Five savings and endowment plans to invest in, in 2018

It’s that time of the year again, where everyone is in a hurry to get their finances in order. The fiscal year is coming to an end and investing in savings plans and endowment plans is the best way to save on some income tax.

A savings plan is a scheme, where the investor puts away a part of his income, over period of time and then at the end of the term, receives are lump sum payment. An endowment policy is a form of life insurance plan where in the policy holder receives a lump sum payment on maturity or he or she dies before the term is up.

These plans are great tax savings tools because in some cases, the pay-out you receive from these policies is tax free. If you’re wondering where you should put your money this year, then here are 5 schemes you should consider.

1.  Unit Linked Investment Plan (ULIP): ULIPs and endowment plan and are a great way to invest your money. They provide insurance cover as well as give you returns through equity. This plan provides life risk coverage. It can provide between 5-11% returns, but they are not guaranteed. The ULIP should be held for a minimum duration of 10-12 years to seen maximum returns.

2.  Life Insurance Plan: Life insurance plans are an investment everyone should make. It is the first step to your financial planning. It should be treated more as an investment than an insurance policy. When choosing life insurance one should opt for term insurance as it comes with low risk and high coverage. A life insurance premium is something you should add to your monthly saving plan. The life insurance claim that you receive on maturity of the policy is tax free.

3.   ELSS Tax Saving Mutual Fund: They offer the highest returns compared to any other tax saving investment plan in the country. The returns are not guaranteed but if you can afford to take some risk, your earnings can range between 12 – 15%. You can even opt for the dividend scheme and earn regular income from your investment.

4.  Public Provident Fund: This fund provides maximum tax saving benefit for the people. The interest rates are updated by the government on a yearly basis. Most banks offer a PPF facility for its customers. This scheme ensures maximum tax saving benefit for its users. At the moment the government allows around 8% interest in PPF.

5.  Five- Year Fixed Deposits: FDs are great savings plans. Banks offer fixed deposits that provide tax benefits. These deposits are exempted under Section 80C and they have a lock in period of five years.