Save Today For a Secure Tomorrow Even though the avenues available to people for saving have evolved, what has remained constant is the importance and benefits of saving
By Aalok Bhan
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Encouraging financial discipline and bringing in a sense of responsibility, enables people to build for their future. There are many reasons to save, however, here are three motives that cover the rest. Firstly, saving enables one to tide over emergencies, like the current pandemic, or any other uncertainties. Secondly, it allows you to indulge in discretionary expenses, and finally, it adds a greater sense of security to life.
As per a recent survey, it was found that in comparison to pre-COVID-19 times, there has been an increase in consumers' savings now. The survey revealed that savings increased for 48 per cent digitally savvy respondents in tier 1 and 38 per cent digitally savvy respondents in metros, which reflects progress in a positive direction. If you have not yet started saving, here are some solid instruments that can enable you to build a secure future:
Public Provident Fund (PPF): An investment in a PPF account can not only save you tax, but it can also help you plan for a secure future in your golden years. Further, the accumulated principal and interest are completely exempt from tax at the time of withdrawal.
National Pension System (NPS): This scheme is available to all employed as well as self-employed people. One of its main advantage, apart from its tax saving benefits, is that it is portable across employers and locations.
Unit Linked Insurance Plans (ULIPs): Investing in ULIPs not only helps in wealth creation but also provides people with life cover. Here customers get a dual benefit wherein the premium paid is eligible for deductions under Section 80C, while the returns on maturity are exempt from tax under section 10(10D) of Income Tax Act 1961.
Bank or Post Office Fixed Deposits (FDs): FDs are one of the safest investment options. They are provided by banks as well as post offices. These saving schemes earn patrons a higher interest rate than a savings account. However, one must be cognizant of the fact that Interest income from fixed deposits are taxed under the head of 'income from other sources'.
Annuity Plans: This is another effective avenue for long term saving and wealth creation. Annuity plans are savings plan which provides patrons with a life cover as well as guaranteed payouts in the form of monthly income, throughout their lives. In case of any immediate need, customers can choose to get a lump sum in place of monthly income. Being a safe investment option, annuity plans offer financial security along with flexibility in payouts to ensure one enjoys the golden days of life with ease.
Senior Citizens' Savings Schemes (SCSS): Senior Citizens' Savings Schemes are amongst the very first choice of retirees as the scheme offers a sound investment to the senior citizens. Availed from a bank or a post office, the scheme has a five-year tenure, which can be extended by a further three years' post maturity. Under this scheme, the senior citizens can also claim deductions of upto INR 50,000 under section 80TTB on the interest earned.
Pradhan Mantri Vaya Vandana Yojana (PMVVY): The Pradhan Mantri Vaya Vandana Yojana is a high-paying scheme for senior citizens above the age of 60 years. Under this scheme, senior citizens can opt for pension payable in monthly, quarterly, half-yearly or yearly options. One can invest up to INR 15 lakh under this scheme and can avail a minimum pension of INR 1,000 per month, up to a maximum of INR 9,250 per month. This scheme repays the entire investment amount to the senior citizen on maturity, wherein in case of the death of the beneficiary, the return of purchase price is paid to the nominee.
Even though the avenues available to people for saving have evolved, what has remained constant is the importance and benefits of saving. We are all familiar with Aesop's fable about the ants and the grasshopper. With 2020 coming to a close, let's pledge to be like the ants by starting to save today for a secure tomorrow.
