Long Term Savings Plan – Best Savings Investment Plans in India
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Long Term Savings Plan - Best Savings Investment Plans in India

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  • 29th Apr 2022
  • 2,659

Long Term Savings Plan - Best Savings Investment Plans in India

Long-term saving plans, when well-planned, tend to outperform short-term investments. So, if you’re saving for your kids’ school or marriage or want to purchase a dream house or plot, long-term saving plans are the way to go since you can start putting money down now and wait for the proper time to spend it. Generally, investments that are made over more than five years are long-term investments. It also means you won’t use those funds until you absolutely require them. In India, there are various long-term saving options. Some of them are mentioned below.

Best long term savings plans

Public Provident Fund

PPF is similar to the Employee Provident Fund (EPF) offered to employees. PPF savings can be retained for up to 15 years, with the government setting an annual rate of return of 7.1-8 per cent. The most important perk of investing in a PPF program is that it qualifies for a tax credit under section 80C.

Bank Deposits (FDs)

When there were few alternatives in India, this was the most conventional kind of investing. Pre-established deposits given by banks are the safest, as the funds can be deposited for a longer time, such as three, five, or even ten years, with a fixed rate of return ranging from 3-6.5% every year. It is possible to draw the money once the period has ended. The interest rates are greater than savings accounts and RDs, and early withdrawal is possible. However, there is a penalty.

ULIPs

If you’re seeking a long-term saving plan that blends investing with insurance, then a ULIP is the best option. One part of the installment you pay is used to safeguard your life, while the remaining part is invested in stock markets to generate profits. Returns are likely to be approximately 8%, but prices fluctuate because of investment in inequities. Their premiums and administrative costs are likewise expensive due to the same reason.

National Pension System

NPS is a long-term saving plan in India developed by the Indian government to provide monthly income to participants after they retire. One can continue to invest in this scheme until they touch the age of 60, and after that, they have to use at least 40% of their money to acquire a regular income yearly plan. The remaining amount can be taken out as a lump sum payment.

Mutual funds and stocks

If you want to generate large returns over a long time, stocks are the best. You can make investments for the long term in stocks or mutual funds (SIP) through a systematic investment strategy. In any event, you should expect returns of 12 to 16 per cent, with 20 to 30 per cent attainable if the economy is doing well. Some of the best mutual funds options for the long-term scheme include large-cap and mid-cap funds with a track record of delivering great returns.

Saving schemes of Post Office

Post offices, like banks, provide a variety of savings plans, which are more popular owing to their security and higher interest rates. The post office savings account, 5-year senior citizen savings plan, post office monthly income scheme account, National savings certificate, Sukanya Samriddhi Yojana, Kisan Vikas Patra, and others are the most important well-known post office savings programs.

To establish an investing strategy, you must first determine your goals, liquidity requirements, investment horizon, and risk tolerance. Choosing which plan to invest in becomes much easier if you have a defined aim. If you’re seeking a long-term saving scheme in India, the above possibilities are worth considering!

- A Consumer Education Initiative series by Kotak Life

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