You may have heard the phrase, ‘a penny saved is a penny earned.’ It holds great importance in investment parlance. You cannot understate the importance of saving your hard-earned money for your future needs. Financial experts worldwide have corroborated that developing the habit of saving by investing in a savings plan from a young age is undoubtedly the best financial practice anyone can adopt in their lives.
Why should you save money?
While it may seem obvious, most people don’t practice the obvious. You must save money for a secure and bright future. In today’s world, saving money is not enough. You must invest it in the right scheme, like an assured savings plan, and grow your capital over time.
Let us look at the crucial reasons why you must invest in the best savings plan.
- Insurance coverage
The assured savings plan is primarily a life insurance product. Thus, when you purchase a savings plan, you get insurance coverage and the opportunity to save and build wealth for your future. The insurance aspect of the savings plan also ensures that your family’s financial future is secured. If something happens to you, the insurer will pay the sum assured to the nominee.
- Systematic saving
Most people know the importance of saving, yet they don’t know how to save their hard-earned income. One of the best ways is to purchase a savings plan. It allows you to save systematically and be disciplined towards savings. This is because when you buy a savings plan, you must pay the premium periodically to keep the policy active. And, every time you pay the premium, you contribute towards your savings.
- Allows you to meet your long-term goals
Since a savings plan allows you to invest in a systematic and organised manner, you can fulfil your long-term goals more efficiently. Also, when you buy a savings plan, the insurer allows you to customise the plan to suit your needs. You can choose the investment tenure and amount as per your goal.
For example, if your goal is to accumulate funds for your kids’ future education needs, you can invest for about 15-20 years and invest a particular amount to get the funds you want.
Even though you may be saving for a long-term goal, you may face some hiccups or an emergency along your investment journey. In such a situation, savings can help you overcome such incidents by liquidating the investment. You can withdraw the amount from your accumulated corpus partially or fully after the minimum lock-in period and take care of your emergency financial needs.
- Tax savings
Savings plans offer tax benefits like other insurance plans. The premium you pay for these plans is eligible for tax deductions up to Rs. 1.5 lakhs in a financial year under Section 80C of the Indian Income Tax Act. Additionally, the maturity amount you receive at the end of policy tenure is tax-exempt under Section 10(10D) of the IT Act.
Now that you know the importance of investing in saving plans, do your diligence and choose the best plan that aligns well with your long-term goals.