When you think of a guaranteed future plan, what do you imagine? You might think about a guaranteed retirement plan that will provide for your needs in the later years of your life. But there are also guaranteed future plans that have nothing to do with retirement and everything to do with investing. The problem is, many people don’t know how a long-term savings plan works or when they should start one.
In this article, we will explore some benefits of long term savings plans in India and why it’s important to invest now rather than wait!
1) Benefit of compounding
This is a concept that many people don’t understand. With compounding, the more you invest today, the more money you will have in your account by tomorrow! If you invest ₹500 today, you may receive more than ₹16 Lakhs in 25 years with an interest of 15%.
2) No short-term volatility
If you invest your money for a long time, the risk of short-term market volatility will not affect your investments. This is because it takes months or years to recover from losses and make up for gains in any given quarter. When you invest for the long term, you can combat short-term volatility.
3) Goal-specific planning
There are many ways to save money, but with long-term savings plans, you can plan your goals and what you want to happen in the future. Whether it is for kids’ education or your retirement, a long-term savings plan will help you plan according to your goals.
4) Better Convenience
During long-term savings plans, you can make smaller deposits without worrying about the hassle of remembering to do so. You don’t even have to remember your due date, you can simply activate your auto-debit feature.
5) Tax Benefits
The interest earned on long-term savings plans is not taxed under the Income Tax Act 1961. Also, long-term savings plans will make it easier to plan your income tax filings.
6) Safer Investments
Investing in long-term savings plans will reduce your risk of making a wrong investment decision. When you invest in the short term, there is more chance that you’ll make mistakes or get into trouble with your investments than when investing for a longer period of time.
7) Retirement Planning
A long-term savings plan can be helpful in retirement planning. If you have a small income now, with the passage of time, your income will increase, and so too will your capacity to save.
It’s not always easy to save for the future. Whether you’re hoping to retire early or simply get ahead, a long-term savings plan can help provide you with security and peace of mind in your golden years. The idea is simple: Pay yourself first through systematic withdrawals from each paycheck that are automatically directed into an investment account such as a retirement fund.
A long-term savings plan can provide you with the financial freedom to do what you want when you want without having to worry about money. In addition, it may allow your business or family more time and flexibility in making a decision on how best to invest funds for the future.