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How to create a savings plan and make good investment choices

This blog post aims to throw light on Financial Planning and Investment model. It introduces you to various critical aspects of financial assistance and how one can choose the best tax saving and investment plan for themselves.

  • 4,674 Views | Updated on: May 24, 2024

    Key takeaways

    Some of the best savings plans

  • Public Provident Fund (PPF)
  • National Savings Certificate (NSC)
  • Senior Citizens’ Saving Scheme (SCSS)
  • Post Office Schemes and Deposits

What is Financial Planning?

Financial planning is integral to one’s life and aims to ensure that the household has the requisite resources and income to meet current and future requirements and expenses. The usual household activities and routine expenses are woven around the regular income. However, not all days are the same. Some unexpected expenses may arise in future, high-value future needs, medical emergencies that require an enormous amount, and a need for funding expenses when the income slows down or completely stops, as in retirement.

Need for Financial Advisory Services

The first and foremost step towards making a good investment is that you should have a fair share of knowledge about it and who can help better than the financial advisors themselves. Primarily a financial adviser links the range of financial products and services considering the specific needs and situation of the client. Not every service would benefit you, and hence the experts help you select the best savings investment plan in your interest. In addition, they help you understand the dynamics of financial products and services.

  • Personal financial management requires time and utmost attention, which we lack due to the rush and monotony of life.
  • Expertise in finance and maths and allocation of assets in the best plan.
  • Selecting the right investment products requires extensive research, and the capability to compare, evaluate and analyse various products enables making an efficient choice from competing options.
  • Asset allocation is a technical approach to managing money that requires evaluating and monitoring asset classes and modifying weights to each asset periodically.

Investment and Saving Plans

Choosing the best savings plan for wealth management is an area of concern for everyone in any income group. While saving money is crucial for future financial security, relying totally on savings does not make sense. Instead, opting for the top savings investment plans in India is one of the best ways to make your money grow over the year and create a better and more secure future for you and your family.

Your savings today can decide the stability of your family in the coming times. At the same time, consider diversifying your portfolio and investing in some of the best investment options giving maximum returns associated with minimum risks. Betterment lies in your choice.

Listed below are some of the best Savings Investment Plans

Small Saving Instruments

India’s government has instituted several small saving schemes to help and encourage investors to save regularly. Most people interested in investments are attracted to these schemes as they provide you with the government’s implicit guarantee, which is the borrower.

Savings schemes currently offered by the government are-

  • Public Provident Fund (PPF)

PPF was instituted in 1968 and came with the objective of a long-term benefit option to those individuals who may not be covered by provident funds of their employers or may be self-employed. PPF is affiliated with the government of India and offers security with attractive interest brackets and returns that are fully exempted from tax. It is a 15-year bank account that allows you much flexibility with the investment amount.

  • National Savings Certificate (NSC)

NSCs are bonds issued by the government for a specific period and pay interest. They can be bought from a post office and are usually held until maturity. NSC offers you a handsome sum of interest up to 8.5% on your savings, and it also guarantees assured returns to the investors investing for 5 to 10 years.

  • Senior Citizens’ Saving Scheme (SCSS)

Only senior citizens of 60 years or above can open an account with the Senior Citizens Saving Scheme. Evidence of age and a photograph of the account holder are required. In the case of an individual retiring on superannuation, under VRS or unique VRS, the age is reduced to 55 years. The retired personnel of Defense Services, excluding Civilian Defense Employees, shall be eligible irrespective of age limit. The term for the scheme is five-year, and the maximum investment limit of investment one can make is ₹15 lakhs. The interest rate is 9.2% p.a., payable quarterly. An annualized equivalent is 9.53% p.a. assuming the interest component is re-invested. SCSS is considered one of the best savings investment plans for the security of the elderly.

  • Post Office Schemes and Deposits

Post Office Monthly Income Scheme (POMIS)

As the name suggests, this is a short term scheme that lasts for a term of 5 years that provides a regular monthly income to the depositors.

Post Office Time Deposits (POTD)

POTD is an investment savings account scheme offered by the department of post, wherein a depositor wants to deposit a lump sum of money for a fixed tenure of five years, which is tax saving.

Conclusion

Concluding, proper and resourceful financial planning is required for a better future. Each investor has a different investment goal, risk appetite and return expectations, so one should be well-researched about their investment decisions. Only your lifelong investments and savings will provide you with financial security and stability in the darkest times; hence make the best choice.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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