Factors to Remember When You Select a Savings Investment Plan

If you are aware of the factors, you can make informed decisions about savings investment plans

It is important to understand the benefits of investing, and savings investment plans give the best opportunity to do so. Because savings investment plans help to create wealth for the future - it is like life insurance which offers a considerable return on investment. Capital accumulation and insurance coverage are few additional benefits of these savings investment plans. One should keep following factors in mind while choosing the alternatives to invest in a savings policy.

Risk Profile & Tolerance
Personal choices and age are crucial factors. Young people can invest in riskier savings plans as their risk appetite can be much higher than a person who has retired or is above 45. The chances of return are higher with a higher level of risk. For an investor who is risk-neutral, it does not matter to what extent the savings policy and investment plan have risk exposure. On the other side, risk-averse investors only wish to take the bare minimum risk even if they earn lower returns.

Financial Goals
Financial goals can be different to different types of investors. And goals can be different for short term and long term. A few may want to avail of maximum tax benefits from the government while others may go for taking up annuities. A clarity to the financial objectives helps one opt for better savings policy and investment plans.

Inflation
An important factor to consider while investing in a saving plan is to focus on the inflation rate. If the inflation rate is lower than the rate of return of the savings policy and investment plan, only then should one take up the savings plan. Also, the plan shall create personal wealth in real terms. Analyze and understand both the positive and negative implications that inflation can cause in case taking up the investment on a long-term basis.

Flexibility of the Plan
Go for a savings investment plan that is flexible in case investing for a longer time horizon. The plan's flexibility refers to whether the amount invested can be withdrawn or liquidated at short-term intervals whenever there are any emergencies - this helps to reduce the risks about the contingencies that arise in such situations. Read the terms and conditions before signing the contract.

Performance of the Plan
A very important factor. Track the performance of the savings policy and investment plan over the years to find which risk class the plan falls under. It is essential as it also opens up diversification opportunities for the investor. A regular review of the portfolio of the funds of investors is required.

It is important to choose the right savings policy and investment plan. And, if you are aware of the factors, you can make informed decisions about savings investment plans. Need more information on saving plans? Call us at 9818510748.

You might like these too:

- How Life Insurance Shields Your Wealth?

- Retirement Planning at 50

- What Does an Insurance Advisor Do?

- Tata AIA: Fastest growing life insurance company in India

- 6 Important Facts about Life Insurance

- A majority of Indians do not have life insurance

- Difference Between Linked and Non-Linked Insurance Plans

- Secure Your Child's Future Through Life Insurance

- What is an effective financial goal?

- Life Insurance: Most Frequently Asked Questions

- Does Term Insurance Covers COVID-19 Coronavirus?