Choose a Savings Plan That Can Secure Your Future

The future is uncertain, and a wise way to prepare for unforeseen events is to plan well in advance. If you make sound investment choices at the right time in your life, you can easily safeguard your future as well as create a corpus to achieve your financial goals. Investment decisions are a crucial decision of your life. The choices you make today lay the foundations for your short-term and long-term goals and also serve as a security in case of unexpected circumstances. A wise investment decision is investing in a long-term savings plan. Saving plans come in a wide variety of products, and hence, it is imperative to select the right one as per your needs.

Few factors to help you choose a savings plan for your future:

1. Risk profile:

To find the best saving plan, it is foremost important that you understand your risk appetite. The risk you can take depends on your age and other personal determinants like financial goals, such as saving for your retirement, sponsoring the marriage of your child, investing in a secondary business or others. Irrespective of the savings plan you choose, they carry an inherent degree of risk that could be market risk, inflation risk, concentration risk, etc. So, before choosing your savings plan, conduct an in-depth risk assessment and make an informed decision. Diversifying across different saving plans such as term insurance, ULIPs (United Linked Insurance Plans), money-back plans, guaranteed insurance policy, etc., can help lower your investment risk.

2. Investment horizon and goals:

Each savings plan comes with a specific investment period. Some allow you to choose the time horizon (such as term plans), while others require you to stay invested for a specific period (ULIPs have a five-year lock-in period). Your financial goals largely influence your investment horizon and, therefore, the choice of your savings plan. For instance, if you want to save money for buying a car after four-five years, you can consider investing in a ULIP. Alternatively, if you wish to create a corpus for your children's education or even save for retirement, opting for insurance policies would be a smarter choice as they come with a medium to long-term investment period. Moreover, if your objective is to save taxes, your choice of a yearly savings plan will depend on the maximum tax benefits offered by a savings plan.

3. Features of the savings plan:

There are different saving plans in the market, each with its unique features, benefits and cost/premiums. It is important to understand your savings plan in detail and then make a choice. Ideally, the best saving plan will offer you insurance coverage, assured returns, add-on riders, applicable bonuses and will fit your budget. Moreover, check for the flexibility of the savings plan. Generally, savings plans allow you to surrender your policy by paying a small charge in case of an urgent cash flow requirement. However, it is best to stay invested for the full tenure to get the maximum benefits of your long-term saving plan.

4. Tax benefits:

The best saving plans offer significant tax benefits and are good tax-saving investments for your present and future. The premiums you pay for your yearly savings plan are eligible for tax benefits under Section 80C, and the benefit or proceeds received under these plans are also free from taxes (subject to some conditions) under Section 10(10D) of the Income Tax Act, 1961. By saving more taxes, you will have more money at your disposal in addition to your savings plan benefits.

Overall, the best way to lead a financially secure life is to start saving regularly and at a young age. By investing in a long-term savings plan of your choice, you can swiftly create a financial cushion for your future as well as avail of significant tax benefits in the present. Trust saving plans by PNB MetLife to be an ideal partner in your financial journey.