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Expecting a significant expense in the next five years? Whether you're planning to launch a business, take a long-awaited vacation, or purchase your dream home, having a well-structured savings plan is essential to meet these financial goals. A carefully crafted plan helps you stay on track and maximises your savings potential. By choosing the right investment options, such as the best monthly savings schemes, you can ensure that your funds grow steadily and are available when you need them most. In this guide, we’ll walk you through the steps to create an effective savings strategy that aligns with your goals and secures your financial future.
Key Takeaways
Secure your finances by setting clear savings goals and building a strong financial cushion
Earn stable and guaranteed returns with high-yield saving schemes like RDs, FDs, and PPF.
Reduce risk and maximise gains by diversifying across debt funds, treasury bills, and money market accounts.
Save more and cut taxes with tax-free investment options like PPF, EPF, and SSY.
Achieve financial freedom effortlessly by automating savings and using smart financial tools.
Assess Your Financial Goals
Before diving into the saving option, you have to define the amount you need and the timeline. Consider the following points:
The total cost of the expense, including inflation
How much you can practically save monthly?
Whether you need flexibility in accessing funds
Do you prefer stable returns, or are you open to some market fluctuations?
A clear financial goal helps in determining the best saving vehicle for your needs.
Begin securing your future
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Invest in the Best Monthly Saving Schemes
To build a disciplined saving, you have to invest in the best monthly saving schemes that offer stability and returns. Some of the options are as follows:
Recurring Deposits- It is the safest form of investment that provides a fixed rate of interest on an invested amount every month.
Fixed Deposits- It is an investment that provides a fixed rate of interest on a lump-sum payment.
Mutual Funds- Mutual funds are a great way to invest in stocks. The benefits of investing in mutual funds are low-cost investment, great flexibility and are managed by professionals.
National Saving Certificate- It is a fixed investment scheme that provides interest of 7.7% per annum and has a lock-in period of 5 years.
Public Provident Fund (PPF)-PPF has a 15-day lock-in period, but partial withdrawals are allowed after 5 years.
You can also consider ULIP plans by Canara HSBC Life Insurance. This plan offers a combination of investment and insurance with a locking period of 5 years.
Did You Know?
Budget 2025 proposes including ULIPs with premiums over 10% of the sum assured and an annual premium of ₹2.5 lakh.
Source: Clear Tax
Diversify With Low- Risk Investments
Diversifying your savings reduces risk and maximises returns. Here are some options that you should consider:
Debt Mutual Fund - It is an investment scheme that invests in fixed-income instruments such as corporate bonds, government bonds, money market instruments etc. At a low-cost investment, debt mutual funds offer stable returns, high liquidity and reliable safety.
High Yield Savings - It is an account that offers a higher rate of interest as compared to regular savings. These accounts are generally a short-term saving goal, providing both security and liquidity.
Treasury Bills - Treasury bills are another low-cost investment plan offering high liquidity, safety and satisfying returns. The maturity date ranges from 91 to 365 days.
Money Market Account - It is a low-risk and short-term debt instrument that provides variable returns. The money market account is highly liquid, and redemption happens within one business day.
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Some savings schemes and investments come with tax benefits, while others may have tax liabilities. Tax implications ensure maximising returns. For instance:
PPF EPF and SSY investments are tax-exempt
Fixed deposit interest is taxable if you exceed ₹40000 in a financial year
Debt mutual funds have different tax treatment based on the holding period
Conclusion
A well-structured savings plan includes balance risk, liquidity, and returns. By assessing your goals, choosing the right investment options, diversifying, and automating savings, you can ensure you reach your target amount without financial stress. You can also consider a saving calculator that determines how much you have to save each month to reach your financial goal. Start early, stay consistent, and make informed financial decisions to secure your future expenses seamlessly.
Glossary
Inflation- It means an increase in the price and goods of a service during a set period of time.
Sukanya Samriddhi Yojana- It is a scheme that provides a brighter future for your girl child.
Saving Money Calculator- It is a tool that determines how much money you save to meet your financial goals.
Lock-in-Period- It is a period where investments cannot be sold or redeemed.
ULIP Life Insurance- It is a life insurance policy that offers dual benefits of investment and insurance.
FAQ
After 15 years, you are eligible to withdraw 100% from the PPF account.
The current interest rate of NSC is 7.7%.
No, once ULIP matures, your maturity amount is paid out.
There is no lock-in-period of debt mutual funds. Your invested amount will easily be redeemed in 1-2 working days.
If you have a short-term financial goal, a high-yield savings account is the best choice.
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.
