Save today for sound financial future tomorrow

Posted by ankita on March 28th, 2017

Regular savings will not help you become rich or financially secure. It’s the saving habits that will help you achieve your financial goals. With the ever rising inflation costs, volatile marketing trends, changing lifestyle every individual must have some sort of financial back-up to cope up with unexpected financial situations. This could be achieved by working on some sort of savings plan. Any investment in which an individual contributes money on a regular basis in order to achieve financial goals of life whether short or long term goal is usually known as “Savings Plan.”

Financial priorities change from time-on-time in your life. When you’re young you save money to purchase bike, car, expensive gadgets, etc. Gradually when you marry in your 30s, you start saving for the family, kids’ education, while as you move towards the late 40s and early 50s it will be more towards retirement planning and daughter’s marriage expenses. But to achieve these goals you first need to start savings and build a solid plan that will cater to your needs over a period of time.

Therefore, savings plans play a vital role in individual investment circuit.

Here are few essential tips for choosing your savings plan:

Risk Profile

It is important one should know their risk appetite before selecting the savings plan. Age, income, risk appetite, future requirements, financial requirements at regular intervals are determinants of the kind of risk factors one must consider. Generally, during the late 20s or 30s a person can opt for higher risk and invest in equity-based funds. In case there are losses, it can be covered well within the time. One can choose a savings plan wherein the part of the premium could be invested in more aggressive funds, book their profits and then shift investments towards debt oriented funds.

Savings plan offered by insurance companies are best suitable for young customers who are willing and able to take such financial risks. On the other hand traditional or money back are better suited for risk-averse investors who prefer to have guaranteed source of earnings.

Tenure

Savings plan are mostly viewed as mid-to-long term investment horizon and serve as one of the best investment tools. The insured person can start with a smaller premium amount and build up over the policy tenure. You have to ensure that the earning should cater your future needs time-on-time basis. Insurance firms understand scenario and volatility quite nicely and provide options where the premium amount could be increased or decreased as per consumer convenience.

Financial Goals

One should be clear about the reason for choosing a savings plan. Talk to a financial expert and ensure that you’re able to meet the goals on time. Your goals may include building a corpus for retirement, children education, daughter’s marriage, foreign vacation, etc. Tax savings are one of the other beneficial options which may be intended when deciding on the savings plan.

Plan Flexibility

For long term goals, your saving plans should provide for taking care of your unexpected needs as well. If the situation demands they should offer the flexibility of fund switching or surrendering the policy. However, it's better to consult your financial expert and take a call on this.

Charges

Last but not the least it’s important to understand the costs and charges involved while picking up your savings plan. Some of the charges associated are administrative, managements, upfront, partial withdraw, fund switching and surrender charges. You should ensure these charges should not eat up most of your earnings.