How to Choose a Savings Plan for Your Needs

Choosing the best savings plan is important to protect your financial future. It’s difficult to choose the best plan according to your needs. 

Financial goals and  risk tolerance are some factors to consider before buying a plan. This helps in growing your money. 

What are Savings Plans?

A savings plan is a financial tool that allows you to set aside money. This money can be used for an education fund, to purchase a home, or in the case of an emergency. These plans compound over time, with interest and investment.
 

Understanding Your Financial Goals 

Clear goals make it easy to choose the ideal investment options

Short-Term Vs. Long-Term Goals

Understand the difference between short-term and long-term goals before investing. Each goals require different financial strategies and products. You can achieve short term goals unde. Examples such as vacations, an emergency fund or saving for wedding. 

For short-term goals, you need investments that are safe and easy to access. Options like fixed deposits or recurring deposits work best for short-term goals. This keeps your money safe while giving some growth.

Long-term goals take more than 5 years to achieve. This includes building a retirement fund, buying a house or a child’s education. The longer period helps your money grow by compounding. This reduces the risks from market volatility. 

Choose market-linked plans for long term plans. For instance, Shriram Life Golden Jubilee Plan (UIN 128L095V01) offers both protection and investment growth. It offers partial withdraw, switch funds and enjoy tax benefits. 

Evaluating Different Savings Plan Options

Looking at all savings plans makes it easier to reach your financial goals. 

Traditional Savings Account 

These are the most common financial products in India. They provide a safe place to save money while giving easy access to funds and liquidity. These accounts are ideal for those who want low risk, security, and easy withdrawals. Their drawbacks are low interest rates.

This is not a suitable choice if your goal is to grow wealth over the long term. 

Life Insurance Savings Plans

These plans combine savings and protection. You can choose these plans to get guaranteed returns after a fixed period. 

For instance, Shriram Assured Plan (UIN: 128N053V06) combines the benefits of Savings, Retirement, and Child Plans together. It gives guaranteed returns and suits people with a low-risk profile to achieve short to mid-term financial goals. 

High-Yield Savings Accounts

A high-yield savings account gives a higher interest rate than a savings account. It is an easy and safe way to grow money while keeping it accessible. 

Key Factors to Consider Before Choosing a Savings Plan

Understanding what matters most makes your savings plan more better. 

Risk Assessment and Tolerance

Before deciding on a savings strategy, it is vital to understand your risk appetite. Savings plans, such as fixed plans, are government-backed and offer small returns. Other savings plans, such as mutual funds, offer a better growth rate, but they also carry a risk of loss. Understand your level of risk tolerance to select the perfect savings plan. This helps in balancing your growth and security. 

Financial Goals & Investment Duration 

The best savings plan depends on your goals and the time you have to reach them. Short-term goals, such as vacations, have low-risk options. Long-term goals such as retirement and a child’s education, where money grows over time, have a slight risk. Knowing your savings goal helps you stay consistent with returns and timeframe.

Flexibility of the Savings Plan

Flexibility is another good factor to consider in savings plans. A good flexible savings plan allows you to switch plans and adjust contributions. You can handle medical emergencies better. 

Cost of the Savings Plan

Every savings plan has fees and penalties that will affect your future earnings. Account maintenance fees, early withdrawal penalties, and exit loads are some standard charges. Ensure that you consider all factors before deciding on a plan. Some low-cost plans provide large returns over time.

Assessing Your Risk Tolerance

Understanding your risk tolerance helps you choose the right investments

Low-Risk Vs. High-Risk Options

Low-risk investments focus on keeping your money safe and provide steady returns. It’s perfect for people with a low-risk profile or those who want short-term financial goals

Examples of low-risk options include National Savings Certificates (NSCs), Fixed Deposits (FDs), or life insurance savings plans. These are safe, easy and give a guaranteed return with lower returns.

High-risk options are linked to the market and suits people with a medium to high risk profile. They help in building long-term wealth. 

Such as Shriram Life Wealth Pro Plan (UIN: 128L096V01) can give higher returns if you’re ready to accept higher risks. 

Balancing Risk and Reward

A financial strategy should balance risk and reward. If you’re dependent on a limited income and need daily cover expenses, choose low-risk options. 

People with extra income can handle some losses without affecting their lifestyles. In this case, they can choose high-risk options 

Diversifying your investment is the way to balance risk and rewards. Spreading money across different assets helps you get better returns. It also helps in keeping market risk under control. 

Considering Tax Benefits

Considering tax benefits helps you save more money. 

Tax-Advantaged Savings Plans

Different savings plans in India vary in tax benefits. Before investing, check how each one affects your tax benefits. For example, if the money you pay for Equity Linked Savings Schemes (ELSS) or for life insurance is deductible under Section 80C. This lowers your taxable income by ₹1,50,000. 

You can claim interest from a regular savings account under Section 80TTA. The limit for this is ₹10,000. These rules help you save more tax. 

Maximising Tax Savings

To get more tax benefits, use full limits under sections like 80C, 10(10D), 80CCD(1B), and 80CCC. Go to a certified tax advisor if you want more clarity. 

Advantages of Choosing the Right Savings Plan

1. Risk Management - A best savings plan allows you to invest without taking on any risks.  
2. Better Returns - The right savings plan helps your money grow steadily by matching your investments to your goals.
3. Peace of Mind - You get a sense of relief when you know that your savings are safe. Without worrying about your savings, you can focus on other priorities. 
4. Cost Efficiency - Good savings reduce fees and penalties, ensuring your money stays invested. 

Seeking Professional Advice

Getting an expert’s guidance helps you make better financial decisions.

Working with Financial Advisors

A financial advisor can help you choose the best savings plan to maximise your returns on investments. They will help you align with your financial goals and risk-taking capacity and achieve the desired results. 

They’re well-informed of the latest taxation guidelines, market conditions, available investment options, etc., so they can create a better financial roadmap to help you achieve all your financial goals.

Customising Your Savings Plan

Everyone has different financial circumstances and aspirations. Professional advice from certified tax planners or financial experts can help you create a good financial strategy. This helps you match your short-term and long-term financial goals and risk tolerance. This helps you match your short-term and long-term financial goals and risk tolerance.

Conclusion

Choosing the best savings plan in India starts with clear financial goals. Before investing, understand your goals and risk profiles. This helps you make smart decisions and helps you reach your goals and match your risk profile.

At Shriram Insurance, you can explore various savings and other investment plans. We’re one of India’s most trusted insurance providers. We also provide Retirement Plans, Child Plans and Protection Plans to help you achieve different financial goals.