It’s not the regular earnings that will make you rich, but it’s the saving habits that will. With the ever inflating economy, volatile market trends, changing lifestyle; every individual is keen to have some form of financial backup to cope up with the unexpected financial situations. You have to have financial savings at regular intervals of time. Any investment in which individual contributes money on a regular basis in order to reach financial goal of the life whether short or long term goal is usually known as “Savings Plan.” Financial priorities change over time in your life. When you’re quiet young you will save for your first car or an expensive watch or gadgets etc., gradually you might marry in your 30s and you will start saving for your kids’ education, as you move towards the late 40s and early 50s you will get more focused on your retirement planning. But to achieve any of these goals you first need to start saving and build a solid plan that will cater your needs over the period of time. Therefore, saving plans play an important role in individual investment circuit.
Here are few essential tips for your savings plan:
It is important one should determine its risk appetite while choosing the saving plan. Age, income source, risk appetite, future requirement are all important determinants of the kind of risk one can take. Generally, during late 20s or 30s one can opt for higher risk and work across the fund investment if there are any losses in the market. They can choose saving plans wherein the part of premium could be invested in more aggressive funds, book their profits and then move them towards debt oriented funds. ULIPs are more suited as best saving plans for young customers who are willing and able to take such financial risks. On the other hand, traditional endowment or money-back are better suited for the needs of a conservative investor, who prefer to have the guarantee of the money being secured even though it generates lower returns.
Saving plan Tenure
Insurance companies generally offer saving plans along with mid-to-long term investment horizon and serve as one of the best investment tools. The insured person can start with a small premium amount and build up over the policy tenure. You have to ensure that the earning should cater your future needs time to time. Insurance companies understand market scenario and volatility quite nicely and they provide options where the premium and the investment amount can be increased or decreased as per consumer convenience.
One should be clear about the reason for selecting your savings plan. You should talk to financial expert and ensure that you’re able to meet the financial goals on time. Goals range from building a corpus for retirement or saving money for child’s higher education, marriage, building house etc. Tax savings are one of the other beneficial options which may be intended when deciding on the saving plans.
For long term goals, your savings plan should allow to take care of your unexpected short term needs as well. If the situation demands your saving plans should also offer the flexibility of surrendering the policy. However, it is better to consult your financial expert to choose an appropriate plan that will give best returns in the long-term planning.
It is important to understand the costs and charges involved while choosing your Best Savings Plan
available in the markets. Some of the charges associated with your plans are administrative, managements, upfront, partial withdrawal, fund switching or surrender charges. You should ensure that your charges should not eat up most of your earnings. Your savings plan should have minimum charges and provide flexibility in terms of cash withdrawal, bonus receipt and term of the policy.