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13 Factors to consider while buying a monthly investment plan

dateKnowledge Centre Team dateFebruary 18, 2021 views183 Views
14 Factors to consider while buying a monthly investment plan

As expenses increases with the quality of living, the rising demand for dependable saving plans is inevitable. With a variety of savings and investment plans, it's natural to feel confused. At Canara HSBC Oriental Bank of Commerce Life Insurance, you can choose from a wide range of monthly investment plans. You must buy the best savings plan as it is important for your long term as well as short term financial goals. However, there are certain factors that you must consider to find the best saving and investment plan to align with your risk appetite.

13 factors that affect your choice of saving plans

Investing monthly in suitable saving plans is beneficial in the long run. Doing so will give you a financial safety net in the future while making you financially disciplined. As mentioned before, choices are plenty when it comes to saving plans, but your choice should depend on certain criteria. Given below are some of the important factors to consider while opting for a monthly saving plan.

1. Set your goals

Before even looking at your options, you should make a credible list of your short-term financial goals. Keeping a list will make your goals more clearly defined, and that will help you to choose a monthly saving and investment plan with more clarity. Ask yourself these questions,

1) Why are you investing, and for what?
2) What kind of risks can you take?

Take your time to answer these questions and use them to set your goals. Your goals will then help you to choose a savings plan best suitable for your needs.

2. Find a balance between risk and reward

For this, ask yourselves the question, what kind of risks can you take? You have to answer honestly, and the answer should cover every aspect of the reasons behind your investment venture. While answering, make sure to point down the risks and the rewards, the pros, and cons. Look at the results and weigh the pros and cons.

The investment won't be manageable if the risks are too high, and you have to sacrifice product quality to keep the rewards high. This is why you should balance the two while searching for the best savings plan.

Create an idea or choose a life insurance plan where risks and rewards exist in harmony and then invest in a savings plan that benefits from and keeps the harmony.

3. Liquidity

Liquidity refers to the ease with each asset, or security can be converted into ready cash without affecting its market price. In simple words, liquidity describes the degree to which an asset can be quickly bought or sold in the market at a price reflecting its intrinsic value.

As we know, cash is considered the most liquid of assets because it can quickly and easily be converted into other assets. That is why your saving schemes should have adequate liquidity to satisfy your needs. You need to make sure that the investment plan will provide funds in an emergency. Therefore, consider your liquidity requirement if you want to choose the best savings plan.

4. Understand the tax reductions offered

When you invest in saving plan, consider the tax benefit offered by the plan. Various policies like life insurance and health insurance offer a tax benefit. Investing in such products would help you when you're in need of funds or when you need financial assistance in the event of a medical emergency. Even saving plans offer tax benefits under Section 80C of the Income Tax Act.

Discuss with your investor and find out, in detail, about the products and the benefits you get from a plan. Choose a saving plan with the best benefit and which would cater to your needs.

5. Check out the history

As stated above, discuss with your investor about the different types of monthly investment plans available for you. Also, check and review the life insurance company to find out their credibility and reliability.

Do the research on your own; ask friends, family, relatives about the preferred plan, get advice. You should also find out the history and customer reviews of all the saving plans available. Compare the plans with each other; a comparison will tell you how strong or weak a particular monthly investment plan is.

Choose the saving and investment plan that the majority of customers preferred and with the most number of good reviews. Don't downgrade yourself into choosing the less preferred option; choose saving plans with the most benefits.

6. Check the features of the savings plan

Your monthly investment plan should not be restricted. It should not be restricted to having only one investment product.

Discuss and ask for a saving plan with the maximum number of investment products. You will have to diversify the investment plan to reduce the risk associated with the same. Check out customer reviews, ask for advice, compare the saving plans and choose the one with the investment products that you think will be beneficial. Consider all the available options, which serve your purpose and diversify the plan along with your investment portfolio.

7. The plan should suit your current lifestyle

With the rise in the price of commodities, livelihood is becoming expensive. Without a best savings plan, you could easily find yourself in situations where you have availed for loans.

Take your livelihood, your lifestyle, and your monthly income into account while searching for the best savings plan. Make sure whatever amount you invest in is the minimum requirement in your household. As usual, don't be afraid to ask for advice. Have a tracker about how much monthly expense you have and how can you reduce it to invest in a monthly investment plan. Choose a saving plan that takes into account your livelihood.

8. Performance of the saving plan

Review your investment portfolio as frequently as possible. Make sure you are up to date on all changes that affected your plan.

Discuss with your investor to check if the changes are beneficial to you or not. Check out the history and the customer reviews of the same. Make sure to ask the right questions. Once you make an investment, it's important to be updated on it every day, if necessary. Review your investment portfolio and take necessary actions to maximize your profit.

9. Create and maintain an emergency fund

Most smart investors put enough money in emergency saving schemes to cover an emergency like sudden unemployment. Make sure you have saved up your income for a particular amount of time so that you won't be caught in an uncomfortable situation.

10. Pay off high-interest credit card debt

If you have any ongoing debts, for example, credit cards, or any other loans – pay them off as soon as possible. Because they are high-interest debts and the more time you take to pay them, the more interest you have to pay.

11. Take advantage of "free money" from the employer

In most employer-sponsored retirement plans, the employer will match most of what you contribute. If your employer provides a retirement plan and you don't add anything from your end to get your employer's maximum match, you are passing up "free money" for your retirement savings.

12. Avoid circumstances that can lead to fraud

These days scams are more prevalent, and people often fall for such traps. Scammers use highly publicized news to lure people into making a bad investment by making their offer sound legit.

However, asking the right questions can prevent you from falling for it. If you are considering saving plans from a non-banking entity, it is best to do some research on finding the best saving plan and the provider.

13. Terms and conditions

Ask all the necessary questions regarding the terms and conditions of your savings plan. If you have any questions or doubts, you can either directly ask the life insurance company or you can discuss with your financial advisor.

Saving and investment plans can be complicated as there are various terms and conditions associated with them. Therefore, buy the best savings plan only when you're satisfied that it will meet your needs and demands. Clear all your doubts before you put your money into it.

Make sure you have goals and ambitions straightened out. Do ample research about the topic and learn everything you can about the saving plans you have been offered. Choose a savings plan that is well suited to your needs, ambitions, livelihood, and future. Keep these factors in check and choose wisely.

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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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