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Effective money saving plans for future

dateKnowledge Centre Team dateJanuary 28, 2021 views112 Views
Effective money saving plans for future

Money is one of the important aspects of a fulfilling life. Saving money is one of the best habits of wealthy people. You must save first and spend afterwards. Start investing in life insurance plans for you and your family’s future. There are a wide variety of plans to suit your financial goals. You can also customise your plan according to your financial needs.

Why Save Money for the future?

Life uncertainties are inevitable. Any emergency may arise in the future that may deduct a surplus amount of money from your pocket and thus, preparing well in advance to tackle such problems is necessary. It is becoming increasingly important to save money. Here are some of the important reasons why saving money is becoming crucial nowadays-

  • Gives Protection- Saving money for the future gives you protection against unexpected circumstances, with each penny saved, you ease a moment of your future. Money plays a vital role in an individual’s life, be it poor or rich; no one knows what will happen the next day. Even if you lose your job but have savings, you can survive while looking for another job. Savings work when you don’t work.
  • A Debt Free Life- Savings help achieve goals and help pay off the mortgage early and live a debt-free life. Living life below your means can give you plenty of room to save. Through savings, one can also pay down debt from friends, family, or even other lenders. The bigger the amount saved, the earlier you can achieve a debt-free life.
  • Early Retirement- Most of the savings plans are retirement plans where one saves money to invest in life after retirement. People saving early can end up retiring early. Putting savings to retirement funds is a pathway for a stress-free future.
  • Improve Financial Being- A saving habit will indeed improve your life. It also avoids you from debts, overspending, resisting the temptation to spend on expensive and useless things, reduces the stress of thinking of your financial obligation and financial struggle.
  • Start Investing- After a good amount of money is saved, you can immediately start investing. You can also try buying stocks with your savings. Let your money make more money for you.

Best Money Saving Plan for Future

Choosing the best money-saving plan is essential. One should look for a plan that offers maximum returns with minimum risks. Only after proper analysis and research, you should finalize a money-saving plan. Here are some savings schemes offered by the government, financial companies, and banks that encourage investors to invest more and earn high returns.

S. No. Savings Plans Interest Rate
1 National Savings Certificate 7.9%
2 Senior Citizen Savings Scheme 8.5%
3 Recurring Deposits 6-7%
4 Post Office Monthly Income Scheme (MIS) 6.6%
5 Public Provident Fund (PPF) 7.1%
6 KVP (Kisan Vikas Patra) 7.6%
7 Sukanya Samriddhi Yojana (SSY) 7.6%
8 Atal Pension Yojana N/A
9 Employee Provident Fund (EPF) 8.6%
10 Pradhan Mantri Jan Dhan Yojana 2% above base rate not exceeding 12%

National Savings Certificate (NSC) is a fixed income saving plan that can be opened with any post office in India. This money-saving plan is an initiative of India's government to encourage investors mainly from small or mid-income categories to invest their money while saving on income tax. It is a low-risk investment and gives fixed returns. The money investor must have a minimum of 18 years of age, and for a minor, a joint account can be opened with an adult. One main advantage is that there is no limit on the maximum number of NSCs that one can purchase. An investment up to Rs. 1,50,000 annually in this plan can earn a tax break, as per Section 80C of the Income Tax Act. The investor can even nominate a family member for the saving plan, even if they are minor. NSC savings plan is free to open by anyone except Hindu Undivided Families (HUFs), trusts, and non-residents Indians.

Senior Citizen Savings Scheme- It is an excellent tax saving investment plan. It offers its investors very high safety, regular income. This savings scheme is available through post offices and verified banks across India. It is for senior citizens aged at least 60 years, although individuals between 55 to 60 can also invest if they have chosen the Voluntary Retirement Scheme or Superannuation. The investment should be made within a month after receiving the retirement benefits. There's also an option of investment for retired defence personnel ages 50 or above. In SCSS, tax deduction up to Rs. Investors can claim 1,50,000 as per Section 80C of the Indian Income Tax Act. It is one of the safest and reliable schemes since it is under the sponsorship of the Indian government.

Recurring Deposits (RD)- It is a term deposit offered by banks. This money-saving plan requires regular deposits and at the time of maturity, generates huge returns. Individuals have the freedom to choose the period, the amount, and the number of monthly deposits as per convenience. It is one of the savings plans where mid-term and premature withdrawals are not allowed, and if anyone requires an early withdrawal, the bank may charge a penalty. It offers high rates of interest for senior citizens, and it can also be used as collateral for taking loans. The main drawback is that the monthly amount you decide cannot be changed, and thus, you need to have a steady income source to opt for their saving plan.

Post Office Monthly Income Scheme (MIS) is a low-risk monthly income scheme where a small amount is invested, and an interest is paid monthly. It also generates a steady income while the money invested is completely safe until it matures since the Government sponsors the scheme. You can either withdraw the amount or invest again in the scheme after the maturity period is reached.

KVP (Kisan Vikas Patra)- A money-saving plan by the Indian Post Office, under which invested money is doubled in 100 months. The minimum investment required is Rs. 1000. This plan was first implemented to uplift farmers and was open for only them, but now it is available to everyone. This plan is not subject to market fluctuations and thus offers guaranteed returns. The returns are taxable. However, TDS is exempt from withdrawals after the maturity period.

Public Provident Fund- It is the safest and most popular government-backed savings option in India. The PPF benefits are payable in lump-sum form or up to 12 deposits per financial year. It is a flexible savings option as one can also transfer the PPF account from one post-office or bank to another.

Sukanya Samriddhi Yojana (SSY)- A saving scheme introduced by the Indian Ministry of Finance, specially designed to secure the girl child's future. One can open the SSY account at any authorized bank or post office in India. It is highly flexible since the account can be transferred from one post-office or bank to another within India.

Atal Pension Yojana- A money-saving scheme initiated by the government specially designed for the welfare of the weaker section of the society. This yojana or scheme provides people with a monthly income when they are no longer earning. The subscriber is eligible to get the tax benefit for the contribution, up to a ceiling, and even for the investment returns on such contributions. A subscriber is eligible for only one individual account.

Employee Provident Fund- It is one of the popular saving schemes launched under the government of India. Its main aim is to build a sufficient retirement corpus for an individual. Under this scheme, both the employee and employer have an equal contribution towards the employee provident fund. Also, the contributions made in the Employee Provident Fund are exempt from tax.

Pradhan Mantri Jan Dhan Yojana- A scheme that is more concerned with providing access to various financial services including remittance, credit, insurance, pension, banking savings & deposit accounts under affordable rates. Under this yojana, both the urban as well as rural areas are covered. No minimum balance is required to open an account under this yojana.

Saving money for the future is very important. The money-saving plan is also a source of wealth creation. You must have in-depth knowledge of the different savings plans and schemes available in the market as most of these schemes are subject to market risk. A suitable plan or scheme's choice depends upon financial objective, time-period, risk level, return rates, etc. A money-saving plan is the passive way of saving money to achieve your life desires and maintain a fulfilling life after retirement. Saving money is the need of the time, and it indeed is very useful in the future to you and your family.

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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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