By Ezra Ivy
Savings plans are a must if you are totally dependent on a fixed source of income. People can financially suffer during an emergency due to the limitations of a single income source. And for this reason, they turn towards savings plans. Most people have a savings plan in one form or another for the known and unknown future requirements. They also invest in different types of retirement plans for the same purpose.
But the investment potential of a savings plan is questionable solely due to a lack of knowledge of its benefits. You might also be wondering whether savings plans are the way to go for future investments. Then don’t worry as here you will get to know more about the investment potential and benefits of savings plans.
5 Reasons: Savings Plans Are the Best Choice for Future Requirements
The debate about whether you can consider a savings plan as an investment plan has been going on for a long time. And the major difference distinguishing both of them is the high interest investment plans have. Some investment plans can even multiply the investment over years.
But nowadays the difference between these two is becoming vague. It is due to the high interest rates that providers started giving for their savings plans. Life insurance and ULIPs, in particular, have such high returns equalling those of a common investment plan.
You can further understand the investment potential in a savings plan with the help of the five points given below.
Secured Capital Investment
Savings plans have assured the return of invested capital. By the end of the investment term, the investor will get back the entire capital without any deductions. This is not seen even in highly profitable investment plans such as equity and market securities. Because in investment plans the value of the capital can decrease if the invested product doesn’t perform well.
Assured Interest Returns
Savings plans also have a fixed agreement between the investor and the service provider. So, the provider cannot back down on the rate of interest that they agreed on at the beginning of the investment. Even if there is a recession your interest returns will remain unaffected.
Tax Exemptions
Savings plans also have several tax exemptions. These include the tax savings on the premium payments, the return of premium, and the rate of interest. So, by choosing a savings plan you can indirectly earn a lot of money by saving money otherwise spent as taxes. Tax benefits are in accordance to the current tax laws that are subject to change from time to time.
Financial Security
Most of the population invest in savings plans for their retirement benefits. There are several types of retirement plans that can provide high and assured returns to the investor. Having such a backup plan for the future creates a sense of financial security. And it helps in managing and meeting the expenses of life during retirement life.
Financial Protection to Dependents
Through the nomination facility of savings plan, people can also hand over the returns to their loved ones in case of their untimely demise. Thus, if the dependents didn’t have any other source of income they can rely on the funds from the savings plan.
Reading these points might help you understand how savings plans are apt investment choices for any future economic needs. But investing in any savings plan is not enough to obtain these benefits. For that, you must invest in better savings plans from a reliable insurance company.
