To live a stress-free life and to deal with its unpredictability, proper financial planning is extremely important. The best way to guarantee a financially secured future is to start saving regularly right from a young age. By venturing into a savings plan, you can create a financial backup for your future.
However, there are some factors which you should consider while putting your hard-earned money in savings plans.
- Risk Profile: It is crucial to understand one’s risk appetite to find the best plan. Age and personal factors are vital to evaluate the kind of risks an individual can take. Usually, young people in their 20s and early 30s can go for a higher risk appetite. They can select plans which are more aggressive.
- Tenure: Insurance plans offer a mid-term to long-term savings horizon and help in tax saving. Today, the market offers you many plans which help you build up a significant corpus over the term of the policy. The policyholder can start with a minimal premium amount and build it up over the policy term. This is possible as most insurers know the volatile nature of earnings and savings depending on the age of the policyholder. They provide options where the premium and the amount can be increased or decreased as per the individual’s convenience.
- Financial Goals: You should be clear about the reason for choosing a savings plan. Financial goals help in determining tax saving alternatives. They range from building a corpus for retirement or having adequate money for your child’s higher education or marriage to buying a new house.
- Plan Features: Different savings plans have different features. The best tax saving plans allow one to make partial withdrawals while others have a fixed cover ranging from 5-10 years to 30-35 years depending on what an individual want.
There are other options that even provide cover for the entire life. With comprehensive coverage and flexible alternatives, you can enjoy protection and experience growth through savings. Certain plans also offer bonuses – the amount of which is decided by the insurer based on the performance of their assets in the volatile market.
- Flexibility: For long term goals, a flexible savings plan enables you to take care of unexpected short-term requirements. They offer the flexibility of surrendering the plan if the circumstances so demand it. Nevertheless, it is better to go with the tax saving plan for the longer term so that they give you better returns.
- Charges: Knowing the costs and charges incurred in the policy is important when selecting a plan for savings. The best savings plan in India would be the one with minimum charges, giving you flexibility in terms of cash withdrawal, bonus receipt and tenure of the plan. Moreover, the long-term effect of these charges is much fewer, so you can accumulate wealth at a low cost.
Savings plans work efficiently when they are bought at an early age. Make sure you analyse, compare and calculate your future requirement before putting your hard-earned money in a plan.