Essay on savings scheme helps in crisis
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For India’s middle class, the current economic slowdown has been a period of financial unrest. After almost a decade, as the same indicators that marked the Global Economic Crisis of 2007-2008 begin to surface, this segment is looking for ways to build their cash reserves if things go wrong. This panic, however, is a justified response to the downturn. The middle-class earn a fixed monthly income and with fluctuating expenses, they do not have a lot of time to plan their finances. In such a scenario, the steep and sudden decline has left investors shaken and doubtful about the financial planning route they had been following for many years. This brings us to question what could be the best way to insulate oneself during these turbulent times? Interestingly, making small changes to the way we invest money seems to be the key.
Over the years, India’s middle-class investors have been conveniently impressed by investment devices that help them accumulate more wealth in the shortest time. This explains the growing popularity of mutual funds over small saving schemes that were erstwhile very popular among Indians who display a low-risk appetite. Also, the interest received on small savings schemes has come down after they have been linked to government bonds with large-cap mutual funds giving investors a far higher annualized returns. But the economic downturn seems to have turned the tables. In a lean market, small saving instruments have emerged as a viable financial planning tool that is low on volatility and can give you guaranteed returns as per the interest rates promised. This, however, does not mean that small savings should be your only monetary mechanism. The tenet is to diversify the way you invest as per your life goals and opt for both small saving schemes along with other yielding investment methods.With investments in small saving instruments such as PPF, NSC, Post Office Savings Deposit, etc sky-rocketing this year, we take a look at some of the reasons that make them a legitimate route to manage your money.