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Personal Finance 101: Choosing The Perfect Savings Scheme

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Saving is a phrase widely used in India by people from all walks of life. Most individuals in the country value the necessity of saving their wages when they are young to achieve their hopes and aspirations in the future, whether for a short, medium or long term timeframe.


Personal finance 101: Choosing the perfect savings scheme

The term ‘saving schemesrefers to revenue that is not spent or postponed consumption. Regardless of their occupation, any individual can save money by placing it in a savings account, contributing it to a pension account, or investing it in any of the schemes or funds managed by banks, financial institutions, post offices, private businesses, etc. the list goes on. To some degree, saving entails minimising expenses such as recurrent charges.

Best Personal Finance Tips

Here are the best personal finance tips to get ahead financially.

1. Start early

You should begin saving as soon as possible in your life. Saving even a tiny amount will establish a habit and give you a head start. 

Over time, the force of compounding will work in your favour, and you may see exponential growth in your savings. Do not wait and begin saving as soon as possible since you will require a less amount compared to a more significant amount if you start later.

2. Stick to a Budget

Budgeting is a crucial step to take while attempting to get ahead financially. After all, if you don’t have a budget, how will you know where your money is going? 

How can you establish spending and saving goals if you don’t know where your money is going? Whether you earn thousands or hundreds of thousands of rupees each year, you must create a budget.

3. Have Saving Schemes

You’ve probably heard the adage, “Pay yourself first.” If you wait until you’ve satisfied all of your other financial commitments before looking at what’s leftover for savings, you’re unlikely to have a healthy savings account or investments.

Commit to saving at least 5% of your earnings before you begin paying your debts. Better still, have money withdrawn from your paycheck and transferred into a separate account deducted automatically.

Best Saving Plan In India

Here are some of the best saving plan in India:

Equity Mutual Funds

Those interested in investing in this programme will mainly deal with equities stocks. According to SEBI (Securities and Exchange Board of India) mutual fund regulations, an equity mutual fund scheme must now invest 65 per cent of its equity assets or other equity-related instruments.

Unlike the others, this fund may be handled either aggressively or passively, depending on the individual’s preferences. The fund manager’s competence mostly determines returns in an active fund.

Senior Citizen Saving Scheme

SCSS is a programme supported by the Government of India as a savings option for inhabitants of the nation over the age of 60 that is part of the saving-investment strategy. It takes five years to develop and mature an account from the day it is started, and the initial deposit is made in a bank. 

This can, however, only be extended once for another three years. The Senior Citizen Savings Scheme has an interest rate of 7.4 percent from April through June 2020.

National Pension System

This scheme is a pension plan and an investment plan designed by the Government of India to help aid and provide for older individuals after retiring. It is an excellent saving scheme for senior citizens.

It provides a well-compensated, long-term savings plan that assists a person in navigating and deciding what they want to do after retirement through a properly regulated, market-based return.

Direct Equity Investing 

Direct equities investment is the way to go if a person is looking for long-term gain. When a person purchases stock in a firm as part of a savings investment plan, they become a part-owner of that company.

In this manner, they also earn a piece of their profits. Individuals who desire to invest favour stock since, other than conquering inflation, no other investment choice has such long-term high growth.

Public Provident Fund

This is one of the most popular saving schemes due to its numerous advantages and investor-friendly features. This was designed to help people who want to earn high, consistent, and reliable returns while taking on a little risk.

As authorised by the Government of India, this plan is implemented with a guaranteed return method to ensure that the people’s financial requirements are safeguarded and met.

Debt Mutual Funds

In layman’s words, a mutual debt fund is a form of savings investment plan that relies on individuals spending their income to earn handsomely from the big market. This investing strategy is low-risk.

This is mostly due to the debt market’s availability of properly crafted instruments to aid in purchasing and selling loans in return for interest.

This is ideal for someone searching for a consistent return, albeit it may be lower than equities funds. Since they are less volatile, debt funds often invest in assets that accumulate fixed interests, such as commercial paper, treasury bills, corporate bonds, government securities, and others.

Pradhan Mantri Vaya Vandana Yojana

This is another saving scheme for older folks aged 60 and over. The Government of India developed the plan to serve as both a pension programme and an investment opportunity. The system was designed to last three years during the initial planning, from May 4th, 2017, to March 31st, 2020.

However, the plan has been extended for another three years due to the positive response until March 31, 2023. The programme gives a beginning return of 7.40 per cent per annum for the fiscal year 2020-21 to benefit users. This will thereafter be reset annually.

Bank Fixed Deposit

Compared to stock and mutual funds, this is regarded as one of India’s safest techniques of best saving plans. According to the DICGC (Deposit Insurance and Credit Guarantee Corporation) guidelines, any individual who chooses to deposit in a bank is covered up to a maximum of Rs. 5 lakhs. 

Schemes that give monthly, quarterly, half-yearly, and other interest possibilities were accessible to aid the people.

Wrapping It Up

Choosing a suitable saving scheme will help you and your family in the long run, as well as their family in the future. Even though several alternatives are available on the market, it is essential to conduct sufficient research to determine which of the various plans is ideal for you. 

Talk to those who have previously established a savings and investing strategy, and consider the benefits and drawbacks. If you are still unsure, you may always seek expert advice.

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