Why do you Need Savings and Investment Plans?

Savings and investment plans play an essential role in helping you achieve both the short as well as long-term financial goals. There are various saving plans available and you may choose the plan based on your goals and financial capabilities. The objective of investing in a savings plan is to build a corpus for emergencies or for fulfilling life goals.

There is a misconception that investment should only be done when a person has an additional stream of income. However, this is not true. You should start investing as soon as you start earning keeping in mind the result of compounding. The longer you stay invested in any saving plans, the more your chances of growing the wealth.

Let us dig deeper and understand what are saving and investment plans and the major reasons you should buy such plans.

What are Saving and Investment Plans?

Saving and investment plans help you accumulate funds over a period of time. Depending on the type of financial goal you have – short-term or mid-term, or long-term, you can choose the period of investment. It is not necessary to stay invested in saving plans for at least 5 years.

Different goals need different period of investment and hence, you should choose the right type of plan and the duration you want to stay invested for.

Basically, there is various type of saving and investment plans. Listed below are some of the plans that you may consider to strengthen your financial planning.

1. Guaranteed Savings Plan

Guaranteed saving plans are life insurance cum saving plans that offer life cover along with an avenue to save and grow your wealth. Canara HSBC Life Insurance iSelect Guaranteed Future is a savings plan that offer guaranteed returns.

For example, with the above-mentioned plan, if you pay Rs. 10,000 per month for 10 years, you will get Rs. 29.85 Lakhs at the end of 20th policy year.

Such plans help you fulfill your long-term goals as the returns are guaranteed.

2. Government Saving Schemes

From time to time, the Government of India introduces saving schemes for the citizens of India. There is a wide variety of saving schemes introduced by the government that may help you reach your retirement goals, or saving goals.

For example, if you want to secure the future of your daughter, you may choose to invest in Sukanya Samriddhi Yojana (SSY), while if you wish to secure your retirement, you may put your money in Public Provident Fund (PPF), National Saving Certificate (NSC).

3. Systematic Investment Plan (SIP)

Systematic Investment Plan (SIP) is a mode of monthly investment plan where in the investor puts the money in mutual funds. You can choose to invest as low as Rs. 500. This saving and investment plan allows disciplined savings.

Know more about systematic investment plan

Why should you Buy a Savings and Investment Plan?

Some say a “penny saved is a penny earned” while others say that we need to “save for the rainy day.” Both statements are true and are the primary reasons behind why we save money. Besides primary needs, human beings have dreams, desires and plans that can only be achieved if we save.

Imagine this scenario. Anand earns a salary of Rs. 1 lakh per month but at the end of the month, he has nothing left. He has no savings and therefore no investments. If he goes on this way, Anand will never be able to secure his future or that of his loved ones.

If you are not saving or investing, you are earning but not generating wealth. Therefore, unless you are saving or investing, it doesn’t matter if you earn Rs. 10,000 or Rs. 1 lakh per month.

Here are a few reasons you need to buy a savings and investment plan:

1. Financial Protection

When you have invested in a saving plan, you will get the benefit of being financially protected through the advantages it offer. If you have invested in a life insurance cum savings plan, the beneficiaries of the plan will get the death benefit, if the policyholder passes away during the term of the policy. That way, your family is protected financially.

2. Tax Advantage

All the saving and investment plan offer tax benefit under Section 80C along with the deductions under Section 10(10D).

3. Helps you Achieve Life Goals

Saving and investment plans also help you in achieving life goals. As these plans allow you to save for a long period of time, you create a corpus that eventually leads you to achieve the life goals you had set for yourself easily.

If you want to create long-lasting wealth, you should select the right investment plan and start your investment journey as early as possible. When you decide to invest, you should have short-term, medium-term and long term goals with different time frames. For short-term goals, you can invest in bank Fixed Deposits; for medium-term goals, you should invest in mutual funds; and for long-term goals, you should invest in equity, ULIPs or guaranteed savings plan.

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised to exercise their caution and not to rely on the contents of the article as conclusive in nature. Readers should research further or consult an expert in this regard.

---