What is considered to be a good Savings Plan for Young Entrepreneurs?
As one of the youngest countries in the world, India is witnessing an entrepreneurial revolution. With bold minds under the age of 35, many young people are leaving their comfort zones and quitting their 9-to-5 jobs to turn their passion into a proper purpose.
Did you know, as of June 2024, the Department for Promotion of Industry and Internal Trade, DPIIT, recognised 1,40,803 entities as startups?
As a young entrepreneur, you would agree that starting your own business isn’t just about having a good idea. A carefully crafted financial plan, market research, public relations and back-up savings plans are things that you need to sort out carefully.
Secure Your Financial Journey with a Savings Plan
As a budding entrepreneur, your financial well-being is like the backbone of your business. Thus, you invest in schemes and plans that can help you not just for long-term goals, but also give you the assurance that the right plans can help you accumulate funds for your long-term as well as short-term goals.
A savings plan allows you to set aside funds on a regular basis for upcoming financial goals. The primary goals of savings plans can vary from building a corpus to getting life coverage, from getting tax benefits to creating an emergency fund, etc. With a plethora of options available, here are some tips and tricks that allow you to choose a good savings plan.
1. Know what you need
You need to keep in mind that a savings plan has to be in line with your needs and requirements. So, rather than choosing the most popular plan, opt for something that offers features and benefits that suit you the best.
Are you saving for emergencies, expansion, retirement, or just peace of mind? Your purpose will determine whether you need liquidity, long-term growth, or tax savings. For instance, if you are investing in a savings plan to build a corpus to buy some machinery in the next few years, choosing a plan with a longer lock-in will not be the right way forward.
2. Understand your risk tolerance
Probably one of the most important things to consider when buying a savings plan is to understand your risk appetite. While there are plans that are mostly suitable for low-risk investors, you can consider some options for investing in the volatile market.
3. Are you looking for insurance coverage?
Every individual who has dependents should surely consider life insurance for the financial well-being of their loved ones. Savings plans can offer you life insurance coverage as well.
Did you know, the premiums that you pay towards a life insurance savings plan get you tax benefits of up to Rs. 1.5 lakhs in a financial year? That’s not all there are plans that can offer you tax exemption on the maturity benefits as well.
4. Start small, but start early
There is no better time to start saving than now. Remember, small monthly contributions can grow significantly with time. Don’t wait for a “perfect” income flow, just begin! You not secure your finances early on, but starting early can contribute significantly to your corpus.
5. Understand the tax implications and benefits
For entrepreneurs, clarity of the taxation system is crucial. Make sure you are well aware of the taxes your business may attract. You need to understand what is GST, and how it can affect your business, your earnings and your profit.
6. Compare plans and returns
Another important step is to draw a detailed comparison of various options and then choose a savings plan that you consider most promising. Use online calculators and comparison tools to check interest rates, lock-in periods, and maturity values before choosing any plan. Take your time and make an informed decision.
7. As an entrepreneur, you should look for flexibility
Unlike a salaried employee, your income as an entrepreneur may not be fixed. Some months may go smoothly, while you struggle a little sometimes. It is best recommended that you opt for savings plans that allow partial withdrawals, top-ups, or early closures in case of emergencies. For this, be sure to read the policy documents carefully before signing the contract.
8. Keep reviewing your savings plan
As you move forward in life, your income, strategies, and goals may also change. It is suggested that you revisit your plan regularly, if not yearly, to make sure it’s still aligned with your needs. You always have the option of opting for more than one savings plan, so decide what suits you the best.
In Conclusion
In today’s fast-moving world, as a young entrepreneur, you would understand that smart investment strategies can take you a long way. You need an accessible, effective and affordable savings plan that suits your current as well as future needs. Starting early, diversifying your investments and seeking the right guidance can offer you financial freedom as well as security that a young entrepreneur neds.