THE SAVINGS PLAN: A WAY TO BUILD WEALTH
What is a savings plan?
The Savings Plan: A Way To Build Wealth. A savings plan is a contractual agreement between an investor, someone who wants to save their money, and an investment provider. It is used for the regular payment of sums of money into an investment. Investors often pay in their money there on a monthly basis, some also at weekly intervals. There are savings plans that only provide for a fixed, recurring payment. But there are also banks, investment companies and building societies that offer savings plans that allow special payments in addition to these regular payments.
Is a savings plan right for me?
Do you want to invest your well-earned money sensibly and build up assets in the medium to long term? Then a savings plan can be the solution. Savings plans are not only suitable for wealthy investors, but also for small savers. Your savings plan can also be useful for everyone who is return-oriented with regard to their investment and retirement provision and still wants to remain flexible. Most savings plans allow a dynamic range of installments – ie you can flexibly adjust your installments or even suspend them entirely.
What are the advantages of a savings plan?
Basically, savings plans naturally have the advantage that they can slowly but steadily help the investor to build up wealth. Another benefit, especially for investors who have more taxable income, is government funding. You can receive bonuses from the state for savings plans such as building society savings plans.
Also practical: there are variants for both medium-term and long-term wealth accumulation. While savings plans with government subsidies with terms of 7 years are a medium-term option, you may build up your assets over the long term with securities savings plans or savings plans for children. You do not have to observe time restrictions here, so you can access your savings balance at any time, although it may be lower in the meantime than at other times.
Savings plans offer you a high degree of flexibility. You can also choose between many different savings plan options. This is how, regardless of whether you are a conservative or a risk-taker, you can define the retirement package that matches you and your needs.
Nevertheless, the different savings plan variants also have their own individual characteristics, which you as an investor should take into account in advance. In addition to the opportunity to build up assets in the medium to long term, there is also a risk of loss for the investor.
The right choice of savings plan: it depends on it
When deciding on a savings plan variant, the amount of the monthly installment that you want to invest and the duration of your savings plan are particularly important. If you are considering a securities savings plan, you will need a securities account. All banks offer this, but it is worthwhile to compare the conditions.
If you compare the providers with regard to their savings plan products, you will find that there are often very many savings plan options to choose from. Ultimately, you need to know that a securities savings plan does not offer you secure returns. Even if the balance sheet has been positive in the past, that is no guarantee of an equally glorious future.
Of course, market fluctuations are somewhat normal. Nevertheless: In order to prevent major losses, we recommend that you familiarize yourself with other system variants. It can make sense to spread your capital across different investments. A mixture of conservative, i.e. safe savings plans and savings investments with a little more risk, but also higher return opportunities, can offset the financial risk overall. Invest only money as you can actually spare per month. Because nobody can predict the stock market and share development with certainty.
WELL-KNOWN TYPES OF SAVINGS PLAN AT A GLANCE
The different types of savings plan also have different advantages and disadvantages. Ultimately, as an investor, you should compare and weigh the options in order to find the savings investment that suits you best.
- The money saving plan
- The capital formation benefits
- The securities savings plan
- The fund savings plan
- The savings plan for children