5 Reasons Why Do You Need Savings and Investment Plans


Investment plans are high returns yielding plans which everyone must have. And as compared to savings plans their returns to investment ratio is much higher. Also, any best investment plan for 5 years or more can give the maximum returns that even long-term savings plans cannot provide. But apart from the high returns, there are several more reasons why people prefer investment plans. Here you will get to know more about five such reasons why you do need investment plans.

To Increase Value of Money Over Time

A drawback of savings plans and savings bank accounts is that they have a very low interest rate. These interest rates are almost equal to the projected inflation rates. So, the value of your saved money will depreciate over time.

You must invest in investment plans if you wish to protect your hard-earned money from depreciation. The interest rates in investment plans are always much more than the projected inflation rate of 3%. So, you don’t need to worry about the value of your money when you need to withdraw it or by the time it matures.

To Gather Funds for a Future Requirement

Several anticipated occasions in life require money. And most of such occasions are in the far future, somewhat five or ten years ahead. A few examples are higher education, college, marriage, business, purchasing assets, and retirement. A savings plans can become useful in such a situation by making regular contributions over the years. But they don’t utilize the benefit of a long-term investment.

However, through investment plans, you can fully utilize the benefits of these prolonger durations. With high interest rates and compounding a good investment plan can almost double the investment in ten to fifteen years.

To Save Money Spent as Income Tax

Investment plans also have several tax relaxations as the Income Tax Act of 1961. There are several sections in the act where you can claim tax relaxation or deduction in your taxable income. And considering the high savings limit of INR 1 to 2 lakhs per annum, you can save a lot of money. Particularly in your long-term investment plans. However, tax laws are subject to change from time to time.

To Have Better Lifestyle

The maturity funds from the investment plans are also very high allowing you to save money for a more luxurious lifestyle. So, you can efficiently save money from your income and gift yourself and your family a better life.

To Have a Backup Fund During an Emergency

If the funds were of no use in any personal requirements that you thought you might have, you can still benefit from them. You can set aside these maturity funds as a backup fund. So, when something unexpected occurs this money can be of use. And you don’t need to take money from other sources meant for personal or family use.

Everyone must have at least one of the requirements in the above-given topics. And for that sole purpose, you must choose investment plans. But if you are still avoiding investment plans stating financial limitations, you can always opt for a ULIP. Unit-Linked Insurance Plans have the added benefit of investment apart from the life insurance. So, you get the benefit of low monthly premiums of insurance and a high return rate of equity in the same plan. And if you choose ULIPs from a reputed insurance company then you can even add the virtue of a reputed insurer. Thus, resulting in the best investment plan for 5 years you can ever get.