Investing in financial instruments is one of the best ways to secure your future to accommodate your personal and family commitments. And savings plans are considered suitable due to their safe and flexible features. There are different types of long-term savings plans in India. But do they offer great returns? Well, the answer is a big yes! Let us understand it here!
What are Savings Plans?
Savings plans are financial solutions that provide the option to help you accumulate a large corpus systematically over a long period to fulfil your short-term and long-term commitments. These are provided by financial service organisations, banks, and governments based on the prevailing interest rates on the policies. The common savings plan options available are the Public Provident Fund, National Savings Certificate, Equity Linked Savings Scheme, etc.
Insurance providers also offer comprehensive life insurance products that provide a life cover and a savings benefit. These are flexible, safe, and easy to access and evaluate.
Yes, savings plans offer great returns in the long term based on their features and functionalities. Your responsibility is to utilise them to the best possible extent and maximise the benefits.
How Can Long-Term Savings Plans Earn Great Returns?
Here are a few pointers that help you understand how a long-term savings plan can earn great returns.
- Power of compounding – Investments in a savings plan earn interest on the principal amount over a period. When the interest accrued is added to the principal amount, and the total sum is used to calculate the further interest, it is referred to as the power of compounding. This power of compounding keeps repeating until the policy matures, earning higher returns in the long term.
- Keeping the plan intact – You can earn greater savings by keeping the product untouched. However, if you opt for a partial withdrawal during the policy term, it will affect the extent of accumulated earnings and the interest accrued.
- Long-term benefit – Some savings plan solutions work based on their financial market investments. In such cases, choosing a long-term period will help you negate the factors that lower the returns due to a temporary economic downturn.
- Investing early – When you decide to invest early in a monthly savings plan, you can earn greater returns by choosing a long policy term and also getting into the discipline of saving a particular amount regularly at your comfort. For instance, at a younger age, the extent of family commitments will be less, making you invest a larger proportion of your income in a savings plan.
And, if you feel responsible for your family commitments in your absence and decide to invest in a savings insurance plan, then you need to know how it works to earn greater returns.
How Do Savings Insurance Plans Work?
Savings insurance plans offer a life cover that ascertains a sum assured to your loved ones in case of your unexpected demise and, additionally, the benefit of getting returns on maturity. Moreover, insurance providers offer savings insurance plans with flexible features to enhance the plan for your financial needs.
For instance, Tata AIA life insurance provides a money-saving plan that offers guaranteed regular income from maturity for a preferred income period.
You can also opt for riders with the plan. Thus, you can get a customisable savings plan solution that can earn greater returns for your financial needs in the long term.
A savings plan based on your financial needs for the future is an ultimate necessity. It can earn greater returns through the power of compounding when you invest early in life for a longer-term while leaving it intact. And, if you are the sole earning member in the family, you can choose the savings insurance solution to protect your family while ensuring returns simultaneously!