During this period of economic growth in Thailand, short-term savings might be an attractive option for many people, especially those who want to save more money within a short period. We should use this opportunity to plan our savings to generate high returns during this economic growth period. This can serve as a reserve fund, prepare us for the future, and create stability in life. Consider "savings insurance," a short-term savings technique that yields high returns and adds peace of mind to life.
3-Phase Savings Goals
Saving money isn't just about depositing it in a bank account. It requires clear goals to plan our savings according to our needs, track our progress, and adjust our plans as needed. Here are three main phases of savings goals:
- Short-Term Goals
Short-term savings goals are usually things we want to achieve within one year. They are easy to reach and take a little bit of time. They involve saving money for foreseeable expenses such as planned travel, purchasing a desired item, or increasing savings to a certain amount. This can be done by depositing cash in a savings account or using savings insurance with a short premium payment period. Having clear short-term savings goals increases our commitment and helps us control spending more effectively.
- Medium-Term Goals
Medium-term savings usually take about 2-5 years, such as saving to buy a house or car or planning for future education. Saving in the medium term requires effective planning that doesn't affect daily expenses. There are many options for keeping in this phase, such as investing in mutual funds or choosing savings insurance that offers high returns.
- Long-Term Goals
Long-term savings usually involve significant and vital goals for the future, such as saving for retirement or children's education. They often take 5 years or more, making choosing low-risk investment methods such as buying savings insurance or investing in stable assets like government bonds is important. Long-term savings help us prepare financially for the future and ensure financial stability when we cannot work or reach retirement age.
During periods of economic growth, we can increase our savings due to various factors. If you're wondering whether to accelerate your savings during this time, here are some reasons why you should save short-term during economic growth:
● Having money for emergencies: Short-term savings help us have more reserves for emergencies, such as unexpected illnesses or accidents, which can happen anytime. Increased savings during this period will help us be prepared to deal with unforeseen situations without relying on borrowing money or using credit cards when we need cash urgently. It also gives us more financial stability and allows us to not worry about debt burdens in an emergency.
● Increased income opportunities: During economic growth, we have more opportunities to earn more, such as expanding our business or investing in new markets. This is when we can generate diverse income streams, increasing our chances to save more.
● Accumulating capital for long-term investment: Short-term savings also serve as an accumulation of capital that we can use for long-term investments, such as investing in stocks or new businesses. Accumulating money during economic growth will help us have readily available capital for future investments without relying on high-interest borrowing. Short-term capital accumulation will give us confidence in long-term investments, which can lead to better returns in the future. Low-risk investments, such as saving in deposit accounts or savings insurance, can pave the way for a solid financial foundation for future investments.
● Diverse low-risk short-term savings options: There are many ways to save money in the short term, such as depositing money in banks that offer low but safe returns or choosing savings insurance that provides higher returns than bank deposits while remaining low-risk. Choosing low-risk savings methods will help us save steadily without worrying about losing money.
Savings Insurance: A Short-Term Savings Option with Peace of Mind
Savings insurance is a life insurance policy that helps instil savings discipline, promote financial stability, and provide life protection simultaneously. Most policies involve a 5-year premium payment term with 10 years of coverage. Upon maturity, the policyholder receives a payout as a lump sum or in instalments during the contract period, depending on the policy details agreed upon with the insurance company. Here are some additional financial benefits:
● Tax deductions: Savings insurance allows us to use the premiums for tax deductions, helping to reduce our tax burden as permitted by law. Utilising premiums for this purpose enables us to save on taxes yearly, leaving us with more money for savings or other necessary investments, such as saving for education or retirement. Tax deductions from savings insurance also help manage long-term financial burdens, allowing for careful financial planning and more efficient spending, helping us achieve financial goals faster.
● No worries about future inflation: Savings insurance policies typically specify a clear return in the policy that the policyholder will receive upon maturity. This is usually a return with increased value from the amount paid. These definite figures give us confidence that the money we deposit will not depreciate due to inflation. The growth of the funds received in the form of a return will help preserve the value of money in the future, ensuring that our savings will have real value and can be used as intended. Savings insurance can also be a tool to hedge against risks from changes in the economy and inflation.
Short-term saving during a period of economic growth is a way to prepare for opportunities and uncertainties that may arise in the future. Effective financial planning will provide us with financial stability in the short and long term.