Understanding Dynamic Equity Funds

A savings plan, as the name suggests, naturally helps you to save and the money is set aside for a rainy day. While you can always save money and put it in the savings account of your bank, the money will not grow there, except for incurring that little interest that savings account come with. It is a far better idea to invest that money and make provisions that you will be able to liquidate the funds when you require it. It is important to layout a proper savings plan so that you can determine how much you can invest and how much will it grow into and whether you will be investing in a lump sum or through monthly installments.

With a good savings plan, you can choose to invest your money in a variety of schemes so that you can minimize the risks from just one option. You can start by building a portfolio by working with a financial advisor. To be able to build a robust savings plan, one must have some risk appetite. But age and personal factors become important determinants here. Those still in their 20s or 30s can take higher risk and can opt for more aggressive investment plans like investing the money in mutual funds or the stock market. For a more conservative investor, it is better to opt for an endowment plan or a money-back policy, as they offer guaranteed, albeit lower returns.

The investment tenure also plays a major role in building a corpus because not only will the money be invested for a longer time, but also because the investor will be able to reap tax benefits for that period. In case of money back insurance schemes, which offer protection as well as savings, one could start with a smaller premium amount and build on it over the tenure of the policy. Most insurance companies will take into account the fluctuations from earnings and savings from a young investor provide adequate options where the premium amounts can be increased or decreased depending on the preference of the investor.

An investor should start a savings plan portfolio with certain end goals in mind. It could be buying a new home after ten years and then paying for the child’s higher education after fifteen. Try to calculate the phases in life when you are going to need lump sum amounts and invest your money accordingly. It is also important to make allowance for unexpected short term needs, like paying for the medical expenses of one’s parents. You should also take into account the charges and charges of the various savings plan options in India.

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