Savings & Investment Plans in India

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What is a Savings and Investment Plan?

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Objectives of Buying the Plan

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Types of Saving and Investment Plans

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Saving Schemes and Investment Plans

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Benefits of Buying Investment Plans

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Factors to Consider Before Buying Plan

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Things to Check Before Buying the Plan

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Riders in Savings and Investment Plans

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Eligibility Criteria to Buy a Plan

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Documents Required to Buy a Plan

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Steps to Buy the Best Plan

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Best Savings & Investment Options

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How To Buy Savings Plan Online?

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Right Time to Buy the Plan

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FAQs

Financial planning is very important as you may need funds at various stages of life. If you plan your journey well, you can easily take care of 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 finest options to build wealth over time. However, mere planning is not enough, you need to allocate your money into various saving and investment plans to achieve your planned goals.

What is a Savings and Investment Plan?

Saving and investment plans are financial products that provide you with an opportunity to build wealth for the future and help you meet your financial goals. Best investment plans inculcate the habit of disciplined investment and help build your corpus to achieve future financial objectives with ease.

If a financial plan is the blueprint of your financial life, investment plans are the tools to turn the blueprint into a reality. Consider various investment options, as they are critical in achieving your future financial goals and meeting your needs.

You can use different types of saving and investment plans for different goals and investment objectives.

Objectives of Buying a Savings and Investment Plan

There are different savings plans for investors depending on their financial needs and goals. However, there are a few common objectives of buying a savings plan for investment. They are:

Security: Every investor wants financial security in life and saving plans provides you just that.
Wealth Building: The next objective of a saving plan is to grow your money more than the inflation and tax. You can create a huge corpus for your long-term goals, like retirement, if your saving plan can beat inflation and taxes.
Tax Reduction: You can increase your investment if you have lower tax liabilities. Another objective of these saving plans is to reduce your tax liabilities.

Types of Saving and Investment Plans

Before you buy any savings and investment plan, you must do a 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:

National Pension Scheme: NPS is a government-sponsored pension scheme initially designed for government employees. Now it is available for other private and unorganized sector employees as well. You invest small amounts at regular intervals in this saving and investment scheme. At retirement, you can withdraw a per cent (up to 60 per cent) of your corpus. The remaining comes to you as a monthly pension. The scheme lets you invest in different funds like debt funds, government funds, equity, etc.
Senior Citizen Saving Scheme: 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 availed from banks or post offices by anyone over 60 years of age. The tenure of this investment plan is five years. The period can be extended up to 3 years when it gets matured.
The maximum amount you can invest in the scheme is Rs 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 change happens later. Senior citizens can claim tax deduction up to Rs 50,000 under section 80TTB with the earned interest from the scheme.
Public Provident Fund (PPF): This is another popular investment plan for investors with a low-risk appetite. The plan comes with a lock-in of 15 years. Premature withdrawal is allowed only in case of emergencies. The 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 Rs 500 annually, while the maximum you can invest in PPF is Rs 1.5 lakh in a financial year. The principal amount, the maturity amount, and the interest earned is exempted from tax. You can be eligible to take a loan against your Public Provident Fund account.
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 per cent of your sum assured every 5 years, and you get the balance amount along with bonuses (if any) on maturity. In case of the demise of the policyholder, the nominee receives the sum assured.
Sukanya Samriddhi Yojana: This is a popular child investment plan to secure the financial future of a girl child. It is a government-backed investment plan that gives your safe and 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 is exempted from taxation.
RBI Saving Bonds: These were introduced on 1 July 2020, and you can invest a minimum of Rs 1000 in these bonds. There is no upper limit for investment. The tenure of these bonds is seven 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 as per your income tax slab.
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.

Medium Risk Savings and Investment Plan

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

High Risk Savings and Investment Plan

Unit Linked Insurance Plan (ULIP): It is 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). In case 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.
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 are 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.

Comparison Between Saving Schemes and Investment Plans

When planning your finances, it's essential to understand the fundamental differences between saving schemes and investment plans. While both help in wealth accumulation, they serve different purposes, cater to varying risk appetites, and offer distinct returns. Let's analyse which option suits different financial goals and how they compare in terms of risk and returns.

Which Option Suits Different Financial Goals?

The choice between a savings plan and an investment plan depends largely on individual financial objectives. If your goal is to build an emergency fund, save for short-term needs, or ensure capital preservation, a monthly savings plan or a life insurance savings plan can be an ideal choice. These options focus on secure savings with predictable growth, making them suitable for risk-averse individuals.

On the other hand, if you are looking for long-term wealth creation, beating inflation, or growing your corpus significantly, opting for the best investment plan in India is advisable. Various investment options in India cater to different risk levels, from mutual funds and stocks to real estate and bonds. These investment plans are better suited for long-term goals like retirement planning, wealth generation, or funding a child's education.

Key Differences in Terms of Risk and Returns

Here’s a comparison between saving schemes and investment plans based on key financial aspects:

Factors	Saving Schemes (e.g., Savings Accounts, FD, PPF)	Investment Plans (e.g., Mutual Funds, Stocks, Real Estate)
Risk Level	Low to negligible risk	Varies from moderate to high, depending on the asset class
Returns	Fixed and relatively lower	Market-linked, higher potential returns over time
Liquidity	Moderate (varies by scheme)	Varies; stocks & mutual funds are liquid, while real estate is not
Best Suited For	Short-term or risk-averse investors	Long-term wealth creation and investors comfortable with risk
Tax Benefits	Available on select schemes like PPF, FD	Available on ELSS, ULIPs, and certain investment options
Example Plans	Recurring deposits, fixed deposits, PPF	Equity mutual funds, NPS, ULIPs, real estate

Choosing between a savings plan and an investment plan ultimately depends on your financial goals, time horizon, and risk appetite. A balanced approach, where you allocate funds to both safe savings and high-return investments, can help maximise wealth while maintaining financial security.

Benefits of Buying the Best Savings and Investment Plans

5 Advantages of Buying the Savings and Investment Plans

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 you want. 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 give 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 invest 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 option for creating your retirement fund over time.
Tax Benefit: Investment plans also give you the option to save tax. The premium paid towards investment plans is eligible for a tax deduction.

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4 Benefits of Buying a Savings and Investment Plan for Children

Secures the future of the child with a life cover. In case of an unfortunate event, the sum assured ensures the family has a fund for the child's higher education.
Secures the future of the child with a life cover. In case of an unfortunate event, the sum assured ensures the family has a fund for the child's higher education.
Premium protection option ensures that all the due investment is made in the goal even when you are not there to fulfil the goal.
The premium paid towards a child investment plan is eligible for annual tax deduction up to a limit of 1.5 lakh under Section 80C of the Income Tax Act.

4 Factors to Consider Before Buying a Savings and Investment Plan

The risk associated with a savings and investment plan: Different investment plans come with different levels of risk. You should know the risk level of the plan which you wish to buy.
Check all the terms and conditions: You should look for a plan where returns and benefits do not come with too many terms and conditions. Look for an investment plan with maximum transparency.
Past performance: One of the reasons you buy an investment plan is to get good returns. Check the past returns of the investment plan and evaluate if it is in line with your expectation and goal.
Charges: An investment plan charges you a minimum commission to manage your portfolio. You must check the commission of the plan you want to buy.

Before making a purchase decision, it's advisable to consult the insurance company or review the policy brochure thoroughly to gain a detailed understanding of the plan, including the charges applied.

5 Things to Check Before Buying a Savings and Investment Plan

Financial Goals: When you have financial goals, you know the amount you need in the future, the amount you need to invest, and the returns you should expect. Create your financial goals and based on that choose the savings and investment plan.
Investment Period: The longer you can stay invested the higher investment risk you can take and the higher growth you can expect. Thus, determining the time to the goal will help you take adequate investment risk and choose saving plans for the same.
Income & Savings: You should know your income, expenses, and savings. Based on your savings, you will decide how much premium you can pay for your investment plan.
Future Expenses: You must not only understand your current expenses but future expenses as well. When you decide to buy an investment plan, you commit to paying a premium for a certain number of years. You should evaluate your future expenses and decide if you can still pay the premium comfortably.
Insurance Cover: Depending on your liabilities, you should purchase a comprehensive insurance plan that gives you a high sum assured.

Riders Available in Savings and Investment Plans

Riders provide you with additional coverage options and come at an additional cost. They offer financial cover over and above the basic sum assured. Some of the riders available in investment plans are:

1. Critical Illness Rider

If you are diagnosed with any critical illness such as heart attack, cancer, kidney failure, you receive rider benefit.

2. Accidental Death Riders

If the policyholder dies accidental death, the nominee receives the sum assured plus the rider benefit.

3. Waiver of Premium

If you suffer from a severe disability due to an accident, this rider waives your life insurance premium amount.

4. Accelerated Death Benefit Rider

If you are diagnosed with any critical illness, you receive a part of the sum assured in advance.

Eligibility Criteria to Buy a Savings and Investment Plan in India

You can buy a savings and investment plan in India if you meet the below condition:

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 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.

Documents Required to Buy a Savings and Investment Plan

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

Age proof document like passport, voting card, etc
Identity proof like Aadhar, PAN Card, etc
Address proof like Driving license, passport, voting card, etc
Income proof like a bank statement, salary slip, etc

Steps to Buy the Best Savings and Investment Plan in India

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 below steps 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 matches your requirement.
Shortlist the saving plans matching your investment goals and tenure. Check 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 per your expectation.

Best Savings and Investment Options for Middle Class in India

Below are some of the best saving plans for the middle-class people in India. Depending on one's needs, financial goals, risk appetite and affordability, one or more saving plans can be considered from the below list:

Saving and Investment Plan	Returns	Risk
Direct Equity (Stocks)	High	High
Public Provident Fund	Medium	Zero Risk
National Pension Scheme (NPS)	High	Low to medium
Mutual Funds	Medium to high depends on the type of mutual fund	Medium to high depends on the type of mutual fund
Unit Linked Insurance Plan (ULIP)	Medium	Medium

Four Best Saving and Investment Options for 5 Years

You have a lot of options to choose from if your investment horizon is five years. You can either go for low and moderate-risk investment plans. Some of the best investment options for five years are:

1. ULIPs

With minimum charges and a range of fund options ULIPs are one of the most tax-efficient and growth-oriented investment plans for five years. The annual investments and fund value both will be exempt from tax.

2. Debt Funds

You can invest in debt mutual funds. Debt funds are those that invest in government securities and rated corporate debt. There is no lock-in, and you can withdraw funds as and when you need them. Also, for five years you will receive the benefit of indexation on the maturity value.

3. Post Office Time Deposits

These are some of the safest options which give you higher returns. You receive interest every year on the amount you have invested. You get high liquidity, and you can expect 7% returns in this savings plan.

4. Equity Linked Saving Schemes

If you have a high-risk appetite and want higher returns, you can invest in ELSS mutual funds. These funds offer tax-deduction on the invested amount under section 80C. The funds have a lock-in period of three years and capital gains below Rs. 10 lakhs are exempt from tax.

How to Buy the Best Savings and Investment Plan Online in India?

Once you have evaluated the plans on various parameters and decide to buy the best investment plan as per your financial requirements, you can buy the plan online by:

Visit https://www.canarahsbclife.com/ and select your plan.
Fill in the required details as requested in the form.
Select the desired option like tenure, premium amount, etc.
Post selection, you will have to fill the proposal form.
Upload the KYC document like Bank Mandate form, Income Statement, Proof of ID, Medical report, etc.
Post verification and premium payment, the policy will be delivered to you.

When is the Right Time to Buy a Savings and Investment Plan in India?

Some goals are common to all investors like buying a house, child's education, building a retirement corpus, etc. To achieve these goals, buying the best saving and investment plan is very important. The right time to buy an investment plan is NOW. Even if you are in your early 20s, you should buy an investment plan. The sooner you start, the better it is. Because when you start early, you get more time and scope to plan and invest your finances as per your risk appetite. When you give more time to your investment to grow, it grows much faster because of compounding.

An investment is an asset or money that one puts somewhere with an aim of generating income or multiplying wealth. However, there is always risk associated with investment.

There are various investment options available in India. You can buy life insurance plans, bonds, mutual funds, or invest in government saving schemes for boosting your wealth building. Investment plans help you in achieving wealth creation, financial security, to create retirement corpus, etc.,

You should buy an investment plan for the below reasons:

a) To secure your and your family's future

b) Create wealth over time

c) Get tax exemption under Section 80C and 10(10D)

If you are looking for higher investment returns, you can buy an investment plan that gives you an option to invest in equity-related instruments.

When you are in your 20s, you don't have many responsibilities. so, it is the best time to invest your income. You can buy investment plans depending on your risk appetite and your financial goals. You can opt for equity-related investment plans.