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Saving and investment plans are financial products that provide you with an opportunity to build wealth for the future and help you meet the 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 look after the needs.
You can use different types of saving and investment plans for different goals and investment objectives.
Before you buy any savings and investment plan, you must do a thorough research and understand the associated risks and benefits.
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:
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 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.
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.
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.
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.
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.
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 ten years. The interest received gets added to your total income and is taxable as per your tax slab.
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 offer monthly income out of your investment which can be in either of the following two ways:
Some of these plans, like MIP mutual funds, also invest in equity stocks.
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.
These funds invest predominantly in corporate fixed-income issues, like bonds and convertible debentures. Since the range of rating of the instruments varies a lot, these funds carry a higher risk than other debt funds investing in more secure debt.
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.
A mutual fund is an investment plan in which your money or investment is managed by a professional called 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.
You receive many benefits when you buy an investment plan. Some of the benefits are:
As an investor, you get 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 of the investment plans are long-term plans and offer good returns and hence help you create wealth over time.
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.
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 funds are not created overnight. You can invest in high-risk funds in the initial years of your investment and get high returns and later move to the low-risk investment. Investment plans are an ideal option to create your retirement fund over time.
Investment plans also give you the option to save tax. The premium paid towards investment plans is eligible for a tax deduction.
The cost of education in India is increasing with every passing year. It is expected to increase in the coming years as well. To ensure your children's education does not give you financial stress, you should have a child savings plan. It will help you plan the future of your child in a much better way. Some of the child investment plans offered by Canara HSBC Life Insurance are:
This is a Unit Linked Insurance Plan (ULIP) that lets you invest in equity, debt, or a mix of both. The plan gives you an option to choose the Cover Option based on your needs. The plan also gives you an option to choose the policy term. Depending on your child's age or the time at which you require the fund for his/her higher education, you can choose the policy term. The plan also offers a life cover, so in case of the demise of the Life Assured, the sum assured received by the family can be used for the child's education or marriage.
It is a unit-linked child plan that gives you the option to invest in your child's bright future. It comes with comprehensive insurance cover that ensures your child's future is safe in any unfortunate event. The plan allows you to make a partial withdrawal from the 6th policy year. You can use the amount for the expenses like the tuition fees of your child.
This traditional non-linked participating investment plan comes with a life cover and guaranteed pay out that you start receiving close to your child's educational milestones. You have the option to choose a flexible policy term depending on your child's education needs.
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.
Child plans also come with rider benefits like accidental death and critical illness.
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.
Some of the factors you should consider before buying an investment plan are:
Different investment plans come with different levels of risk. You should know the risk level of the plan which you plan to buy.
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.
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.
An investment plan charges you a minimum commission to manage your portfolio. You must check the commission of the plan you want to buy. Compare the commission with other similar plans and see if it is around the average of similar plans.
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.
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.
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.
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.
Depending on your liabilities, you should purchase a comprehensive insurance plan that gives you a high sum assured.
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:
If you are diagnosed with any critical illness such as heart attack, cancer, kidney failure, you receive rider benefit.
If the policyholder dies accidental death, the nominee receives the sum assured plus the rider benefit.
If you suffer from a severe disability due to an accident, this rider waives your life insurance premium amount.
If you are diagnosed with any critical illness, you receive a part of the sum assured in advance.
You can buy a savings and investment plan in India if you meet the below condition:
You need to have the below documents for buying the best savings and investment plan:
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:
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|
There are different savings plans for investors depending on their financial needs and goals. However, there are a few common objectives of buying a saving plan for investment. They are:
Every investor wants financial security in life and saving plans provides you just that.
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.
You can increase your investment if you have lower tax liabilities. Another objective of these saving plans is to reduce your tax liabilities.
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:
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.
Invest 4G from Canara HSBC Life Insurance is a ULIP that can help you to create wealth while also protecting you with a life cover.
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.
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.
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.
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:
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.
It depends on a lot of factors like your lifestyles, liabilities, etc. In general, you should have at least 18 times your annual income if you want to retire at 55.
Every investment has a certain amount of risk. An investment plan gives you a variety of options to choose from, and if you have a low-risk appetite, you can choose an investment plan that comes with the least risk.