How to Create a Savings Strategy Using these 5 Investment Options

You must have heard the phrase, “Every penny saved is a penny earned”. This term was coined by Ben Franklin almost two centuries ago but is still highly relevant when it comes to  financial insecurities in our daily lives. It establishes the importance of having a savings strategy in place

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Every time you save a penny, you are fueling your future finances. In this fast-paced world with a huge pile of uncertainties, you can’t stay chill about your money - even if it is just lying in your bank account.

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In order to make your every penny work for you, you have to invest it properly. A well executed investment plan that gives you high returns is the only way to attain a strong financial back. 

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But, in order to invest, you first have to save substantially. According to a report by scripbox, if you save Rs. 1 today, it’ll become Rs. 277 by the end of year 1, given that you invest it carefully and let the multiplier in the economy do its job effectively.

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By multiplier, we are referring to interest rates and favourable rates of return that boost your invested money by manifolds.  

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So, from where to begin with your saving strategy? 

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• You can start saving even by doing the bare minimum! Just ponder a little about your recent dinner date or the latest shopping spree that you hit out of boredom. Or that large pack of nachos that couldn’t make it to the second day because you ended up having them all at once! Well, we all spoil our savings plans sometimes, but if you are setting your goal high for your future finances, you must be responsible for saving now as well. 

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• Starting a saving plan is never easy. But, if you decide to be consistent in your efforts and make saving a habit, you can achieve any financial milestone. You can save a lot just by switching to some more economical and sometimes, even better, substitutes. For example, you can replace your movie night out that will cost you no less than Rs. 1200, with a simple OTT subscription for just Rs. 500 per month and hence, save Rs. 700! 

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• Similarly, your monthly spa visits can be once every 2 months and you can even switch to some DIY dose for your skin and hair. In another instance, you can just simply expand your research and look for good alternatives for  your everyday items that will suit your savings goal better. On the other hand, you can check out these 14 tips to stop impulsive buying and curb your spending.

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With these tiny and careful steps, you will see a big improvement in your financial health as the time passes by. 

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By combining these minute economical lifestyle changes with your best suited investment plan, you can grow your money at a much faster pace.

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This is because a good investment plan alone won’t reap you any sweeter fruit if you fail to manage your everyday expenses smartly.

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Therefore, begin gradually and then brace up to take long leaps! 

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Your investment plan must consider the tax factor. If you keep saving and investing with no tax deductibility, you will find yourself stuck in a financial trap in the longer run.

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In addition, most of the tax deductible investment schemes provide high returns and are even government sponsored! So you can hit the two-fold target of saving on tax and expanding your savings altogether! 

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Here are some tax deductible investment options to boost your money: 

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Section 80C of Indian Income Tax Act

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In the Indian tax system, under section 80C of the Income Tax Act, you can invest around 1 lakh in government tax deductible schemes and save around 40k on taxes!

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This section alone can bloom your finances by its quite favourable investment structures and plans. A reduction in tax liability automatically surges your investments and saves you thousands. 

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Public Provident Fund (PPF)

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This government scheme is one of the earliest of its time and has been an attractive investment plan since day 1. This  is  perhaps  the only scheme that is completely tax free!

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You can invest upto an upper limit of Rs. 70,000 and earn a ROI as high as 8% per year. There is even an option of post tax return for any person paying tax as high as 30%

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Insurance premia schemes

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Even though these schemes are not fully tax deductible, you can still grow your wealth through these.

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Here, you can invest upto  1 lakh. The annual premium will be around 20% of the assured sum.

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If you are opting for an Equity Linked Savings Scheme (ELSS), you can avail your profits completely tax free at the end of the third year, however, for other plans, there are no such deductions and you will receive your money at maturity and tax will be deducted annually accordingly. 

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Mutual funds

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Another attractive investment option to multiply your penny are the mutual funds. They too allow a  tax-exempted investment of 1 lakh annually.

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Even though the risk involved in mutual funds is high, they are a reliable investment plan and pay you a very high rate of return. 

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Employee Provident Funds

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You can invest in EPFs too with the same 1 lakh limit annually and get tax deductions on your investments.

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These are easy to  operate and the rate of returns are too substantially economical. 

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Tax saving fixed deposits

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These fixed deposits are available for a fixed time period of 5 years and you can earn profits annually.

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Invest upto 1 lakh per year and avail your tax benefits easily due to  exemptions under section 80C. 

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While theoretically, all schemes and plans seem to be perfect, it is the execution that scares us.

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You must carefully set a goal and then start saving with tiny steps.

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Investment schemes are generally attractive, but they take time to give you the best results.

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Be patient with your long term goals and wisely cut down on your regular reckless expenses.

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You can opt for  any one or all of these schemes altogether to stretch your penny and expand your savings. 

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Don’t miss out : How you can get automatic rewards from automatic savings.

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With the development of online platforms like Jar, you get great savings and investment plans.

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If you enable Jar to auto invest your spare change or pennies in digital gold, you can grow your money.

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Your investment will reap high benefits as gold prices surge. Additional benefits like spins on every transaction can help you double the amount of change that you initially invested.

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Now that you know how much longer every single penny can stretch itself over time, you mustn’t refrain from helping it to expand far and improve your financial health.