Why do I need Savings & Investment Plans?

In life, you have always given your family whatever they have wanted. Yet, there are some promises you have to fulfil, such as taking your family for a vacation, or buying that dream house. Set aside some money to achieve these specific goals with the help of Reliance Savings & Investment Plans. These investment plans allows you to experience the joys of life and provide for your family's needs. Enjoy life without worrying about the promises you have made—we are here to fulfil them.

Our Savings & Investment Plans provide you the assurance of lump sum funds for your and your family's future expenses. While providing an excellent Saving Plans tool for your short term and long term financial goals, these online investment plans also assure your family a certain sum by way of an insurance cover.

You have always given your family the very best. And there is no reason why they shouldn't get the very best in the future too. As a judicious family man, your priority is to secure the well-being of those who depend on you, not just for today, but also in the long term. More importantly, you have to ensure that your family's future expenses are taken care, even if something unfortunate were to happen to you.

A big factor that you need to consider while building your wealth is inflation. It has a dual impact on your hard-earned savings. Inflation not only erodes your current purchasing power but also magnifies your monetary requirements for the future. Sample this: A 35 Year individual needs to invest Rs. 36,000/- per year with 8% returns to build a corpus of Rs. 10,00,000/- by the age of 50 Years.

Life insurance can serve as the foundation of a well-thought-out financial strategy. And if you're someone who wants to take an active role in reaching your financial objectives, you may be looking for a life insurance policy that provides more than just simple protection - one that gives you the potential to accumulate wealth that can help you achieve a variety of future financial goals.

Assured Savings Plan may be just the Plan for you. This Plan not only provides affordable protection but also helps accumulate wealth for achieving future financial goals by giving guaranteed benefits .

Tax Saver: Tax Exemption

About Tax Saving

An income tax is imposed on an individual or a company by the Government of India only if his or her income is included in the slab of taxable income. The Indian Income Tax Act of the year 1961 governs the levy whereas C. B. D. T. (Central Board for Direct Taxes) governs the Department of Income Tax in India. However, as per some of the sections of this Act like Section 80 C, 80 CCF, 80 D etc., exemptions are given on certain incomes. There are many tax saving options, investing on which, one can get a deduction on his or her total income tax.

Tax Saving Options

India has got several government as well as private sector organizations offering numerous tax saving options to the residents of this country. Some of them are as follows:

Public Provident Fund: Commonly known as P. P. F., this tax saving option falls within the Section 80 C of the Income Tax Act in India. Public Provident Fund allows a maximum contribution of INR. 100, 000 per year. The return in this scheme is compounded annually at the rate of 8.5%. It is one of the long term ventures that does not allow complete withdrawal before 15 years. Post 5 years of investment, withdrawal is possible though. No tax is levied on the earned interest. Besides these, it even forms a retirement-planning tool. One can have such an account in either the State Bank of India or some of the nationalized banks or at some of the designated post office branches.

Unit Linked Insurance Plans: Covered by the Income Tax Act's Section 80 C, U. L. I. P. is a unique blend of investment and insurance that gives a tax exemption of INR. 100, 000 per year. Here, the premium, which is being paid by a customer, gets deducted with initial charges while the rest of the amount is invested. Such Saving plans can be of the following three kinds:

Aggressive ULIPs where one can invest 80 % to 100 % in equities. The rest can be invested in debt instruments though.

Balanced ULIPs where an individual can invest 40 % to 60 % in equities Conservative ULIPs, which allows one to invest up to 20 % in equities

Equity Linked Saving Scheme: Popularly called E. L. S. S., this is a kind of mutual fund that comes within the Income Tax Act Section 80 C. With a minimum investment period of 3 years, this investment option helps one get exempted from income tax payment and offers an exemption of maximum INR. 100, 000 in a financial year as well. The interest rate depends on the performance of this scheme in a given year. However, if it does well, then it is more likely to increase even the interest rate of P. P. F.

Fixed Deposits: Fixed Deposits (FDs) are another popular tax saving option covered by the Section 80 C of the Income Tax Act. With a maximum exemption of INR. 100, 000 annually, the rate of interest varies from one bank or post office to another. However, the tax saving can only be done of FDs once you have invested for a minimum duration of 5 years. This scheme neither allows the encashment of the money prior to completion of the 5 years term nor can this be used as the security against any loan.

Employee Provident Fund: Famously called E. P. F., this scheme offers a total yearly exemption of INR. 100, 000 as mentioned in the Income Tax Act Section 80 C. In this fund, 10 % to 12 % of a person's basic salary gets deducted and the other 12 % is contributed by the employer. One can withdraw the entire amount in instances of leaving job, retirement after 58 years of age or taking V. R. S. Partial withdrawal can be done for home, medical or marriage related expenses though.

National Saving Certificate: This tax saving scheme known as N. S. C. helps one get exempted from tax by an investment of up to INR. 100, 000 per year under the Section 80 C of the I. T. Act of India. The interest rate is compounded half-yearly at the rate of 8 % and reinvested every year from the last year's N. S. C. The minimum period for this investment scheme is 6 years post which, one is provided with the entire interest along with the initial capital. The major benefit of this is that one can earn a maximum tax saving interest of INR. 100,000.

Health Premiums: Popular as Mediclaim Policies, which are a form of health insurance, comes within the Section 80 D of the country's Income Tax Act. Applicable even on the proprietor firm's cheques, these policies offers a maximum deduction of INR. 35, 000. This deduction is calculated in addition to any other tax saving done as per the Section 80 C. The total amount of INR. 35, 000 can be divided as follows:

INR. 15, 000: Premium for policies on spouse, children or self

INR. 15, 000: Premium towards policies for dependent parents, who are non-senior citizens

INR. 15, 000: Premium for dependent senior citizens

Besides saving your income tax, these policies even help you deal with your or your family's health related problems with ease during any emergency situation.

Tuition Fee: Covered under the Indian I. T. Act Section 80 C, payment made towards the education of children is even exempted from one's yearly income tax. Being a part of Section 80 C, one can get a maximum exemption of up to INR. 100, 000 per financial year. Tuition fee for school, college and university as well as coaching fee for varied competitive exams are considered under this policy. However, just 2 children are considered for such a kind of tax exemption.

Post Office Saving Options: Under the Section 80 C of the I. T. Act of the nation, one can invest in any of the different tax saving options provided by the post offices. Though, along with the terms and conditions, the interest rate as well as the tenure of the investment varies from one scheme to another, they provide a maximum deduction of INR. 100, 000. To name a few of such schemes offered by India Post are:

Recurring Deposit Account (5 Year)

Time Deposit Account

Public Provident Fund Account (15 year)

National Savings Certificate (VIII issue)

Senior Citizen Savings Scheme

Mutual Fund: Being covered under the Section 80 C of the I. T. Act of India, this type of investment plan helps in a total exemption of INR. 100, 000. The entire tenure of such a scheme varies from 3 years to 5 years. Equity Linked Saving Scheme is considered to be one of the best tax saving mutual funds.

Tax Rebate Such a rebate is actually the deduction calculated on the tax, which is computed over one's annual income. Under Section 88 of the Act, certain rebates are allowed. Apart from the different tax saving schemes, one can get a rebate at the rate of 20 % of the payment, deposit or investment made on a maximum amount of INR. 60, 000. Under the Section 88 B, a rebate of INR. 15, 000 is given to a senior citizen of the country (65 years of age or more) irrespective of his of her income. However, the Section 88 C grants a woman assesse an extra rebate of INR. 5, 000.

Tax Saving Options in Public Sectors Banks Fixed deposits are among the most popular tax saving options in most of the public sector banks. Besides that, some of the public sector banks like the State Bank of India, Allahabad Bank, Punjab National Bank and many more offers some other tax saving options like P. P. F., mutual funds and infrastructure bonds etc. Another unique bond, which helps to save tax payments, is 6.5 % Savings Bonds, 2003 by R. B. I. (Reserve Bank of India). This bond's tenure is for 5 years with an annual interest rate of 6.5 %.

Source: http://www.taxexemption.in/tax-saver.html

5 Simple Rules to Maximize Your Savings

Every year we take some resolution on our birthday or the New Year – like exercising for 1 hour daily, reading a book every month, etc. This year let’s add “save more and invest” in our resolution list. This resolution will go a long way in maximizing savings in the long term, resulting in a much better and happier financial life.

In this article we give you the hands-down approach on planning your savings smartly.

Pay off your debt and credit card bills on time: It is better to have low savings or investments for a short period of time, but being debt-free and starting clean will help you build a much better foundation for the future. Effectively managing debt and credit plays a very important role in achieving financial freedom and stability. It is advised to pay off your high interest debts, particularly credit card dues, as early as possible. Unfortunately, today’s youngsters are the main victims of the credit dept spiral.

A typical free credit period in India is 45-51 days. If you pay off the dues within this period, the interest is saved. If you are unable to pay off the entire amount within the due date, a common practice is rolling over the dues after paying the minimum amount. This is expensive as you would have to pay an interest of about 3 % per month (yes, 36% interest p.a.!) on your dues, and the bad news is that the new purchases made will not get any interest-free period until the dues are completely settled. Many people are still not aware of this.

Hence, it is always advisable to pay your card’s bills well within the prescribed time, thus avoiding unnecessary charges such as overdraw charges, late payment, interest cost, etc. All this adds up and you could save Rs.5000 to Rs.50000 every year.

Track your expenditure and create a cash flow statement: This month, try to record everything you spend. The expenses can be divided under heads like:

Household – Food and groceries, rent/maintenance, conveyance/fuel and maintenance, healthcare, utilities bills, housekeeper, mobile;

Lifestyle: clothes and accessories, shopping/gifts, dining, movies, personal care, vacations;

Dependent Expenses: Children’s schooling and other expenses, contribution to parents’ retirement;

Insurance Premium: Term Insurance, mediclaim, vehicle insurance, other insurance;

Loan Servicing: Home loan EMI, vehicle loan EMI, personal loan EMI.

* If there are any yearly expenses – Divide the same by 12.

All this will tell you what your net outflow is every month. Deduct the same from your income to check what your net saving is every month.

At least 10% to 20% of your total monthly income should be saved and invested towards your goals. If your expenses don’t allow that, look for ways to cut back, like trimming the lifestyle expenses.

Pay yourself first: Most of us have a habit of saving only what is left at the end of month in our bank account, which is not a disciplined approach. On the contrary, we should become a little smarter and pay ourselves first. That is, whenever we receive a pay cheque or other income, we should first save/invest a part of it and then spend the remaining amount. By doing this we will not feel guilty about our spending as we already have kept some aside for investment purpose.

 Pay attention to taxes: The Government of India and Income Tax Authority want to promote savings and investment and give tax breaks under various sections in order to encourage people to do so. Hence it is advisable to do proper tax planning every year and invest in avenues which give tax breaks. This can help you to save up to Rs.50000 every year on taxes, which is not a small sum by any means.

Set savings goals and invest with discipline for that goal: Attaching a goal to a Best Saving Plans and investment plan will always motivate you to stick to the plan. The goal can be short-term like: travelling or buying a car. Alternatively, the goal can be long-term like: retirement. For each goal, figure out how long you have to save for it and set your monthly savings target towards that amount. There is a facility in mutual funds called SIP (Systematic Investment Planning) which sets up automatic transfers from your savings account to the designated investment. As is rightly said – if you don’t see it, you won’t spend it!

Investments should beat inflation: If our savings are meant for very long term goals like children’s education, children’s weddings, retirement, etc., then it would make more sense to ensure that the returns from our investments should beat inflation. If they fail to do so, then the whole purpose is defeated. We may consider bank FDs safe but if they don’t help reach the target amount, then what is the purpose of having it in the first place? This is where equity investments like direct equity, equity MFs or equity ULIPs can give better inflation-adjusted returns in the long term, than the popular fixed income instruments.

Conclusion: Finally, I would like to conclude by a quote from by Ron Lewis: “It’s never too early to encourage long term savings.” I would advice every investor to start saving and investing at least 10% of their monthly income towards their goal. The earlier you start saving, the more time your money has to benefit from ‘the power of compounding.’

Source: http://investmentinsights.bajajallianz.com/insights/index.php/articles/254/?utm_source=savingsPlan&utm_medium=link2B&utm_content=article&utm_campaign=articleonlandingpage

Limited Premium Saving Plans Gaining Popularity

Limited premium policies have become one of the best selling products of the life insurance sector. With single premium plans fading out in the retail segment, limited premium plans have been able to help life insurers to sustain their growth in the non-single premium segment.

In limited premium plans, customers pay premium for a shorter span of time for a longer period of insurance cover.

These plans are very useful for those people who prefer to be relieved from the commitment of paying insurance premiums for a longer duration.

There has been significant growth in these plans, as most customers have a limited horizon for investment and require funds for specific needs such as increase in childrenâs school or tuition fees or any other financial requirement at regular intervals.

Insurance companies also enjoy higher persistency levels if the limited premium paying product is suitable to the long-term financial goals of the policyholder.

For the past few years, limited premium products have been able to gain significant market share in India. Although its market share was 5-10% in the initial phases, it has increased to 15-20% in the past few quarters.

The factor that single premium products have become unattractive due to lower tax benefits has also contributed to the popularity of limited premium products.

The last budget (2012-13) had proposed that a life insurance policy would be eligible for tax benefits only if the sum assured was at least ten times the annual premium. This, too, impacted single premium products, as the sum assured on death is less then ten times the single premium in these products.

While yield-to-maturity does not vary much between limited premium and single premium, the total premium paid towards a limited pay policy can be higher then that of a single premium policy, leading to a higher maturity value.

Also, with a limited premium plan, a customer can link his change in income to the premium payment and can plan relatively bigger saving plans and sum assured as compared with a single premium plan. Further, tax benefit is limited to one year. Riders, too, are generally unavailable under single premium plans. However, they can be purchased under regular or limited premium plans.

Non-single premium income of life insurers has seen an 8.1% rise for April-December 2012 period in the retail segment. The new business premium for non-single segment rose to Rs 30,169.57 crores from Rs 27,892.84 crores in the last financial year.

On the contrary, single premium is seeing a decline of 6.4%. Single premium for the individual segment fell to Rs 10,518.48 crores for the April-December 2012 period, compared to Rs 11,238.48 crores in the same period last financial year.

Source: https://www.policymantra.com/blog/limited-premium-plans-gaining-popularity/

Have you saved enough for your family?

Life is a beautiful journey that comes along with various important milestones you aspire to achieve for a happy and secured family life. These milestones could be your house, your child’s education and marriage, your retirement plans, business plans etc. However, with the growing inflation rates, improved lifestyle measures, high-end socializing and for getting best of the amenities just dreaming and saving some money in your piggy bank won’t work. For this you need a careful planning and a regular savings approach. A savings plan is a non–participating limited pay endowment assurance plan that allows you to enjoy the benefits of a long term savings plan ensuring that you and your family are free of any financial worries. Savings plan helps individuals secure financial protection and attain their financial goals. The suitability of savings plans vary from person to person, as it depends on factors like budget, age, income sources, needs and wants of an individual.

The article guides you through some of the savings plan that we all require at different stages of life. 

Emergency Savings Plans: This fund is much desperately needed when there are unexpected events, such as car and home appliance repairs and medical expenses etc. It is advisable since it is a small term goal you could use savings accounts to grow your emergency fund.  The good point is that it allows you to withdraw money quickly. One could set a maximum limit for emergency savings. When that limit is crossed, the excesses can be transferred to goal-oriented savings plan.

Retirement Plans: Retirement Plan is investment insurance plan which allows you to save systematically and build up the much needed lump sum to provide yourself a regular income after your retirement. A person pays fixed amount, known as the premium, to the insurance company, over a pre-determined period of time, known as the term of the policy. The premium will be invested by the insurance company in various instruments to earn returns and build a corpus over the term of the policy. The amount paid as premium is also eligible for tax benefits.  

Goal-Oriented Savings Plans: These savings plan are aimed at generating funds for meeting a specific goal, such as the purchase of a car, a house, going for a holiday etc.  Such plans typically involve savings funds in financial instruments such as equities, debt and mutual funds that yield high returns.

Child Savings Plans: As the name suggest it is for the better future of your child. In this highly unpredictable  world it is extremely important that you keep no stone unturned for secured future of your child right from the day he or she arrives. You can opt for growth oriented child plans which are tax free products built for child safety and secured future aspect.

Short-term saving plans usually meet your needs which arrive in a span of one to two years while you work, run a business or earn in any form. These could be setting up a savings account, Certificates of Deposit, Money Market Deposit Accounts, Government Tax-Saving Bonds etc.

However, when you wish to achieve your long-term goals especially thinking about the day your earning machine comes to halt or you perish from this world then the only solution lies is guaranteed Best savings plan. This savings plan enables you to save money for the long term, while receiving the benefits of a life insurance. The assured sum is paid out in addition to bonuses accrued over the years, as a lump sum either when the plan matures or in the event of the death of the insured person.

Pradhan Mantri Suraksha Bima Yojana and Jeevan Jyoti Bima Yojana differences

Pradhan Mantri Suraksha Bima Yojana and Jeevan Jyoti Bima Yojana are social security schemes launched for the common man of India. Both these schemes are insurance scheme. Many people get confused between these insurance schemes as both schemes are more or less similar. So, what is the difference between Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Pradhan Mantri Jeevan Jyoti Bima yojana (PMJJBY)? Why two schemes are required? Let’s try to figure out the differences and similarities between these schemes.

What is Pradhan Mantri Suraksha Bima Yojana?

Pradhan Mantri Suraksha Bima Yojana is accidental death insurance scheme.

Pradhan Mantri Suraksha Bima Yojana is available to the people in the age group from 18 years to 70 years.

Bank account linked to Aadhar Card is mandatory for this insurance scheme.

The Premium of this scheme is 12 Rs/- per year.

Pradhan Mantri Suraksha Bima Yojana provides accidental death risk cover of 2 Lac.

Default term of this insurance scheme is 1 year which can be extended year on year.

What is Pradhan Mantri Jeevan Jyoti Bima Yojana?

Pradhan Mantri Jeevan Jyoti Bima Yojana is low-cost life insurance policy.

Pradhan Mantri Jeevan Jyoti Bima Yojana is available to the people in the age group from 18 years to 50 years.

The Premium of this scheme is 330 Rs/- per year.

Pradhan Mantri Jeevan Jyoti Bima Yojana provides insurance coverage of 2 Lac. 2 Lac will be paid to the nominee in case of natural or accidental death.

Risk coverage can continue up to 55 years.

Aadhar card is required in order subscribe to this scheme.

Premium paid under this scheme is eligible for tax deduction under 80C.

Difference between Pradhan Mantri Suraksha Bima Yojana and Jeevan Jyoti Bima Yojana

Pradhan Mantri Suraksha Bima Yojana

Similarities between Pradhan Mantri Suraksha Bima Yojana and Jeevan Jyoti Bima Yojana

Pradhan Mantri Suraksha Bima Yojana

Conclusion -

Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) are very Best Saving Plan insurance available for Indian. Total sum assured offered by these insurance schemes is not sufficient. You can purchase these policies, however, it is recommended to purchase additional term plan along with sufficient risk coverage.

Source : http://moneyexcel.com/12278/pradhan-mantri-suraksha-bima-yojana-jeevan-jyoti-bima-yojana    

A saving plan that suits you

The first step on the road to fabulous wealth is saving. But faced with inflation and escalating living costs, it can be difficult just to make ends meet, much less saving money. So, where should we start?

Work towards a goal

We need a concrete goal if we want to get anywhere, and the same is true for our savings. You could be aiming to save $50,000 within 2 years to tour around Europe, $100,000 within 5 years to cover the cost of your studies, or $150,000 before the age of 30 for your wedding banquet. Having a target and timeline to aim for allows you to calculate how much you need to set aside each month or year as you move ahead. Then it’s simply a matter of finding the best way to work towards that goal, including possibly enrolling in a saving deposit plan at the bank to achieve it.

Save before you spend

Most people live pay cheque to pay cheque, paying bills and making necessary purchases first and then worrying about saving any money that’s left. They often find that there simply is none, or even that they have to spend money saved from previous months to get by. But there is a budget hack that may help!

Try setting aside 10-30% of your monthly income as savings immediately, in a location relatively inaccessible to withdrawals like a bank deposit plan or investment product with low risks and steady returns. That way, when you go to pay bills and adjust your budget you will be working with a smaller sum already – saving money while also tightening your spending!

Compound interest – let your money work for you

Saving is hard when you work hard for every cent. That’s why you need to let your money work for you. The earlier you begin saving your money, the more powerful the effect of compounding is! Make the best of time deposit and savings insurance plans as early as you can! The money growth in your accounts can make budgeting much easier.

Explore income sources and reduce expenses

We only live once, so it’s important to seize the day. An overly strict Best savings plan, however, could limit our chances to see the world. What’s worse is very often when working with a rigid plan, the potential rebound could be going on spending sprees and quickly use up all their savings. In view of this, perhaps we could consider seeking more income sources, such as freelance jobs or online trading, to earn a little more outside the office.

When you draw up your savings plan, you should take into account the financial burden you can bear, and make sure you have enough cash for emergencies. Fresh graduates should also consider the fact that their parents could retire anytime, so they could soon become the bread winner for the whole family.

Source: http://blog.fwd.com.hk/en_US/2015/09/09/saving-plan-suits-you/