Savings Plans, Savings Plan, Saving Planner

Savings plans help individuals’ secure financial protection and attain their financial goals. The suitability of savings plans vary from person to person, as it depends on factors like budget and needs.

 

Types of Savings Plans

Savings plans can be broadly categorized into the following:

Savings plans help individuals’ secure financial protection and attain their financial goals. The suitability of savings plans vary from person to person, as it depends on factors like budget and needs.

 

Types of Savings Plans

Savings plans can be broadly categorized into the following:

Emergency Savings Plans: This fund comes in handy when we encounter unexpected events, such as car and home appliance repairsand medical expenses. You could use savings and checking accounts to grow your emergency fund, since these allow you to withdrawmoney quickly. One could set a maximum limit for emergency savings. When that limit is crossed, the excesses can be transferred to goal-oriented savings.

Retirement Savings Plans: These plans are focused on savings for the post retirement period. You can use IRA and 401 (k) plans,bonds and certificates of deposit to receive a regular stream of payment when you are not working.

Goal-Oriented Savings Plans: Savings may be aimed at generating funds for meeting a specific goal, such as the purchase of high-ticket items (a car or a house) or going for a holiday. Such plans typically involve savings funds in financial instruments that yield high returns. To facilitate the availability of funds for achieving a goal, you can use bonds and certificates of deposit, rather than a savings account.

Kids’ Education Savings Plans: To save for your kid’s education, you can opt for growth-oriented college savings plans, to which you can start contributing right after your child’s birth. With this plan, you can save on taxes. Plans such as the TIAA CREF-managed plans and Vanguard-managed plans fall under this category.

 

Short-Term Savings Plans

A few examples of short-term savings plans include:

• Savings Accounts: Savings accounts pay interest on deposits, but offer a limited number of withdrawals in a month.
• Certificates of Deposit: CDs require making a deposit of a certain amount for a fixed period. These offer higher returns than savings accounts. However, withdrawing money before the fixed period attracts a penalty.
• Money Market Deposit Accounts: Provides higher interest rates than savings accounts, but requires the maintenance of a minimum balance.
• Government Tax-Saving Bonds: These tax-free bonds are issued by the government and usually have a fixed maturity period.
• Endowment Savings Plan: This savings plan enables you to save money for the long term, while receiving the benefits of a life insurance. The assured sum is paid out in addition to bonuses accrued over the years, as a lump sum either when the plan matures or in the event of the death of the insured person.

Long-term savings plans include long-term bank deposits, such as fixed deposits and recurring deposits, life insurance and retirement plans. Certain examples are the 529 Higher Education Plans, the 401K Retirement Savings Plans, the UK Banks and Building Society Savings Accounts and UK National Savings.