Humans have been inbuilt with the need to save money for a rainy day for a long time. This stems from either a cultural phenomenon or a biological one. We like to save money because it helps us work towards a future goal, motivating a person to reach their dreams which could be a top position or buy something important.
We have been raised in a household where our parents started saving money for us from the time we were born. This would later go towards college fees or having an extravagant wedding. According to India's national savings rate, the country has maintained a high 19.68% GDP rate. However, based on previous years, the net savings rate and the country's gross savings rate have declined by about 7% and 12%.
The idea of saving money for the long run gives a person room to decide what they want to do in their future lives. That is why it is best to own a good savings plan that will be beneficial and help increase the payout at the end of the day. There are a few factors that one must always consider before choosing a plan that is best suited for them. Given below are a few options made available to choose from as a good saving investment plan:
Present Saving Investment Plans
- Real Estate – This can be seen as one of the easiest methods for a saving investment plan. With all things to consider, one should never put the house that they are currently living in as an investment. However, those do not mean that this is impossible. In the long run, owning a second property can be seen as a wise decision as this can be your investment. Owning a real estate property depends on one major factor.
Your property's location will help decide how valuable your property is and how much rent you can earn. Real estate works in such a way that it is liquid. This means that unless you are ready to sell the property, its value will not be seen in monetary factors.
- Equity Mutual Funds – For those looking to invest in this scheme, they will mostly deal with equity stocks. At the moment, based on SEBI (Securities and Exchange Board of India) mutual fund regulation, 65% of equity assets or any equity-related instruments must be invested by an equity mutual fund scheme. Unlike the others, this fund can be managed either actively or passively, based on each person's opinion.
In an active fund, the returns are generated mainly based on the abilities of the fund manager. The better they are, the more returns come in; on the other hand, passively managed funds work based on tracking the underlying index to gain returns.
- Senior Citizen Saving Scheme – As part of the saving-investment plan, SCSS is a plan funded by the Government of India as a savings option for residents of the country over the age of 60. From the day an account is opened, and once the initial deposit has been made in a bank, it takes five years to grow and mature. However, this can only be extended once for another three years.
From April till June 2020, the Senior Citizen Savings Scheme had an interest rate set at 7.4%. This was then considered the highest interest rate among the many small savings schemes within the country. To make matters even easier, this scheme is available to private and public banks and India Post Offices.
- National Pension System – As a good saving investment plan for the senior citizens, this system is a pension plan and an investment plan created by the Government of India to help assist and provide for the senior folks after they have retired. It provides a well-compensated, long term savings plan that helps a person navigate and decide upon what they want to do after retirement via a properly regulated return that is market-based.
This national pension system is overseen by the PFRDA (Pension Fund Regulatory and Development Authority). However, at the moment, the NPST (National Pension System Trust) was created by the PFRDA to be the registered owner that oversees all assets that are under NPS.
- Direct Equity Investing – If a person is interested in long-term growth, direct equity investing is the way to go. As a form of saving investment plan, when a person buys stocks belonging to a company, they become part owners of that company. This way, they also gain a share of any profits that are made by the company. Individuals that like to invest prefer equity apart from overcoming inflation; none of the other investment options have such a long term high growth.
Though there can be risks, it all boils down to choosing the right company that offers good growth opportunities. As this is mainly meant for the long run, a person will begin to see a growth in their savings within a minimum of seven years.
- Public Provident Fund – This is one of the recently popular saving investment plans because it has many benefits and investor-friendly features. This was created to benefit individuals who are looking to gain high steady and stable returns with low risk. As the Government of India has mandated this plan, it is enforced with a sure-fire return strategy to help ensure that the people's financial needs are protected and received.
This fund has a lock-in period of 15 years before which funds cannot be completely withdrawn to ensure a safety net is in place. However, if required, an individual can decide to extend this tenure period five years after the initial lock-in.
- Debt Mutual Funds – In simple terms, a mutual debt fund is a type of savings investment plan that relies on individuals investing their salaries to make a handsome profit from the major market. This investment plan offers low risks. This is mainly because the debt market facilitates carefully constructed instruments to help with the buying and selling loans in exchange for interest.
This is perfect for a person looking for a steady return though it may be low compared to equity funds. As they are less volatile, debt funds generally invest in securities that build fixed interests like commercial paper, treasury bills, corporate bonds, government securities, and many more.
- Pradhan Mantri Vaya Vandana Yojana – This is another saving investment plan for the senior citizens 60 years and above. The Government of India launched the plan to serve as a pension scheme and an investment opportunity. During the initial planning, the scheme was created to run for three years, from 4th May 2017 to 31st March 2020.
However, based on how well-received, the scheme has been extended for another three years until 31st March 2023. For the year 2020-21, and to help benefit the users, the scheme provides a starting return at 7.40% per annum. This will then be reset every year.
- Bank Fixed Deposit – In India, this is considered one of the safest methods of saving investment plans compared to equity and mutual funds. According to the rules of the DICGC (Deposit Insurance and Credit Guarantee Corporation), each individual who has decided to deposit in a bank will be insured to a maximum amount of Rs. 5 lakhs. This was put into effect from 4th February 2020 and was available to both the principal and interest amount.
However, before this, the insured amount was placed at a maximum of Rs. 1 lakh for the interest and the principal amount. To further help the people, schemes that provide monthly, quarterly, half-yearly, and so on interest options were made available.
- Defensive Investment – Unlike the others, this saving investment plan makes returns that increase or maintain that level. This is dependent on financial issues like bear markets, high inflation, black swans, recessions, and many more. Some examples of this are gold, treasury bonds, defensive stocks, and money market funds. Though this can be considered a bit risky, it all depends on the type of defensive investment chosen.
A defensive investment that is perfect against high inflation may not be so for recession. In this case, stocks that tend to do well regardless of how the market falls can also be considered a defensive investment.
To Round It Up
Choosing a good saving investment plan will benefit you in the long run and your family and later on their family. Though there are many options available in the market, it is best to do extensive research to decide which of the various plans is perfect for you. Talk to folks who have already gotten a saving investment plan and then weigh the pros and cons. If you are still undecided, then you can always get professional assistance.
Canara HSBC Life Insurance is one of the top companies in the country that provides you with a choice of saving investment plans. As a globally recognized brand, they have created a strong presence for themselves in the market. Contact them today to speak to their experts for the perfect saving investment plan for you.