Are Saving Plans a Good Investment Choice for you?

2021-05-11

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The definition of Saving has evolved over the years from “putting aside” some money to “investing” the money so that it works hard and grows over time. The objective of saving has also changed because the fast-growing, increasingly educated Indian society is more aspirational than ever. It is natural to dream of a periodic vacation, offer the best possible education to children and lead a comfortable life before and after retirement.

When you have a family, you will also think of ensuring a steady income or some sizeable contingency fund to take care of your family if you are not around.

Saving Plans as an Investment Avenue

There are several investment options available across asset classes such as Gold, Real Estate, Fixed Deposits, Bonds, and so on. It is tempting to stay invested in one of them or all of them basis current market trends. However, the best savings plans, and the best saving schemes focus on financial goals and invest in assets that can match to achieve these goals.

Some of these objectives could be:

Liquidity

Are withdrawals (turning to cash) possible in case of emergency?
Does the value of asset changes very quickly and frequently (volatile)?

Movable and immovable assets such as Gold and Real Estate are highly illiquid and volatile. Selling off physical gold could be challenging, and real estate sale depends on buyer availability, market dynamics, etc.

While equity stocks could be easily turned to cash but suffer from frequent and significant changes in their value.

Taxation

You may want to look at options that offer you tax benefits when you invest or withdraw the amount.

Deduction of the invested amount
Exemption on withdrawals
Long-Term Capital Gains (LTCG) on maturity value or withdrawals

Learn what is long-term capital gain and how it works in India.

More tax-efficient investments will save your wealth from erosion due to taxes.

Protect Your Goal from the Unforeseen

The policy also offers some valuable additional features under the premium protection option. Premium protection will financially secure the goal in case of your death or disability within the policy tenure. Among other things:

The future premiums are waived off in case of untimely demise or permanent disability.
In case of untimely demise, the family will receive the sum assured immediately
The child will receive the fund value at the time of maturity-either in regular income streams or as a lump sum

Risk-Return Category

Before you start parking your hard-earned money into an investment, you should know whether the risk is worth taking. For example,

How long can you stay invested? or How far is your goal?
Short-term or less than 3 years investments should avoid equity exposure
Long-term investment which are 5 years or longer must allocate to equity for a higher inflation-adjusted growth
What are your options to manage your investment risk in market-linked investments?

Financial Support for Family

You are expected to have a large term insurance cover to protect your family from the consequences of your untimely demise. However, you also have a few very important financial goals to meet on the way. While the term insurance will take care of the survival costs of the family, you can use separate life insurance plans to protect the goals. These plans will:

Help you build the corpus for the goal
Protect the goal from your untimely demise
Do it all free of taxes

Therefore, it is important to make the right investment choice and then stay invested for the defined term.

For example, Canara HSBC Life Insurance offers different insurance policies that provide life cover, guaranteed income stream, and guaranteed additions to Sum Assured. If you are exploring the best saving policy in India, you must consider these three insurances cum investment offerings:

1. Guaranteed Income4Life

Guaranteed Income4Life is a perfect investment plan if you are looking for an income stream to match a future expense. For example, if your child will turn 18 in 10 years from now and you want to pay his/her fees for a 5 Year integrated MTech program.

You can opt for Guaranteed Income Plan with a 10-year policy term
You will invest each year for the first 5 years
After the fifth instalment, the policy will continue without premiums for another 5 years
Starting the end of the 10th policy year your child will receive intended payments from the policy for the next 5 years.
You can also opt to receive the future regular income pay-outs as a lump sum calculated as the current value of the amount.

Protect Your Goal from the Unforeseen

The future premiums are waived off in case of untimely demise or permanent disability.
In case of untimely demise, the family will receive the sum assured immediately
The child will receive the fund value at the time of maturity-either in regular income streams or as a lump sum

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

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