As expenses rise with the quality of living, the rising demand for dependable saving schemes is inevitable. With a large number of investment schemes, it's natural to feel confused. At Canara HSBC Oriental Bank of Commerce Life Insurance, you can get a variety of monthly investment plans in India based on the number of products (individual and group). But choosing a good plan is important for your long term as well as short term endeavors.
14 factors that affect your choice of saving schemes
Investing monthly in suitable saving schemes is beneficial in the long run. Doing so will give you a safety net in the future while making you financially disciplined. As mentioned before, choices are plenty when it comes to saving plans, but your choice should depend on certain criteria or factors. Given below are some important factors to consider while opting for a monthly investment plan.
1. Set your goals
Before even looking at your options, you should make a credible list of your short term financial goals. Keeping a list will make your goals more clearly defined, and that will help you to choose a monthly investment plan with more clarity. Ask yourself these questions,
1) Why are you investing, and for what?
2) What kind of risks can you take?
Take your time to answer these questions and use them to set your goals. Your goals will then help you to choose a plan best suitable for your needs.
2. Find a balance between risk and reward
For this, ask yourselves the question, what kind of risks can you take? You have to answer honestly, and the answer should cover every aspect of the reasons behind your investment venture. While answering, make sure to point down the risks and the rewards, the pros, and cons. Look at the results and weigh the pros and cons.
The investment won't be manageable if the risks are too high, and you have to sacrifice product quality to keep the rewards high. This is why you should balance the two.
Create an idea or choose a life insurance plan where risks and rewards exist in harmony and then invest in a plan that benefits from and keeps the harmony.
Liquidity refers to the ease with each asset, or security can be converted into ready cash without affecting its market price. In simple words, liquidity describes the degree to which an asset can be quickly bought or sold in the market at a price reflecting its intrinsic value.
As we know, cash is considered the most liquid of assets because it can quickly and easily be converted into other assets. That is why your saving schemes should have adequate liquidity to satisfy your needs. You need to make sure that the investment plan will provide funds in an emergency. Therefore, consider your liquidity requirement before you choose a plan.
4. Understand the tax reductions offered
When you invest in saving schemes, consider the tax benefit offered by the plan. Various policies like life insurance and health insurance offer a tax benefit. Investing in such products would help you when you're in need of funds or when you need financial assistance in the event of a medical emergency. All monthly investment plans have their own investment products.
Discuss with your investor about these topics and find out, in detail, about the products and the benefits you get from a plan. Choose the plan with the best benefit and which would cater to your needs.
5. Check out the history
As stated above, discuss with your investor about the different types of monthly investment plans available for you. The task for a detailed explanation about the benefits, returns, and customer ratings.
Do the research on your own, ask friends, family, relatives about the preferred plan, get advice. You should also demand and study the history and customer reviews of all the plans available to you. Compare the plans with each other; a comparison will tell you how strong or weak a particular plan is.
Choose the plan that the majority of customers preferred and with the most number of good reviews. Don't downgrade yourself into choosing the less preferred option; choose saving schemes with the most benefits.
6. Check the diversity of the plan
Your monthly investment plan should not be restricted in any circumstance. It should not be restricted to having only one investment product.
Discuss and ask for a plan with the maximum number of investment products. You will have to diversify the investment plan to reduce the risk associated with the same. Check out customer reviews, ask for advice, compare the plans and choose the one with the investment products that you think will be beneficial to your business. Consider all the available options, which serve your purpose and diversify the plan.
7. The plan should suit your current lifestyle
With the rise in the price of commodities, livelihood is becoming expensive. Without a good savings plan, you could easily find yourself in situations where you have availed for loans.
Take your livelihood, your lifestyle, and your monthly income into account. Make sure whatever amount you invest in is the minimum requirement in your household. As usual, don't be afraid to ask for advice. Make detailed plans about how much monthly expense you have to reduce to comfortably buy monthly commodities and invest in the money. Choose a plan that takes into account your livelihood.
8. Performance of the plan
Review your portfolio as frequently as possible. Make sure you are up to date on all changes that affected your plan.
Discuss with your investor to check if the changes are beneficial to you or not. Check out the history and the customer reviews of the same. Make sure to ask the right questions. Make sure that the changes are trustworthy and will not be misfortunate to you.
Once you make an investment, it's important to ask to be updated on it every day if necessary. Review the portfolio and take necessary actions to maximize your profit.
9. Create and maintain an emergency fund
Most smart investors put enough money in emergency saving schemes to cover an emergency like sudden unemployment. Make sure you have saved up your income for a particular amount of time so that you won't be caught in an uncomfortable situation.
10. Pay off high-interest credit card debt
No investment plan pays off as good as or comes with less risk than paying off all high-interest debt you may have accrued. If you owe money on credit cards, the wisest to do is to pay off the balance in full as quickly as possible.
11. Take advantage of "free money" from the employer
In most employer-sponsored retirement policies, the employer will match most of what you contribute. If your employer provides a retirement plan and you don't add anything from your end to get your employer's maximum match, you are passing up "free money" for your retirement savings.
12. Avoid circumstances that can lead to fraud
In today's day and age, scams and fraudulent schemes are more common, and people often fall for such plans. Scam artists use highly publicized news to lure people into making a bad investment by making their offer sound legit.
However, asking the right questions can prevent you from falling for it. If you are considering saving schemes from a non-banking entity, it is best to do some research on finding the best plan and the provider. This will help you save your money.
13. Consider dollar-cost averaging
Dollar cost averaging is an investment plan where you can protect yourself from the risk of investing all of your money at the wrong time by following a consistent pattern of adding new money to your investment over a period.
When you make regular investments with the same amount of money, you will buy more of an investment when its price is low and less of the investment when the price is high. Individuals that typically make a lump sum contribution find that their saving schemes are more rewardable.
14. Terms and conditions
Ask all the necessary questions regarding the terms and conditions of your plan. Discuss with your investor the benefits of the same.
Investment plans can be complicated as there are various terms and conditions associated with them. Therefore, buy a savings plan only when you're satisfied that it will meet your needs and demands. Clear all your doubts before you put your money into it.
Make sure you have goals and ambitions straightened out. Do ample research about the topic and learn everything you can about the plans you have been offered. Choose a plan that is well suited to your needs, ambitions, livelihood, and future. Keep these factors in check and choose wisely.