Savings and Investment Plans in India

Financial planning is essential as you may need funds at various stages of life. If you plan your journey well, you can easily manage important events in your life. You should look for the best investment options that can grow money while you focus on other aspects of life. Online savings plans are one of the best options for building wealth over time. However, mere planning is not enough; you need to allocate your money into various savings and investment plans to achieve your planned goals.

Before you buy any savings and investment plan, you must do thorough research and understand the associated risks and benefits.

Low Risk Savings and Investment Plan

If you are an investor with a low-risk appetite, you can choose a savings and investment plan with low or no volatility. These investment options are reliable and give you stable growth with minimum risk involved. Most of the low-risk savings and investment plans have a long lock-in period.

Below are some of the low-risk investment plans:

1. National Pension Scheme: NPS is a government-sponsored pension scheme initially designed for government employees. It  is now available for employees of other private and unorganised sectors. You invest small amounts at regular intervals in this savings and investment scheme. At retirement, you can withdraw a percentage (up to 80%) of your corpus. The remainder is paid to you as a monthly pension. The scheme allows you to invest in different funds like debt funds, government funds, equity, etc.

2. Senior Citizen Saving Scheme: The Senior Citizen Saving Scheme is one of the best investment plans for a retired person. The scheme is designed for senior citizens and can be accessed through banks or post offices by anyone over 60 years of age. The tenure of this investment plan is 5 years and can be extended up to 3 years on maturity.
   The maximum amount you can invest in the scheme is ₹15 lakh. The interest is paid to you quarterly, and it is taxable. The interest rate change is revised every 3 to 6 months. The rate at which you buy the policy will remain the same during the tenure of your policy, even if the rate changes happen later. Senior citizens can claim a tax deduction of up to ₹50,000 under Section 80TTB on the earned interest from the scheme.

3. Public Provident Fund (PPF): Another popular investment plan for investors with a low-risk appetite. The plan includes a lock-in of 15 years. Premature withdrawal is allowed only in case of emergencies. Interest is calculated every month, and it gets added to the PPF account at the end of the financial year. The minimum investment required is ₹500 annually, while the maximum you can invest in PPF is ₹1.5 lakh in a financial year. The principal amount, the maturity amount, and the interest earned are exempted from tax. You can be eligible to take a loan against your Public Provident Fund account.

4. Money-Back Plan: The plan combines investment and insurance and gives you assured returns periodically. The tenure of this savings plan varies, and you have the choice to decide the term. In general, the policy term is 20 years. With a Money Back Plan, you receive a percentage of your sum assured every 5 years, and you get the balance amount along with bonuses (if any) on maturity. Upom the demise of the policyholder, the nominee receives the sum assured.

5. Sukanya Samriddhi Yojana: SSY is a popular child investment plan to secure the financial future of a girl child. It is a government-backed investment plan that offerssafe guaranteed returns. The plan duration is 21 years or until the marriage of the girl child after 18 years of age. The investment you make in the scheme is eligible for a tax deduction. The interest earned and the maturity amount are exempt from taxation.

6. RBI Saving Bonds: These were introduced on 1 July 2020, and you can invest a minimum of ₹1000 in these bonds. There is no upper limit for investment. The tenure of these bonds is 7 years and offers you an interest rate of 7.15% (effective from 1 January 2021, subject to change). The interest you receive from the bonds is taxed according to your income tax slab.

7. Fixed Deposits: It is an investment plan in which the interest rate remains the same throughout the investment period. Therefore, you have a clear idea of how much you are going to receive at maturity. There is great flexibility when it comes to tenure. You can open a fixed deposit account anywhere between 7 days and 10 years. The interest received gets added to your total income and is taxable as per your tax slab.

8. National Savings Certificate (NSC): NSC is a government-backed fixed-income investment scheme available at post offices. It is suitable for investors looking for safe and guaranteed returns. The scheme comes with a tenure of 5 years and offers fixed interest rates that are compounded annually. The interest earned is reinvested automatically and qualifies for tax deduction under Section 80C up to ₹1.5 lakh, although the final maturity interest is taxable.

9. Employees’ Provident Fund (EPF): EPF is a retirement savings scheme primarily meant for salaried employees working in organisations registered with the Employees’ Provident Fund Organisation (EPFO). Both the employee and employer contribute a portion of the employee’s salary to the fund. The accumulated amount earns interest and can be withdrawn at retirement or under specific conditions. Contributions to EPF qualify for tax benefits under Section 80C.

10. Atal Pension Yojana (APY): APY is a government-backed pension scheme aimed at workers in the unorganised sector. Under this scheme, subscribers contribute regularly until the age of 60 and receive a guaranteed pension ranging from ₹1,000 to ₹5,000 per month, depending on their contribution. In the event of the subscriber’s demise, the spouse continues to receive the pension benefits.

11. Kisan Vikas Patra (KVP): KVP is a small savings scheme offered through post offices and certain banks. It is designed to encourage long-term savings by offering guaranteed returns. The invested amount doubles after a fixed tenure (as notified by the government). The scheme requires a minimum investment of ₹1,000 and has no upper investment limit.

12. Post Office Monthly Income Scheme (POMIS): A government-backed investment plan that provides a fixed monthly income. Investors can open an account with a minimum investment and earn interest that is paid monthly. The scheme has a tenure of 5 years and is suitable for individuals seeking a stable and predictable income stream with low risk.

13. Post Office Savings Account: The Post Office Savings Account is a simple and secure deposit scheme offered by India Post. It works similarly to a regular savings account in banks and allows individuals to deposit money while earning interest at a government-declared rate. The account can be opened with a small minimum balance and provides easy liquidity along with the safety of funds.

Medium Risk Savings and Investment Plan

Moderate-risk savings and investment plans offer you balanced and diversified investment options. In such plans, your investment goes to a bucket that has both debt and equity.

Examples of medium-risk savings and investment plans are:

• Monthly Income Plans (MIPs): Monthly income plans offer monthly income out of your investment, which can be in either of the following two ways:
  • Interest/dividend payment every month
  • Payment of the invested amount every month (annuity plans)

Some of these plans, like MIP mutual funds, also invest in equity stocks.

• Arbitrage Funds: Arbitrage funds are a special type of mutual fund that benefits from market imbalances. Since the positions are opposite to each other, these funds carry little risk in any market situation. However, since the underlying investment isvolatile, like commodities or equity stocks, these funds carry a higher risk than fixed-income debt funds.

• Corporate Bond Funds: These funds invest predominantly in corporate fixed-income issues, like bonds and convertible debentures. Since the range of ratings of the instruments varies a lot, these funds carry a higher risk than other debt funds investing in more secure debt.

• Balanced Mutual Funds: Balanced mutual funds invest in a mix of equity and debt instruments to provide both growth and stability. Typically, a portion of the investment is allocated to equities for capital appreciation, while the remaining is invested in debt securities for relatively stable returns. This diversification helps manage risk while offering moderate growth potential.

• Hybrid Debt Funds: Hybrid debt funds primarily invest in debt instruments but also allocate a small portion to equities. The debt component provides stability, while the equity portion offers potential for better returns. These funds are suitable for investors seeking slightly higher returns than traditional fixed-income investments but with controlled risk.

• Capital Guarantee Plans: Capital guarantee plans are investment products designed to protect the principal amount invested while also offering the possibility of additional returns. A large portion of the investment is allocated to secure debt instruments to ensure capital protection, while a smaller portion may be invested in equities to generate growth.

• Child Plans: Child investment plans are designed to help parents build a financial corpus for their child’s future expenses, such as education or marriage. These plans typically combine insurance protection with investment benefits. Some child plans invest in a mix of equity and debt instruments to provide balanced growth with moderate risk.

• Pension Plans: Pension plans help individuals accumulate a retirement corpus over time through regular investments. These plans usually invest in a combination of equity and debt instruments to balance risk and returns. Upon maturity or retirement, the accumulated amount can be used to generate a regular pension income.

• Debt Funds: Debt funds are mutual funds that invest primarily in fixed-income securities such as government bonds, corporate bonds, treasury bills, and other money market instruments. These funds aim to provide stable returns with relatively lower risk compared to equity funds, making them suitable for investors looking for moderate risk and steady income.

High Risk Savings and Investment Plan

1. Unit Linked Insurance Plan (ULIP): A combination of investment and insurance. A part of your premium goes to insurance, and the balance is invested in the market. With most ULIPs, you have the option to choose whether you want your investment to go to equity, debt, bonds, or hybrid funds. As a survival benefit, you get the maturity amount depending on your Net Asset Value (NAV). If the policyholder passes away, the nominee receives the sum assured.
   
   New ULIP plans give you more flexibility in terms of investment options and are also cheaper.

2. Equity & Balanced Mutual Funds: A mutual fund is an investment plan in which your money or investment is managed by a professional called an Asset Management Company (AMC). There are different types of mutual funds depending on the fund type. The different instruments in which mutual funds invest include debt, equity, bonds, etc. Depending on your risk appetite, you can choose a mutual fund scheme. When you invest in a mutual fund, you are allocated NAV, and your investment grows as the price of NAV increases.

3. Direct Equity: Direct equity is investing directly in the shares of publicly listed companies through the stock market. Investors buy stocks with the expectation that their value will increase over time or that they will receive dividends. While direct equity investments can generate high returns, they also carry significant risk due to market volatility and price fluctuations.

4. Equity Linked Savings Scheme (ELSS): ELSS is a type of equity mutual fund that primarily invests in stocks and offers tax benefits under Section 80C of the Income Tax Act. These funds come with a mandatory lock-in period of three years, which is the shortest among tax-saving investment options. Since ELSS funds invest predominantly in equities, they carry higher risk but also have the potential to deliver higher returns over the long term.

5. Real Estate Investment Trusts (REITs): REITs are investment vehicles that allow individuals to invest in income-generating real estate assets such as commercial buildings, office spaces, and shopping complexes. Investors purchase units of the REIT and earn returns through dividends generated from rental income as well as potential capital appreciation. While REITs provide exposure to the real estate sector without directly owning property, their returns can fluctuate with market conditions.

6. Initial Public Offerings (IPOs): An IPO refers to the process by which a private company offers its shares to the public for the first time in the stock market. Investors can purchase these shares during the IPO period with the expectation of benefiting from potential price appreciation once the stock is listed. However, IPO investments can be risky as the company’s market performance after listing may be uncertain.

Canara HSBC Life Insurance Pension4Life Plan (UIN: 136N071V11):

A retirement-focused annuity plan designed to provide regular guaranteed income after retirement, helping individuals maintain financial independence during their post-retirement years.

Canara HSBC Life Insurance Promise4Future (UIN: 136N119V01):

A non-linked participating savings life insurance plan that helps individuals accumulate wealth over time while also providing life insurance protection and potential bonuses.

Canara HSBC Life Insurance Promise4Growth (UIN: 136L089V02):

A Unit Linked Individual Life Insurance Plan (ULIP) that offers flexible investment options and portfolio management features, allowing investors to align their investments with changing financial goals.

Canara HSBC Life Insurance Saral Jeevan Bima (UIN: 136N075V02):

A simple and affordable pure term insurance plan that provides financial protection to your family in case of an unfortunate event during the policy term.

Canara HSBC Life Insurance Wealth Edge (UIN: 136L085V04):

A ULIP-based savings plan that combines investment opportunities with life insurance protection, helping policyholders work towards long-term financial goals.

Canara HSBC Life Insurance Promise4Growth Plus (UIN: 136L093V01):

A customisable ULIP plan that provides multiple portfolio management options and flexibility, allowing investors to manage their savings based on their evolving financial needs.

Canara HSBC Life Insurance Promise2Protect (UIN: 136N091V01):

A non-linked pure risk term insurance plan offering flexible coverage options, including life cover and return of premium benefits, helping ensure financial security for your family.

Canara HSBC Life Insurance iSelect Smart360 Term Plan (UIN: 136N080V02):

A comprehensive term insurance plan designed to provide financial protection through lump sum or regular income payouts in case of the life assured’s demise.

Canara HSBC Life Insurance Young Term Plan (UIN: 136N087V03):

A term insurance plan designed for young individuals, offering life coverage options and optional built-in benefits to safeguard the financial future of loved ones.

Canara HSBC Life Insurance iSelect Guaranteed Future Plus (UIN: 136N098V04):

A non-linked guaranteed savings life insurance plan that provides assured benefits along with life cover, helping individuals achieve important life goals such as education, marriage, or retirement.

Savings and investment plans offer a structured way to grow your money while helping you achieve long-term financial goals such as wealth creation, financial security, and retirement planning. You receive many benefits when you buy an investment plan. Some of the benefits are:

• Wealth Creation: As an investor, you have the option to choose the type of investment you want to make, depending on the risk you want to take and the returns. Most investment plans are long-term plans that offer good returns and, hence, help you create wealth over time.

• Financial Security: A savings and investment plan gives you returns as well as life cover. With the life cover option, you secure the future of your loved ones even if an unfortunate event happens.

• Goal-Based Planning: Investment plans help you grow money formoneyinvest for your long-term goals, like a child's education, creating a retirement fund, etc. You can buy an investment plan for each of your goals and start investing regularly, as per your comfort.

• Retirement Saving: Retirement funds are not created overnight. You can invest in high-risk funds in the initial years of your investment and get high returns, then move to low-risk investments. Investment plans are an ideal way to build your retirement fund over time.

• Tax Benefit: Investment plans also give you the option to save on taxes. The premium paid towards investment plans is eligible for a tax deduction.

• Planning for Your Child’s Future: A savings and investment plan for children secures their future, ensures continued contributions through premium protection, and offers tax benefits under Section 80C. It also provides life cover to fund key milestones like higher education.

Savings and investment plans are suitable for individuals with different financial goals, income patterns, and risk appetites. They help build long-term financial security while allowing investors to choose options that align with their needs, whether it is guaranteed returns, wealth creation, or retirement planning. The following profiles can particularly benefit from investing in savings and investment plans:

• Conservative Investors: Conservative investors typically prioritise capital protection and stable returns over high-risk investments. For them, savings plans that offer guaranteed benefits and predictable returns can be an ideal option. These plans are usually not affected by short-term market fluctuations, making them suitable for individuals who prefer financial stability and low volatility in their portfolio. Options such as traditional savings plans, fixed-income instruments, and other low-risk investment schemes can help conservative investors preserve wealth while earning steady returns.
• Young Professionals: Young professionals who are just starting their careers have the advantage of a long investment horizon. This allows them to take calculated risks and invest in instruments that offer higher growth potential over time. Products such as Unit Linked Insurance Plans (ULIPs) and Equity Linked Savings Schemes (ELSS) can be suitable for them as these investments provide market-linked returns along with long-term wealth creation opportunities. Starting early helps young investors benefit from the power of compounding and build a strong financial foundation for future goals such as higher education, travel, or major lifestyle purchases.
• Parents Planning for Their Child’s Future: Parents often invest with the goal of securing their child’s future expenses, such as higher education or marriage. Savings and investment plans designed specifically for children can help build a dedicated financial corpus over time. Options such as child investment plans or government-backed schemes like Sukanya Samriddhi Yojana (SSY) can support long-term savings while providing disciplined investment growth. By starting early and investing regularly, parents can accumulate a substantial corpus to meet important milestones in their child’s life.
• Retirement Planners: Individuals planning for retirement need investment options that help them build a steady income stream for their post-retirement years. Long-term savings and investment plans such as the National Pension System (NPS), pension plans, and annuity-based products can help create a retirement corpus during the working years and convert it into regular income later. These plans encourage systematic savings and ensure financial independence during retirement by providing periodic payouts or pension benefits.

Investment needs and risk tolerance evolve at different stages of life. Choosing the right investment strategy based on your age can help you balance growth, stability, and long-term financial security.

To enhance the protection offered by savings and investment plans, insurers often provide optional riders. These add-on benefits help strengthen your financial security by offering additional coverage against specific risks such as critical illnesses, accidents, or disability.

You can buy a savings and investment plan in India if you meet the following conditions:

• The starting age for investment plans may vary from 0 to 18 years, depending on the type of plan

• Maximum entry age also varies for different savings and investment plans, starting from 45 years to 65 years

• Maximum age at maturity may depend on the type and purpose of the plan. For example, a pension plan may last up to 100 years of age, while a PPF investment may continue only up to 85 years of age.

• You should be in a financially sound condition to invest in life insurance plans.

You need to have the following documents for buying the best savings and investment plan:

• Age proof document like a passport, a voting card, etc

• Identity proof like Aadhar, PAN Card, etc

• Address proof like a driving license, a passport, a voting card, etc

• Income proof like a bank statement, salary slip, etc

The best investment plans help you invest your money in various money market instruments in a systematic way so you can achieve your financial goals.

Follow the steps below to buy the top investment plan in India:

• Know your financial goals and your requirements

• Figure out the tenure of all your goals

• Evaluate how much you can invest in a savings plan and see if the sum assured and life cover match your requirements

• Shortlist the savings plans matching your investment goals and tenure. Check that the investment plan does not have high commissions.

• You can buy a single investment plan for all your goals or one plan for each goal, depending on what you are comfortable doing. If you decide to buy a single investment plan, ensure it is diversified to reduce your risk. If you decide to buy multiple investment plans, create a diversified portfolio of investment plans.

• Review your investment plan once or twice a year and see if it is performing as expected