5 Benefits of Savings Plan That You Can’t Miss
Last updated on September 16th, 2022 at 10:06 am
We have grown up hearing that we can buy anything we want once we save a significant amount. It is probably the first financial habit we inculcate through piggy banks or coin collection. This important lesson has now become a crucial part of our life goals.
Saving plans are an effective way to invest, save, and accumulate wealth for unforeseen situations. They provide financial security and life coverage during crises.
Investing in the flexible and best saving plans in India can cater to our specific requirements. Moreover, it motivates us to meet our short and long-term financial goals at every stage of our life.
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As you take the first steps towards choosing the right savings plan, here are its major benefits that you must know:
When you choose the best savings schemes, you get assured returns. The plans guarantee the minimum amount upon maturity as defined in terms and policy. Hence, enabling you to establish your financial goals and paving the way to attain them.
As you know that you will get a specific amount at the end of prolonged terms, all you need to care about is completing the investment tenure. Also, in case of your untimely demise due to unfortunate circumstances, your family will receive the money as the plan provides life cover.
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Tax savings is a key feature of these plans that are applicable in the following conditions:
- Under section 80C, the investment amount is deducted from the total taxable income.
- You can invest money without giving up on the tax-free status of the maturity amount.
- Seek tax-free death benefits/maturity value.
Insurance companies offering plans with guaranteed returns provide the above-mentioned tax-exemption status, thus adding to the benefits of savings plans.
So, you can choose any of the plans to meet your financial targets and the value you earn could be tax-free. However, the only condition is that your annual investment amount should not exceed 10% of your life cover plan.
Moreover, you can invest a maximum of ₹ 5 lakhs in a financial year and if it exceeds the given amount, the maturity value will be taxable.
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We emphasize the importance of savings plans as they provide security in case of any financial emergency or crisis. The savings work as an insurance plan, providing financial coverage to the nominee in case the policyholder is no more.
You can choose features that you want and seek benefits other than the payout. Therefore, ensuring that your family has much-needed financial support. Moreover, it can pay for your huge medical bills so you or your family don’t have to face debt.
It takes away financial stress during emergencies by offering instant help.
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Given the frequent and uncertain market fluctuations, investment schemes are prone to risks of capital loss. However, investing your money in saving plans mitigates such risks as most of them consider inflation rates before defining terms and policy.
You are not only assured of secured capital upon maturity but can also seek benefits of added maturity at the end. This adds value to the capital you invest.
Several Investment Options
You can find a plethora of savings plan options, from shares that involve a huge risk to government securities that are comparatively safer.
The best investment schemes come with flexibility so you can use your money conveniently. Moreover, based on your goals, you can invest in multiple financial instruments at different times.
With an increase in your income level, you can invest a larger sum and seek higher returns.
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Choosing The Right Saving Plan
There is a slew of investment savings options available in the market, and choosing the best savings plans can be overwhelming. Every scheme has pros and cons, and you need to be meticulous with your decision to avoid investing in the wrong plan.
These points will help you choose the right scheme.
- Set your financial and savings goals.
- Be clear about your short-term and long-term goals
- Decide on the degree of risks that you can afford
- Calculate the amount you are expecting to earn
- Do your research about different savings plans and educate yourself
- Find out the unique features, terms & conditions, flexibility, and interest rates of each plan
- Zero in on the right one based on all the crucial aspects.
Savings abide by one rule, the sooner you start, the more you gain. Your financial discipline and habits are most important and then comes the size of your investment. So, if you are planning to kick-start your investment journey, then now is the right time.
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Naina Rajgopalan has a thing for numbers and a deep fascination to learn about all things finance. She’s been money-wise from a young age and has always shared her knowledge and tips with those around her. Being a part of the content team at Freo Save, a neobank that offers a 7% interest rate on savings along with benefits such as insurance on balance, safe & secure banking, and so on, Naina stays updated with the latest on what happens in the banking and fintech industries. She has taken it upon herself to share her knowledge with readers across all walks of life to help them manage their finances and budgets better, so they can make better decisions while spending, borrowing, investing and saving.
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