Once you start earning and have a regular income, it is natural to start thinking about saving your earnings and investing in a way that your hard-earned money can grow and reap benefits for you.
However, after a certain income bracket, one also must be aware of the income tax they are liable to pay to the government on a yearly basis. As a taxpayer, you must be mindful about the taxable amount you need to pay every year and if any of this amount can be exempted by investing in tax-saving instruments.
If you are looking for ways to save tax while accumulating wealth, then your search can end on a saving plan!
A saving plan or scheme can offer a variety of features that will help you achieve your future goals while saving tax and enjoying a life insurance cover to a certain extent. It is this trio benefit of the saving schemes that attract the youth to it the most!
Check out these 6 main reasons why you should also be adding a saving plan to your portfolio:
Building A Savings Habit
No matter how much you earn and for how long, it is essential to inculcate a savings habit that will be beneficial in the long run. By investing in a savings plan, you can ensure that you start putting money aside from an early age and claim tax deductions as and when applicable.
Additionally, it would be helpful to go for a scheme that not only offers wealth creation but also provides a life insurance cover, giving you all-around protection.
Diversifying Your Investment Portfolio
A saving plan doesn’t only have to be focused on helping you invest and earn handsome returns. There are ample types of life insurance plans that can help you not only mitigate risk with a life cover but also save tax. However, if saving money is your primary goal and getting insurance with it would be an added benefit, you need a Unit Linked Investment Plan.
If you buy a saving plan, then not only can you enjoy tax benefits but also avail financial protection against illnesses and comprehensive death benefit, which is a win-win scenario for most taxpayers looking to get a life cover at an affordable rate.
Ease Of Liquidity
These are relatively flexible plans that can be easily liquidated as and when the investor desires. However, remember to keep the tax benefit in mind when you decide to liquidate money from your saving schemes. You can think of this as money parked aside to create wealth and come in handy in emergencies and during unprecedented situations.
Enjoying Guaranteed Payouts
You may have many long-term goals like buying a new home, paying for your children’s education and marriage, preparing your retirement corpus, taking an international tour, etc., to name a few.
A saving plan would be an ideal way to help make your long-term goals come true. With the guaranteed payouts that these types of plans offer, you can support your life goals and the ones of your family at ease.
Creating Emergency Backup
There are many types of savings and income plans, like the guaranteed benefit plan, assured wealth plan, income advantage plan, guaranteed income plan, savings advantage plan, etc., to select from, and create a portfolio accordingly.
However, what is common between these plans is the goal to help you save income and park it aside for rainy days. Your investment will definitely reap the benefit and yield good returns in the long-term, but they will also offer you a cushion, i.e., a backup financial plan, in case there is a need in the family.
Planning Your Taxes Early
With the help of a saving plan, you can start planning your taxes as well! Under section 80C, you can claim a deduction of up to Rs. 1,50,000 by investing towards this plan every year, as per the old tax regime of the Income Tax Act (1961).
This amount that you save in a saving scheme of your choice every year can not only earn handsome returns but also help you save taxes every year, making it a double benefit scenario for taxpayers. Additionally, the maturity and death benefit claimed by the beneficiary of the life insured will also be tax-exempted under section 10(10D) of this act.
Eventually, if you are earning but not really saving or investing your hard-earned money, then it may not make much of a difference either way. Hence, you must remember to select income plans or saving schemes that suit your requirements and those of your family the most.
Nowadays, invest and save apps like moneybox is a very popular way to earn interest on your savings, to save for your first home with a market-leading Lifetime ISA or to bring together your old pension pots.
Moneybox is not the only invest and saves app. You can compare moneybox vs nutmeg or moneybox vs freetrade.
The best way to earn and create wealth with your earnings is by opting for saving schemes that will help with capital appreciation, offer tax benefits, and help you build a strong portfolio that will reap benefits in the long run.