A savings plan is a good method to gradually grow money for a future purpose while having the maximum liquidity for an emergency. Not having such a plan may affect the finances of an individual or a family as they will have to depend on debts. And any debt, especially at an early age, is not good because of its long-term ill effects. A savings plan with a higher interest rate can also become a substitute for an investment plan. Thus, giving you the liquidity of a savings plan and the high returns of an investment plan. Here you will get to know about seven such beneficial savings plans.
A fixed deposit is a one-time investment savings plan with one of the highest interest rates. Depending on the banking institution, you can easily get an interest rate of 8% or more. The interest rates also go higher as you increase the investment duration.
Recurring deposits also have a good interest rate of 5% to 7%. But the major benefit of such plans is that it allows investment with small monthly payments over the years. So, you don’t need to worry about arranging large sums for the contributions.
Life Insurance with Moneyback Policy
Life insurance is a beneficial policy as it provides life cover for a premium. But people often use the plans with a money-back policy to save money for the future. It provides a good interest rate, tax savings on premium payments, and even a tax-free return of premium. Thus, it has all the best qualities of a savings plan and can also provide life coverage.
Post Office Savings Scheme
Post office best savings schemes are one of the most popular savings plans. They have more popularity in the rural settings of the country because of their wide network and outreach programs. They also allow people to get an adequate interest rate even with monthly contributions as low as INR 100. Thus, giving access to a savings plan to everyone without the discrimination of investment capacity.
Sovereign Gold Bond
The government of India issues sovereign gold bonds as an equivalent to investing in gold. SGB have a twofold benefit. The value of your sovereign gold bond is directly dependent on the gold rate. So, if the price of gold increases, your savings will also increase. And they also have a fixed interest rate of around 2.5% above and beyond the increase in the price of gold.
National Cash Certificate
National cash certificates are also one-time best investment schemes, but the government directly issues and manages them. They have a high-interest rate of 6.5% per annum with a five-year lock-in period.
Savings Bank Account
A savings bank account is a last resort to a savings plan. But if you choose the right bank, you can convert it into a good returns-yielding savings plan. The state and central banks in India already provide 4% or 5% annual interest rates. But some new banks provide interest rates as high as 8%. Savings bank accounts are solid savings plans as they give the maximum liquidity and increase the value of your day-to-day use money over time.
You can use any of these savings plans to save money for any financial goal. And if you increase the duration of retention, the money can grow further. It would also help if the savings plan provided compound interest instead of simple interest.
Life insurance with a moneyback policy is a good savings plan among all the discussed plans because it has the dual benefit of a savings plan and life cover. Insurance plans, particularly have a substantial interest rate. Thus, providing you with the benefit of an investment plan as well. So, if you haven’t yet started a savings plan, don’t waste time and invest in one immediately. This will help you gain more returns because of an early start and help you secure your financial future goals.