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Guaranteed Savings Plan for Young Professionals

dateKnowledge Centre Team dateJanuary 12, 2021 views178 Views
Guaranteed Savings Plan for Young Professionals

The perfect time for investments and savings is when you start earning. It is the beginning of your life, and though you do not find many responsibilities on your shoulder at the moment, further in life you will require money for a thousand different reasons. Hence, it is extremely significant to save whenever you get a chance. The days when you saved little pennies in your piggy bank are long gone. These are the times of smart decisions and sturdy future planning.

The best way to save is by investing in a savings plan or a life insurance plan. They are the safest ways of saving for your future or unseen occurrences. However, most of us are not aware of the benefits of a savings plan due to which only 2.74 % of the population in India invests in savings plans.

First, let's look at the definition and functioning of a guaranteed savings plan. A savings plan is a life insurance plan which offers individuals an opportunity to accumulate funds for future purposes. Such investment plans guide individuals and help them invest in a disciplined manner for their short-term and long-term financial needs.

The individual has to invest depending upon his/her abilities and risk-bearing attitude. Also, guaranteed savings plans give you an advantage of insurance with wealth accumulation. The insurance advantage is that a death benefit is paid to the policy’s beneficiary in case of the insured’s sudden demise during the policy tenure.

Factors to Consider While Choosing a Savings Plan

While choosing the perfect savings plan as per your requirements, one should keep in mind the following factors:

  • Goals: You should keep in mind the objective behind investing in a savings plan and choose the plan which gives you the best benefits.
  • Risk Appetite: Make sure that you know the amount of risk you can bear. You will have to maintain a balance between risk and reward.
  • Liquidity: You need to make sure that your savings plan has enough liquidity and will provide you funds in emergency times.
  • Tax Deduction: It is essential to consider the tax benefit offered by the investment product. Investing in such products will reduce your tax amount and protect you in case of a medical emergency.
  • Diversity in Investment Product: Consider all the investment options, which serve your purpose and diversify the investments. This helps in reducing the risk associated with a savings plan.
  • Keep a Check on the Portfolio of the Plan: Ensure to keep a check on the portfolio investments and returns at the end of the year and see if you can make any changes in your investment.
  • Charges of Savings Plan: It is essential to know about your saving plan’s costs and charges. The best kind of savings plan is the one that has minimum charges and flexible withdrawals.
  • Features of the Plan: Look for different benefits and incentives a savings plan offers. Choose the plan which has flexible options and will help you grow in life.

Best Savings Plan to Invest In India

There are different types of guaranteed savings plans all around India. There are Government schemes as well as bank policies. It all depends upon the investor’s requirements and goals. A list of best savings plan is given below:

Best savings plan amongst Government banks in India

There are many Government banks that offer various types of savings plan, with different maturity age and interest rate. All of these banks provide tax and other benefits. The banks which offer the most beneficial savings plan for youth professionals are mentioned below:

Best Bank Saving Plans in India

You don’t have to enroll in a particular saving policy. You can also invest in a particular type of deposit, which are investment products, where you can carry out your saving procedures. The different types of deposits are:

Canara HSBC Smart Vriddhi Plan Guaranteed Saving Plan 18yrs-75yrs 60 years

Fixed Deposit: Over the years, fixed deposit is the most common and trusted way of saving amongst the Indians. You get an interest rate of 5.5%-7.5% with guaranteed returns. Fixed deposits are bank-based investment products and are closely monitored by RBI Bank, thus ensuring safety. Investors can avail of a loan against their FD investments at lower interest rates. The interest rate for an FD investment is fixed at the time of opening the account but it can fluctuate throughout the year.

Recurring Deposit: A recurring deposit is a term deposit which a bank offers. In this type of savings plan, investors deposit money regularly and earn high returns upon maturity. The interest rate is between 4.5%-6.5%, with guaranteed returns. The minimum investment is Rs 500 and the maximum investment can be up to Rs. 1 lakh. Recurring Deposits offer higher interest rates to senior citizens.

Best Government Saving Schemes in India

Government schemes are considered the most trustworthy amongst other plans, based on returns, popularity, and security. These schemes offer reliability, security, and dependability, therefore the popularity. The various Government schemes are:

  • National Savings Certificate

    It is a fixed income investment plan, which can be opened with any post office. You get tax exemption benefits along with wealth accumulation. The National Savings Certificate is perfect for mid-income investors, as there is low risk.

  • National Savings Scheme

    The Government supports the National Savings Scheme, and in this scheme, the total assured amount is paid after the completion of its maturity tenure. Furthermore, the applicable interest rate is compounded annually. Along with saving funds, you get the benefit of tax exemption.

  • Public Provident Funds

    Public Provident Funds (PPF) is an initiative of the National Saving Organization, offering a term period of 15 years. It is one of the safest options of investment, with a fixed interest rate of 7.79%. The interest and the maximum limit of funds i.e. 1.5 lakhs, both are tax exempted. Another advantage of PPF is that it is quite flexible and can be transferred from any bank or post office to another bank and post office. The minimum contribution allowed is Rs. 500 and the maximum is rs. 1.5 lakhs. It is the most selected savings plan.

  • Post Office Saving Scheme

    If you are someone with a low-risk appetite, this is the guaranteed saving plan for you. It is the most relied on and secure saving plan, with the benefit of high-returns. The post office saving scheme is easily accessible and completely hassle-free. A POSS Account can be opened in the name of a minor. It has an interest rate of 4%.

  • Employee Provident Fund

    The Employee Provident Fund was introduced by the Employee Provident Fund Organization, especially for salaried individuals. It is the perfect type of savings plan for youth, who have currently embarked on the journey of earning money in the corporate sector. In this, the salaried individuals have to invest funds in the Provident Fund account. The EPF enables individuals to save for their retirement and life after retirement. The financial contributions are made from the salary of the employee. The contribution is 12% of the salary, and the employer contributes a similar amount. The annual interest rate ranges between 8%-12%.

  • Equity Linked Savings Scheme

    The Equity Linked Savings Scheme is based on saving and creating wealth by investing in stocks and equities. They are diversified equity mutual funds that invest across market capitalization and sectors. They have a lock-in period of 3 years. Returns are market-linked and the scheme is tax exempted.

Best Saving Plans in Insurance Sector

Endowment Plans

The most popular savings plan in the insurance sector is the Endowment Plan. Endowment Plans are regular savings plans to build an entity and give guaranteed maturity with exceptional benefits. Furthermore, they cover the insurance risk with additional riders to have a reliable source of funds when something goes wrong. The returns in this plan are similar to fixed yield and deposits.

Compare to Choose Better

There are too many options to choose from in India when it comes to selecting a savings plan.The only thing you can do is compare these savings plans online and choose the one which suits you the best. There is software such as investment calculators on which you can calculate your priorities and choose accordingly.

Guaranteed Savings Plans are essential for a better future in this era of extravagance and expensive living standards. They give guaranteed returns with great benefits. Savings bring stability to your life and help you enhance the way you live. You only live once, so why not save and live a peaceful, fun, and lavish life!

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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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