financial requirements and goals. However, you must always invest some of your funds in stable instruments like SDP as it provides fixed returns and proves to be a reliable cushion to hedge your portfolio during an emergency.

If you want to know what is investment then you can check the instruments like equity and SDP as they are entirely different and come with different features as well. The returns of equities is dependent on market forces whereas SDP provides fixed returns. Also, SDP is better when it comes to flexibility in terms of investment and liquidity. It also allows you to pick a tenor and number of deposits as per your convenience.

Overall, it allows you to grow your deposits at a good rate by investing a fixed amount each month. You can certainly allocate some of your funds to SDP as it is a stable and secure instrument as per the high credit ratings conferred by credit rating agencies like CRISIL and ICRA.