To Buy: 1800-258-5899 (9 am to 6 pm)

|

customerservice@canarahsbclife.in

|

Locate Branch

Login

Best Saving Plans For Middle Class Population

dateKnowledge Centre Team dateJanuary 27, 2021 views138 Views
Best Saving Plans For Middle Class Population

India, with a population of over 135 crores, has a middle-class population of around 35 crores. No wonder they have to bear most of the tax and related financial burdens along with other responsibilities. To be relieved from this stress and provide a support system for your financial health, you have to have multiple income sources. Investment is one such option that can overcome the issue.

Factors to be Considered Before Investing in a Savings Plan

Before investing anywhere, one needs to consider some factors that may help choose the best and most beneficial saving plans most suited for their family's needs.

  • Financial Literacy - It is certain that there are a lot of scammers always ready to cheat you and steal money. Thus, one should possess sufficient knowledge to make prudent decisions to manage one's financial matters. Being financially literate means having these understandings-

    1. High priority for savings.

    2. Knowledge of various financial instruments.

    3. Knowledge of how the economy works.

    4. Disciplined investing, into diversified asset allocation.

  • Investment Time Horizon - It is the period for which an investor wishes to withhold the investment without liquifying for cash. One should have proper knowledge on what amount would be most profitable in the future.
  • Risk- Return Analysis - No investment is profitable if it doesn't provide returns. The investment must be made with due diligence and after proper analysis of various schemes and saving plans.
  • Wealth Goals - Investments are mostly made to achieve wealth goals that may not be possibly achieved by spending a month's salary for a middle class individual. Choose your wealth goals and then look for the most suitable saving plans worth your investment.
  • Investing Strategy - Investment strategy is the guide to invest. There are some pre-written protocols, and a set of behavioural traits an investor must possess to become a successful investor. Understand those rules and follow the strategies properly before deciding on investing.

Best Investment Plans for Middle-Class Population

Here is the list of the top best saving plans for the Indian Middle-Class population.

S. No. Investment Asset Return (Expected) Risk (Expected) Time Horizon Tax Implications
1 Direct Equity Investment Relative High Risk Relative Exempt up to Rs. 1 lakh; Excess of which is taxable at 10%
2 Public Provident Fund (PPF) 7.90% No Risk 15 years Deductions up to Rs. 1.5 lakh u/s 80C; Fully exempt from tax
3 National Pension Scheme (NPS) 10%-12% Low to Moderate 18-65 years Deductions up to Rs. 1.5 lakh u/s 80C; Additional Deduction Rs. 50k u/s 80 CCD(1B)
4 Senior Citizens Saving Scheme (SCSS) 7.5%-8.5% No Risk 5 years Deductions up to Rs. 1.5 lakh u/s 80C; Interest is fully taxable
5 Mutual Fund Investing Relative Moderate Risk Relative Deductions up to Rs. 1.5 lakh u/s 80C (Under ELSS funds). Qualifies Capital Gains Tax.
6 Sovereign GOld Bond (SGB) 2.5% (+) Relative. Low Risk 8 Years Only Interest is taxable
7 Index Investing Relative Moderate Risk Relative Qualifies capital gains tax
8 ETF Investing Relative Moderate Risk Relative Qualifies capital gains tax
9 Fixed Deposit Schemes 6%-7% No Risk 7 Days Deductions up to Rs. 1.5 lakh u/s 80C.
10 Government Securities 6%-8% Low Risk 5 - 40 Years Deductions up to Rs. 1.5 lakh u/s 80C.
11 Unit Linked Insurance Plan (ULIP) Relative Moderate Risk 5 Years Deductions up to Rs. 1.5 lakh u/s 80C; Furthermore the returns are exempt u/s 10(10D)
12 Pradhan Mantri Vaya Vandana Yojana (PMVVY) 8% Low Risk Relative Not eligible for deductions. Taxable based on slab rates.
13 Hybrid Funds Relative Moderate Risk Relative Deductions up to Rs. 1.5 lakh u/s 80C. Qualifies Capital Gains Tax.
14 RBI Bonds 7.15% Low Risk 7 Years Qualifies Capital Gains Tax; Interest on bonds is fully taxable.
15 Real Estate Investing Relative Moderate Risk Relative Qualifies capital gains tax
16 Post Office Monthly Income Scheme (POMIS) 6.5%-7% Low Risk 5 Years Not eligible for deduction. Taxable based on slab rates.
17 Bullion Investing Relative Moderate Risk Relative Qualifies capital gains tax
18 Savings Account 3%-4% No Risk Relative Deductions up to Rs. 10,000 u/s 80TTA. Taxable based on slab rates.
19 Recurring Deposit Account 6%-7% No RIsk 6 Months Deductions up to Rs. 10,000 lakh u/s 80TTA. Taxable based on slab rates.
20 Crypto Investment Relative High Risk Relative May not be treated under Capital Gain. But, it is taxable.

It's important to note that the above list is non-exhaustive; the rates and returns are not perpetual and may change over time.

Equity Investment- Under this investment, a certain number of company shares are bought, entitling the owner to be compensated according to his ownership percentage. An individual or company that invests money into a private or public company to become a shareholder is an equity investment. It gives returns year after year if invested with care and knowledge.

Public Provident Fund- It is a no-risk investment and a most popular long-term saving-cum-investment. India's government guarantees investment in the fund and the interest rates are set by the government quarterly.

National Pension Scheme (NPS)- An investment cum pension scheme for all the employees from the public sector, private sector, and even the unorganized sector except for those who work in the armed forces. It is a saving, pension, and investment scheme, all under one basket.

Senior Citizen Savings Scheme (SCSS)- SCSS is an investment cum pension scheme for Indian residents aged over 60 years, i.e. senior citizens. The scheme can provide better returns with optimum savings.

Mutual Fund Investing- An investment where a pool of money collected from many investors to invest in securities like stocks, bonds, money market instruments, and other assets. It is subject to market risk, and the returns generated are purely based on market conditions and asset allocation.

Sovereign Gold Bond (SGB)- The government security issued by the Reserved Bank of India (RBI) denominated in terms of gold on a per gram basis. It is not very flexible and is traded on the gold price. However, it is more favourable than an actual gold purchase.

Index Investing is one of the best passive investing strategies that attempt to generate returns similar to a broad market index. It has to be approached as in SIP.

ETF Investing- ETF or Exchange Trading Fund involves different types of investments pooled together into a single entity.

Fixed Deposit Schemes- It is one of the most effective ways to grow savings with utmost safety, the returns are assured and remain unaffected by market fluctuations. FDs can be easily renewed and offer the highest stability.

Government Securities- It is a better form of the fixed deposit that offers better return rates to the investors. You receive full repayment of invested principal at the maturity of the security. These are government debt issuances used to fund daily operations, and special infrastructure and military operations.

Unit Linked Insurance Plan (ULIP)- Under ULIP policyholders make a regular premium payment, part of which is utilized for insurance coverage. Simultaneously, the remaining portions are pooled with assets from other policyholders; these are then invested in equity and debt instruments, similar to mutual funds.

Pradhan Mantri Vaya Vandana Yojana (PMVVY)- A pension scheme available for senior citizens. You get an annual interest on your investment, and the subscriber will get an assured pension based on a guaranteed return rate.

Hybrid Funds- It is a classification of mutual funds or ETFs that invest in different assets or classes to produce a diversified portfolio. They may be defined as asset allocation funds. The investor can invest in multiple asset classes through a single fund.

RBI Bonds- It offers a stable and more competitive rate of return than bank savings accounts. Income earned is non-cumulative, and the interest earned is directly transferred into the savings account.

Real Estate Investing- Real estate investing is becoming more popular. An investor can become a landlord of a rental property and enjoy the returns either in rent money or other forms.

Post Office Monthly Income Scheme (POMIS)- Under this scheme, the investor invests a certain amount and earns a fixed interest every month. It is highly reliable, and a low-risk MIS and generates a steady income.

Bullion Investing- Investment is made in precious metals.

Savings Account- It is a simple saving withdrawal account with regulated access. It depends on how often you make a transaction, but it also offers exceptional flexibility that's ideal for building an emergency fund.

Recurring Deposit Account- RD account is a kind of term deposit available with banks. A fixed amount is deposited by the people having regular income monthly into an RD account. It is one of the safest investment options.

Crypto Investment- Cryptocurrencies are digital assets; it is a high-risk investment but provides higher returns than any other asset class for the past decade. You need to invest at the right time for a good return in the future.

Saving plans are a good source for accumulating wealth to have a sustainable life during retirement and compensate for the important needs of life. These plans are further used for wealth creation which is the major goal of investing. Investing at the right time and choosing the right saving plans provide a sense of relief and satisfaction and help in living a life free of financial misfortune.

Related Articles

Browse by Categories

Get a Call Back

Do you want us to call back Please fill the form below

Annual Income (In Lacs)

Our Products

TERM Insurance PLAN

TERM Insurance PLAN

Whole life cover option available

Increase your life cover with changing life stages

Return of premium & in-built protection options

Multiple premium payment options

Avail tax benefits on premiums paid as per tax laws

ULIP PLAN

Unit Linked Insurance Plan

8 funds and 4 portfolio strategies to invest

Loyalty additions and wealth booster

Return of Mortality Charge is available on Maturity under all three cover Options

Flexibility of switching between the fund options to take benefits of market movements or change in risk preference

Pos Easy Bima Plan

Top Benefits

Hassle free

Get double life cover in case of accidental death

Choice of flexible premium payment and policy term

Avail tax benefit on premium paid

Frequently Asked Questions (FAQs) for Term Insurance

This being a term plan doesn't offer any payout after maturity or expiration date.

Each insurance company has its own term insurance premium calculator. If you want to check out the premium quote, go for the iSelect Star term plan calculator. It gives a premium amount based on your age, gender, habits, education, and annual income.

You can purchase an iSelect Star term plan anytime between 18 to 70 years of age.

It depends on your needs. For example, if you want to cover a child's education or wedding expenses, you have to include them in your coverage. Your premium will be calculated accordingly.

If your key purpose is to give your Family financial protection, go for the term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan.

Go for at least 12 times cover than your annual income. Or you can go as far as 20 times coverage as per your needs.

The right time is when you don't have anything to keep your Family safe from financial storms, and they rely on you for financial needs.

If you are unable to make the payment or suffering from a terminal illness, a term plan pays a part of the sum insured to treat your disease.

Term insurance riders are attachment or endorsements made, while taking the term insurance policy, as a supplementary coverage to policyholders. Apart from the core death benefit, term insurance riders offer below-given additional benefits:

  • Accidental Death Rider When a person suffers from a terminal illness, his/her family ends up spending a significant amount in treatment and medical expenses. Accelerated death rider pays a part of the sum insured in advance to cover such costs and save the family from running out of cash.
  • Accidental Disability Rider If the policyholder can't pay the premium because of an accident or permanent disability, a sudden disability this pays the premium on behalf of the policyholder till completion of policy term or for a defined duration.
  • Critical Illness Rider If the insured person gets a heart attack, cancer, or any other critical illness, this rider pays a lump sum on valid diagnosis.
  • Premium Waiver Rider If the policyholder is unable to make payments due to income loss or disability, a premium waiver rider waives off all future premium payments. And the term policy remains active until the expiration date.
  • Income Rider: The rider ensures that your family receives regular income + sum insured in case of unfortunate demise of life insured.

Anyone can go for life insurance as it offers some savings after the maturity date, but it doesn't cover the protection of your family . The best term insurance plan is solely designed for taking care of loved ones if something happens to you. Term plans act as a shield between your family and sudden financial fall. They make sure that your family lives a healthy life even after you. With a little amount paid per year, you can be worry-free from the family's financial conditions.

Questions that you need to ask while buying Term Insurance?

  1. 1. Amount of premium you have to pay based on your age, habits, education, and monthly income
  2. 2. The total number of benefits covered in the term plan. Do they include benefits that you care about the most?
  3. 3. How to save money on tax if you pay for the term plan?
  4. 4. Do they offer regular income options?
  5. 5. Can you change the coverage and premium in the future?
  6. 6. Does the claim consider valid if death occurs outside India?
  7. 7. Which kind of death is not covered by insurance?
  8. 8. Can NRIs take term insurance? If yes, what are the conditions?
Call BackCall Back Pay PremiumPay Premium