When it comes to your financial future, there are several things that you have to keep in mind. It is always best to make informed decisions on the best saving scheme for your portfolio, instead of blindly going by others’ advice and inputs. However, to do this, you will have to thoroughly evaluate multiple such savings and investment schemes before coming to a final decision.
Some of the key aspects in this regard also include tax implications and benefits, risks, and, of course, the final returns that you can expect. Let us look at some of the best options in this article.
Best Saving Scheme for You: Top Choices
Here are some of the top savings schemes that you can consider:
1. PPF (Public Provident Fund): This is ideal for those with lower risk tolerance levels. You can expect assured returns from this government-backed scheme with tax deductions for your annual contributions and exemptions for the maturity amount. Yes, the returns may seem lower than many other market-linked plans, but there is not much risk involved. The lock-in period of 15 years (you can extend this) is another point worth considering for building up long-term savings.
2. Fixed Deposits: The interest rates are again lower than many investment plans, but the returns are fixed. There are virtually zero risk elements in this plan, and you can choose to compound your money to earn even higher returns over a period of time.
3. ULIPs: Unit-linked insurance plans are excellent savings options and suit those with moderate risk appetite. They offer life coverage throughout the policy period while enabling you to invest in market-linked instruments for earning higher returns in the long haul. Of course, there are risks involved, but you can mitigate them with features like fund-switching and professional fund management. The premium payments are tax-deductible, depending on certain conditions. However, the annuity received is taxable as income.
4. Pension Plans: These plans are ideal for getting a guaranteed income stream after retirement. You have to invest a certain amount in a lump sum or periodically over time and then get an annuity to cover you after retirement. Many pension plans also have handy life coverage that you can consider. Premiums of immediate annuity plans are tax-exempted.
Some other options include post office monthly income schemes, National Savings Certificate, Senior Citizen Savings Scheme, Pradhan Mantri Jan Dhan Yojana, and the National Pension Scheme (NPS). You should evaluate each of these choices thoroughly and then go ahead.
What Should You Do?
As they say, it is not advisable to keep all your eggs in one basket. Hence, you should diversify your savings and investment portfolio. If you have a lump sum amount, put some into a fixed deposit for long-term wealth creation, and also invest in the PPF every year.
Simultaneously, consider ULIPs for mid-term and long-term goals while investing in pension plans for retirement. Make sure you have adequate life and health insurance coverage while spreading out your investments in avenues like mutual funds, ELSS, NSC, and so on, with varying levels of risk.
This post first appeared on The Kashmir Pulse
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