Need for an Investment Plan
Regardless of a person’s age, it is important to have an investment plan, which enables one to prepare for what may happen in the future. A report by Aegon Center for Longevity and Retirement found that among 15 countries surveyed across the Americas, Europe, Australia and Asia, Indians are more prepared for retirement, with India scoring more than 7.3 on the Aegon Retirement Readiness Index (ARRI), when compared to the global average of 5.9. Furthermore, it was also reported that around 55 percent of the working class in India are preparing for retirement by saving regularly, when compared to 39 percent globally. The report also mentioned that while around 26 percent Indians save occasionally, 9 percent of the working class intends to start saving in the future.
Having a good savings plan is crucial for securing a healthy financial life. Furthermore, a savings plan needn’t be difficult. One has to just be committed to the cause to secure their future. All of us want to accumulate wealth to protect ourselves and our family members, and ensure a comfortable life, and one of the popular ways to build wealth is through investments. Apart from that, the government, banks and other financial institutions offer various saving schemes, in order to encourage customers to invest, and earn higher returns. Here are some of the most popular savings plans, and how much money you would need to begin your investment journey.
Popular Savings Plans
- Personal Provident Fund (PPF): One of the most popular and risk-averse investment options in the country is the personal provident fund. One can open a PPF account either at a post office or a bank, and the money is invested for 15 years, which can then be extended further by 5 years. The minimum annual investment to open a PPF account is Rs. 500, while the maximum annual investment is Rs. 1,50,000. PPFs also have a lock-in period of 5 years, and can earn a compound interest at 7.10 percent per annum.
- National Saving Certificate (NSC): Similar to the personal provident fund, the national saving certificate (NSC) is a government-backed savings plan that offers guaranteed returns, along with tax savings up to Rs. 1,50,000 under section 80C of the Act. However, the interest earned on the national saving certificate is taxable. The interest rates do not change during its tenure once the investment is made. The minimum investment amount is Rs. 500, while there isn’t a cap on the maximum limit. At present, NSC offers an interest rate of 7.9 percent.
- Recurring Deposit (RD): RDs are term deposits offered by banks, and are ideal for customers who can deposit amounts regularly, and expect huge returns at the time of maturity. Furthermore, customers can opt for the term period that fits their investment horizon, along with the amount they plan to deposit every month. The minimum amount to start a recurring deposit in a bank is Rs. 500, while the minimum amount to start an RD in a post office is just Rs. 10. While the interest earned on bank recurring deposits differ from one bank to the other and also according to the market volatility, post office RDs have a fixed ROI, and the interest is compounded every quarter.
While the above mentioned savings plans are risk-averse and are ideal for customers that are just starting their investment journey, and have a low-risk appetite, other investment instruments such as ULIPs are widely popular. ULIPs provide customers with an insurance cover, along with the option to invest in debt or equity, according to their preference. Popular savings plans offered by Canara HSBC Oriental Bank of Commerce Life Insurance are listed below:
- Invest 4G Plan: The Invest 4G Plan from Canara HSBC Oriental Bank of Commerce Life Insurance gives customers the option to choose a life insurance cover, along with the opportunity to save a corpus to meet their life goals and expectations. Furthermore, benefits such as Loyalty Additions & Wealth Boosters add to the customer’s savings. The feature of returning the mortality charges upon the policy’s maturity also allows one to maximize one’s savings.
- Guaranteed Savings Plan: Important life goals like your child’s education, their marriage, or the financial security of your loved ones cannot be left to fate. The Guaranteed Savings Plan offers guaranteed benefits payable on maturity, provided all due premiums have been paid. You can customize your savings horizon to your important financial goals, in addition to Tax Benefits under Section 80C and Section 10(10D), as per the Income Tax Act.
Savings plans are inevitable for a secure future and offer an opportunity to grow your wealth and accumulate it for use in the future. Before you invest in a savings plan, it is advised that you conduct thorough research, making informed saving decisions. It is important that you invest in a systematic way to ensure that you achieve your short-term and long-term life goals. Different plans offered by Canara HSBC OBC Life Insurance can offer different features that help you meet your specific financial need by making investments as per your suitability and risk appetite.