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Why should you ladder your investments to beat low FD rates?

As a preferred investment option for most customers, there is a lot to like in fixed deposit, which offers ease of investment, attractive returns, and luxury of high liquidity.

November 27, 2020 / 11:35 AM IST

For the past few years, the investment world seemed set in its ways, but the occasional repo rate cuts came along to upend this notion. This year however, repeated rate cuts have brought down repo rates to an all-time low, thereby driving banks and financial institutions to make several cuts to fixed deposit interest rates. As a preferred investment option for most customers, there is a lot to like in fixed deposit, which offers ease of investment, attractive returns, and luxury of high liquidity. For risk-averse investors, you really couldn’t ask for more.

Since the beginning of this year, markets have seen unprecedented fluctuations in fixed deposit interest rates. These sudden variations in rates have left many investors in a quandary about whether to reinvest their funds or perhaps consider alternative investment avenues. However, with unfavorable market trends and a struggling economy, determining a low-risk, high-yield investment instrument is like finding a needle in a haystack.

However, laddering your investments is a simple strategy that ensures favorable returns amidst low fixed deposit rates.

What is Laddering?

Instead of investing in a single FD scheme for five years, let us assume you invest Rs. 5,00,000 in 5 different Bajaj Finance online FD schemes, as the institution offers some of the highest FD rates in India. Each one of the fixed deposit plans should have a different maturity date spread out with equal intervals between each FD scheme. Let’s take a look at the following example.

FD AmountTenureInterest RateInterest PayoutMaturity Amount
Rs. 1,00,0001 year6.35%Rs. 6350Rs. 1,06,350
Rs. 1,00,0002 years6.55%Rs. 13,529Rs. 1,13,529
Rs. 1,00,0003 years6.85%Rs. 21,990Rs. 1,21,990
Rs. 1,00,0004 years6.85%Rs. 30,346Rs. 1,30,346
Rs. 1,00,0005 years6.85%Rs. 39,275 Rs. 1,39,275

You can reinvest the amount received on maturity of each deposit, which creates a re-investment cycle or an investment loop. This will ensure you remain invested in the long run, as a result you will enjoy the high interest rates prevalent at the time. Additionally, each of the five fixed deposit plans can have completely different parameters based on your preference.

Bajaj Finance FD is one of the safest investment avenues offering lucrative returns and easy investment facilities. Here’s a look at some of the best benefits of choosing to ladder your deposits with Bajaj Finance Fixed Deposit.

  • ● Highest interest rates when compared to banks and other NBFCs

Even in the present low interest rate regime, Bajaj Finance offers one of the best FD rates, in comparison with other banks and NBFCs.

Let's look at a comparison between interest rates offered by Bajaj Finance Limited and other banks and NBFCs.

Financial InstitutionFD Tenure/ Interest RateMaturity Amount Under Laddering*

Other NBFCs (average)

1 yr5 yrs
4.90%5.35%Rs. 558,785
Bank (average)4.90%5.80%Rs. 568,258
Bajaj Finance Limited6.35%6.85%Rs. 611,490
*Note: Principle amount Rs. 500,000 calculated over tenure from 1 to 5 years.


  • ● Mitigate risk of fluctuating interest rates with ease

Laddering your deposits requires ease of investment processes, along with the ability to manage all your deposits in 1 place. This is where investing in a Bajaj Finance FD can be a rewarding experience, as you can invest easily with an end-to-end paperless online process. You can also track and manage your deposits easily through Experia app.


  • ● Diversify your investments in the safest Fixed Deposit

With the highest safety ratings of FAAA by CRISIL and MAAA by ICRA, Bajaj Finance is one of the safest investment option for you to diversify your investments. There is no safer way to reap the benefits of fluctuating interest rates, than investing in this FD.

  • ● Plan your investments with Bajaj Finance FD Calculator

Bajaj Finance Fixed Deposit Calculator is one of the best ways to determine the returns you can gain, on your deposit. All you need to do, is enter your intended investment details, and you can find out the payout amount and maturity date, before you invest.

  • • Monthly savings with Systematic Deposit Plan (SDP)

Another great laddering strategy is to invest in Systematic Deposit Plan (SDP) by Bajaj Finance Limited, where you can save on a monthly basis with contributions starting Rs. 5000 each month. The strategy for laddering your investments with SDP largely remains the same, but because you have the option to save monthly, this gives you far more flexibility in re-structuring your investments when interest rates are higher.