A good saving strategy is a stepping-stone to financial stability, especially in the long run. When it comes to envisioning savings and relevant policies, you must consider setting aside a certain portion of your earnings on a monthly, quarterly, or yearly basis. Although there isn’t a fixed bar of how much you should save, it is necessary to go about the same by keeping both short and long-term goals in mind.
Why Choose a Savings Plan to Fulfill Life Goals?
Before discussing different savings plans and zero in on the best option considering your financial stead, it is necessary to gauge the importance and benefits of the same. A good savings plan usually offers considerable returns, which ensures financial growth in due course. Besides, a savings plan also prepares you for financial emergencies, similar to what most of us experienced in the post-pandemic era.
To sum it up, a savings plan works like a financial discourse, allowing you to save a certain portion of your earnings, only to get back the same at a later point in time, albeit with additional perks.
Types Of Savings Plans And How Each Can Benefit
There are many savings plan that you can consider based on preferences, inclination, and goals. For instance, if you are into short-term gains and not looking to go beyond the 5-year tenure, Fixed Deposits, ‘Equity Linked’ Savings Scheme or ELSS, and SIPs are advisable.
Besides, you can also opt for NPS to strengthen your retirement corpus, understand what is ULIP and invest in it to get dual benefits of debt and equity-centric funds, or choose income & savings plans to plan for a steady income source. Regardless of the plan you choose, there are quite a few benefits to account for, especially in the long-run:
1. Financial Discipline
Every savings plan helps inculcate financial discipline, thereby urging you to set aside a fixed sum of money periodically. Be it life insurance policies, ULIPs, NPS, PPF, or more, you are advised to follow a monthly premium payment plan to manage your resources better.
2. Regular Income
As a salaried individual, you might be interested in a savings plan that can help you get a fixed monthly income later in life. The likes of Post Office MIS, Fixed Deposits, government bonds, SCSS, and Monthly Income plans are some of the best savings plans to consider if monthly remittance is what you seek.
Besides, you can reinvest the sizable corpus after the savings plan matures and opt for the monthly income flexibility to have a fixed income source to rely on post-retirement.
3. Life Cover
A savings plan for life cover might sound contradictory, but it’s very much possible with the likes of ULIPs and Income plans. While you can select the best savings plan as per your requirements, these schemes also insure your life in the best possible way. With savings & incomeplans return quite a significant corpus at maturity, ULIPs are slightly more flexible in this regard.
As ULIP comes with a floating fund performance scheme, the insurers’ interest rates may vary. If you are into the world of investments for long-term profits while taking moderate risks, a ULIP is a much better option to consider. A life Insurance Policy is more popular, reliable, and often comes with longer tenure.
4. Guaranteed Tax Savings
Almost every savings plan comes with tax benefits regardless of the types of taxes in play. This means both the premium and interest earned are tax-free, depending on the concerned insurer’s declarations.
However, not every savings plan is tax-free, both for investment and interest. For instance, tax-saving FDs allow you to get benefits under 80C of the ‘Income Tax Act’ but only on the principal. The earned interest is still taxable as per the existing rates.
On the other hand, ULIPs are tax-free both at the source and origin. Therefore, if tax savings is your priority, you need to check the declarations carefully before persisting with a savings plan of choice.
5. Add-Ons and Riders
A typical savings plan might not allow you to pair along with riders, but you can achieve the same for the life insurance policies. In case you have invested in a life insurance policy as a part of your retirement portfolio, it allows you to add critical illness, accidental death, and other riders for making sustenance easier for your family members in case of a mishap.
Choosing an effective savings plan is the need of the hour, considering the lingering financial threats. However, you need to research extensively and select the plan in sync with your financial goals to procure long-term benefits.