What Are The Savings?
The amount of money that is left over after expenses is called savings. People may save for retirement, a child’s college education, the down payment on a home or car, a vacation, or a number of other life goals. Typically, savings are set aside for unforeseen circumstances.
Read: How Saving Money Becomes Easy With The Help of Community?
Why Should You Save Money Monthly?
Having a regular savings plan helps people prepare for any kind of financial crisis. Additionally, it enables a person to achieve both short-term and long-term financial goals. One can create a financial cushion for the future and enjoy their golden years of retirement in a stress-free environment by maintaining a disciplined approach to savings.
Apart from providing financial cushion, saving money has the following benefits:
- Strengthens Financial Security
- Provides Room for Investment
- Financial Freedom
- Provides for Emergencies
- Helps Build a Comfortable Retirement
Read: Importance Of Saving Money: Why Is Saving Money Important?
Earn Around 10%-20% Return On Your Monthly Savings
How To Set Up A Monthly Saving Scheme?
In order to fulfill the financial objectives of life, it is very important to start saving right from a young age. To ensure a financially secure retirement, a person should aim to save 20% of their income. To make a plan for saving money that will last forever, follow these tips.
- Create a budget
- Set your savings goals
- Determine the monthly amount you can contribute to your goals.
- Open more than one retirement or savings account.
- Keep track of your spending and income.
- Increase your savings gradually.
Are Monthly Savings Schemes Exempt From Taxes?
Answer: Tax exemption is not available for all savings plans. However, the following savings programs provide investors with a tax break:
- Employee Provident Fund
- National Savings Certificate
- Equity-Linked Savings Scheme
- Public Provident Fund
Which Are The 5 Most Popular Monthly Savings Schemes?
Sukanya Samriddhi Yojana
The Indian Ministry of Finance launched the Sukanya Samriddhi Yojana (SSY) program. This is a savings plan intended specifically to safeguard the girl child’s financial future. The Sukanya Samriddhi Yojana has a number of notable features and benefits, including the following:
When compared to the other savings plans, the Sukanya Samriddhi Yojana has the highest annual interest rate on the principal, at 8.1%.
In India, the SSY account can be opened at any authorized bank or post office.
The account can be opened with a minimum investment of Rs. 1000 and a maximum investment of Rs. 1.5 lakhs per calendar year.
The scheme has a maturity term of 21 years from the date it is issued, and account holders can contribute up to a total of 14 years to the account.
Within India, the SSY account can be moved from one post office or bank to another.
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Public Provident Fund
The National Savings Institute was established in 1968 by the Public Provident Fund, or PPF. It is the safest and most widely used savings strategy in India because it is supported by the government. Section 80C of the Income Tax Act allows for a tax deduction for the PPF account contribution. The scheme attracts an annual income rate of 7.6%, which is compounded annually. One can contribute as little as Rs. 500 and invest as much as Rs. 1.5 lakh per financial year. The benefits offered by PPF are payable in form of lump-sum or up to 12 deposits per financial year. PPF provides flexibility as a person can move their PPF account from one bank or post office to another, it offers flexibility.
Read: Best Guaranteed Monthly Income Plans: 10 Monthly Income Schemes
Post-Office Monthly Income Scheme
This is a monthly savings scheme in which you invest some money and receive monthly interest payments. This savings plan provides a steady income because it is a low-risk monthly income plan. Because the scheme is supported by the government, the money that is invested is completely safe until it reaches maturity. You have two options when the savings plan reaches its maturity period: either withdrawal of the funds or reinvesting them in the plan.
You can start with an initial investment amount while opening the account and later multiply this, according to how much you can manage. This savings plan has higher returns than other investment plans of a similar nature. However, the monthly income plan for the post office will be taxed. This option, on the plus side, does not have tax deducted at source.
Only Indian citizens can use the savings plan. This account is open to anyone under the age of ten. Individuals may open multiple accounts, but the total amount in each account cannot exceed Rs. 4,50,000. For this savings plan, no more than three lakh rupees should be invested by minors.
This savings plan allows for the nomination of a beneficiary or a nominee. Although joint accounts can be opened, the savings plan stipulates that each account holder receives an equal share regardless of who contributes. The entire investment amount can be transferred to a different post office at no additional cost if you are moving to a new city.
Senior Citizen Savings Scheme
How To Set Up A Monthly Saving Scheme?
In order to fulfill the financial objectives of life, it is very important to start saving right from a young age. To ensure a financially secure retirement, a person should aim to save 20% of their income. To make a plan for saving money that will last forever, follow these tips.
- Create a budget
- Set your savings goals
- Determine the monthly amount you can contribute to your goals.
- Open more than one retirement or savings account.
- Keep track of your spending and income.
- Increase your savings gradually.
What are Top 12 Alternative Investment Options in India for 2022
National Savings Certificate
The National Savings Certificate (NSC) is a fixed income monthly saving scheme that one can open with any post office in India. This savings plan is a government initiative that encourages investors, primarily those with low or middle incomes, to invest while saving on income tax. According to Section 80C of the Income Tax Act, investments in this savings plan of up to one lakh fifty thousand rupees annually are eligible for a tax break. For five-year plans, the annual interest rate is 7.9%, while for ten-year plans, it is 8.8%. However, the owner will not receive the interest until the certificate reaches its expiration date.
Conclusion
Besides the government based monthly savings scheme, Money Club is another option where you can save monthly and get good returns. Money Club is the first ever social platform Money which not only provides you a systematic saving scheme, but it also make sure that you have an easy access to your savings and the flexibility to borrow much larger sums, when you need it the most. Here a specific number of members contribute monthly and those in need of money bid for the pooled amount. Benefits of this platform are:
- Credits and savings combined in a single scheme
- Higher returns than saving accounts and bank FDs
- Lower interest rate than most money lenders
Read: Know Your Money Club platform Journey On The Money Club App
