Savings plan


A savings plan, in a broad sense, is one that allows us to manage our assets effectively and efficiently, allowing us to achieve a certain proposed objective.

This broad definition can be specified in the market, and refers to the options offered by financial institutions to save our capital and save it with them, receiving, in turn, a return on the deposit.

In this way, when we talk about a savings plan, we are talking about those products that allow us to save in the short, medium or long term, with the aim of progressively increasing our future assets, adding, additionally, a return on the deposit of capital. .

In other words, the managing entity is saving our capital, which accumulates, and which is then invested in the financial markets to generate additional profitability that increases our equity.

The profitability will be higher or lower, as long as we are capable of assuming a greater or lesser risk. In other words, the savings plan is adapted to the profile of each saver or investor. In this way, we can allocate from € 20 per month up to a legal limit. In the same way that we can choose between variable, fixed or mixed income. We will select all of this, with the help of an advisor or not, before entering into the contract with the entity.

Why have a savings plan

First of all, in a broad sense, it is good that we have one when we are pursuing a goal that requires funding. For example, we want to buy something in the near future or have a mattress in a long period of time.

In a concrete sense, it is essential to choose the one that best suits us. Thus, a savings plan must meet our expectations based on our customer profile. Nobody better than an expert to advise us on this matter.

On the other hand, there are usually two different types. First, the plans with a linked bank account that work in a similar way to a deposit and are managed by banks. Second, we have those that are linked to insurance, which are managed by insurance companies.

Short, medium or long term savings plan

Savings plans can pursue different purposes and depending on this, the terms that may be of interest to us vary. Thus, we will have the short, medium and long term.

  • Short term: In this case, liquidity is essential, the product must guarantee absolute availability. On the other hand, monthly contributions must be planned in detail, so as to achieve the proposed objective. The objective is usually temporary.
  • Medium term: In this case the projects are usually between one and five years. Here there must be a balance between profitability and liquidity, since an unforeseen event may arise and we may need to withdraw the money. In this case, the objective is usually of a structural type.
  • Long term: Here we find projects to be carried out in several years, more than five. Therefore, profitability must now prevail over liquidity. In addition, the money we invest must be that which we will not need. As in the medium term, the objective is structural.

Savings plan and pension plan

It is important not to confuse a savings plan with a pension plan. Both serve to obtain a financial cushion in the future, but there are a number of differences to take into account.

  • Pension plans tend to offer lower returns than savings plans. This aspect is compensated with tax benefits.
  • On the other hand, savings plans tend to incur a series of lower maintenance expenses than pension plans.
  • Savings plans allow the withdrawal of money at any time, although it should be done when they are already exempt from paying income tax. They have what we call "liquidity windows", that is, moments in which we can withdraw the capital without being penalized for it. Pensions penalize if you withdraw before the established deadline.
  • Annual contribution limits are often different for both types. Typically, savings are lower than pensions.

Example of a savings plan

Finally, let's imagine that we want to save CU1,200 each year. (monetary units). For the sake of simplicity, we consider profitability and annual fees. At the end of 10 years we would have a determined accumulated capital (see image) using the compound capitalization law.

In short, a savings plan can help us by providing us with an increase in our assets in the future. In this way, we will have a way to get our projects financed when the time comes to do so.

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