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10 Best Saving Plans to Consider

dateKnowledge Centre Team dateFebruary 04, 2021 views145 Views
7 Reasons to Buy a Savings Plan

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 Oriental Bank Of Commerce 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.

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Frequently Asked Questions

What is saving plan?

A savings plan is likely to be different for everyone depending on the financial goal, risk profile, returns, and investment horizon. If you are young and want to save for your retirement, ULIPs like Invest 4G or Titanium Plus plan would be the best option. You are likely to create a large corpus by your retirement through market-linked returns if you invest in this savings plan. If capital protection is your aim, then traditional insurance plans such as Guaranteed Money Saving Plan should be suitable for you.

Who should invest in a Savings Plan?

If you are looking for a guaranteed income plan, then saving plans should be on your list of investments that you are planning to make. Savings plan require you to invest a pre-decided amount on a regular basis. People with a regular stream of income who require a lump-sum amount after a period should opt for a savings plan. Working professionals, self-employed people and businessmen should consider a savings plan to meet their long-term financial obligations. Saving plans are also ideal for people who are risk-averse and want to accumulate funds through relatively safer mediums. These saving plans inculcate financial discipline in policyholders which make them crucial for every portfolio.

How much money should you put in savings each month?

The amount that should be invested in a savings plan each month depends on the income, existing financial obligations and the long-term financial goal. If you have a steady income, you should save at least 20% of your monthly income. It is not necessary to invest your entire money into a savings scheme as investments should be diversified. Ideally, you should aim to have a financial buffer of over 10 times of your annual income. Choose an income plan based on your financial circumstances to stay afloat.

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What is the difference between saving and investing?

Saving is the money that you keep aside for emergencies or for buying any big-ticket item. Investing means growing or multiplying the wealth that you have by buying savings plan, or any other assets. Buying a savings plan will help you in achieving your investment goals such as retirement, your child’s higher education or marriage, or for buying a new house.

Which savings plan is best for retirement?

The Invest 4G plan with its multiple investment options and various portfolio management strategies for capital protection is an ideal saving plan for retirement. Also, Guaranteed Income4Life is also another savings plan that you can consider for building your retirement corpus as it acts as a guaranteed income plan that will provide you maturity benefits to manage your post-retirement expenses.

Which savings plan is best for long-term goals?

Smart Goals Plan is a savings plan with its unique features such as modification of the sum assured partial withdrawal and fund switch can help you plan for your long-term financial goals. Canara HSBC Oriental Bank of Commerce Life Insurance offers a wide variety of saving plans that you can invest in as per your risk appetite and investment goal.

Which savings plan is suitable for girl child?

The Future Smart unit-linked plan from Canara HSBC Oriental Bank of Commerce Life Insurance is the ideal savings plan for the girl child. Monthly Income Advantage Plans are also a good option if you are planning to invest in a savings plan for your girl child.

Where should I invest my money?

You should spread your investments across financial instruments. However, having the best savings cum guaranteed income plan in your portfolio is extremely important. Savings plan ensures financial stability and also helps in fulfilling short, medium and long-term monetary goals.

What is a monthly income advantage plan?

A monthly income advantage plan ensures that you lead a stress-free life with your loved ones as it provides a life cover along with giving you guaranteed monthly income. In short, it is a life insurance and income plan that will financially secure commitments made to your loved ones. Canara HSBC Oriental Bank of Commerce Life Insurance Guaranteed Income Advantage Plan is a monthly income advantage plan that provides life cover for the entire term while you pay premium only for a limited period.

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What is a good age to start saving money?

When you plan to invest in a financial product, it always pays well to start early. The earlier you start saving and investing, the better. When you start investing early, the capital gets adequate time multiply. Even a small amount invested for a long time can give substantial returns due to compounding in a savings plan. Invest in an income plan as early as possible to build a significant corpus that will later help you in life. Ensure that you buy the best saving plan in India that can be aligned with your investment goals.

Should you use a savings plan for retirement planning?

Yes. Retirement planning is one of the most important financial decisions of our lives. The best saving plan offers a host of features that may help you build your retirement corpus. Some of the saving plans like Guaranteed Income4Life offer guaranteed returns at policy maturity. Such returns can act as a regular income stream even after your retirement to help you stay financially stable.

Are saving plans beneficial for managing unexpected expenses?

Yes. Best saving plans in India offer partial withdrawal system that can be utilized during your rainy days. Being financially prepared to tackle such odds will help you manage any unforeseen expenses in a smooth manner. Buy a monthly income advantage plan that will generate a steady source of income for you to take care of both long-term and short-term financial goals.

How to save tax by using savings plan?

Saving plans are known for helping us achieve our financial goals. Best saving plans allow you to grow your wealth while providing life cover. Saving and investment plans are also beneficial for tax planning. Premiums of savings cum protection plans come with tax benefit under Section 80C of the Income Tax Act. Moreover, proceeds received upon the death of the policyholder or upon the maturity of the policy are tax free under Section 10 10(D).

What is the right age to start saving money?

When you plan to invest in an income plan, it always pays well to start early. The earlier you start investing in a savings plan, the better. When you start investing early, the appreciation in capital is significant. Even a small amount invested in the best saving scheme for a long time can give substantial returns due to compounding. Buy the best savings plan as soon as you start earning to achieve all your milestones on time.

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How a savings plan can help in building your child’s education fund?

Saving plans help in building wealth over time against the investments that you make. Buy the best savings plan to build an education fund for your child. The best saving plan for kids offered by Canara HSBC Oriental Bank of Commerce Life Insurance eases the stress of planning your child's future by providing a lump-sum payout on the investment. Consider investing in a monthly income advantage plan to assist you in fulfilling your financial goals.

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How Savings Plans by Canara HSBC Oriental Bank of Commerce Life Insurance can help you?

Every person has a unique reason to save and invest. With ULIP savings schemes, the company caters to people seeking wealth creation through capital appreciation. Contrarily, the traditional plans can help you save for important life goals without worrying about the fluctuation in fund value. All major savings plan offers partial withdrawal facility that can help you take care of unplanned contingencies. With savings plans from Canara HSBC Oriental Bank of Commerce Life Insurance, you get adequate flexibility while investing and receiving the savings benefits, which makes them a good investment choice for investors looking for income plans.

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