Finance

Which Savings Plan Should You Opt for In India?  

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Today, most people try to set aside funds for emergencies, to safeguard their retirement finances, and manage their everyday spending in the face of uncertainty and falling interest rates. Investing your money in appropriate assets is a smart approach to enhance your wealth and meet your daily demands. Wondering what is the best savings plan? Here are some of the top investment plans that you should consider investing in.

Unit Linked Insurance Plans

 

Since, they provide both life insurance and investment returns, ULIPs, or a unit-linked insurance plan, is often regarded as the best savings plan in India. It gives you the choice of moving your money between high, medium, and low risk. This is because it allows you to invest in a variety of different fund types. The remaining component of the premium is utilised to offer much-needed insurance coverage, while a portion of the payment is assigned to a number of fund options. Overall, ULIPs are life insurance policies with the option of investing your money in a variety of money-market linked assets based on your objectives. Thus, ULIPs are another way to invest in professionally managed equities or bond portfolio. The advantage of investing in a bond fund through a ULIP plan is that, depending on the current tax regulations, you may be eligible for a tax deduction under section 80C if certain circumstances are met.

Mutual funds

 

If you want to explore and benefit from equities and debts, you can invest in tax saving plans such as mutual funds. This offers the choice to balance risk and rewards based on your preferences. It is safer to participate in the stock market through mutual funds than it is to invest directly in the stock market. You can also create a Systematic Investment Plan (SIP), which is one of the most effective ways to invest in mutual funds by making small, regular investments.

Fixed deposit (FD)

 

Many people consider fixed deposits as the best savings plan to mitigate risk while receiving guaranteed profits. When you invest in a fixed deposit, you deposit a certain amount of money for a certain length of time and earn interest at a specific rate of return. If you want to earn more money, consider investing in FDs with higher interest rates and more flexibility in terms of tenure and frequency of periodic interest payments. In an emergency, you could also contemplate prematurely terminating your FD or getting a Loan against a Fixed Deposit. After your FD matures, you can consider reinvesting the interest to obtain a lump sum payment. Senior citizens can receive higher interest rates on their savings, allowing them to better manage their post-retirement needs.

Public Provident Fund (PPF)

 

Given the variety of incentives that it offers, the Public Provident Fund is one of the best tax saving plans in India. If you are a salaried individual, PPF can provide you with a number of benefits. PPF interest is tax-free and can be included in the overall aggregated amount of Rs 1.5 lakh under Section 80C. However, tax laws are subject to change from time to time.

Post Office Savings Schemes (POSS)

 

These are usually favoured over FDs, and they can be used as part of a monthly income plan. This is a handy function for people who are retired or unemployed. It is also amongst the most popular tax saving plans because it doesn’t have any TDS (Tax Deducted at Source) applied to it.

Money market funds

 

These are open-ended liquid mutual funds with a short-term investment horizon. They are only invested in for a brief amount of time. Their major goal is to generate revenue from capital in order to increase the investor’s wealth. Customers can now write checks from their money market fund accounts at several banks.

While the government, banks and other financial institutions offer a variety of investment instruments, it is important to do your own research to find the best savings plan for your requirements.

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