Savings&insurance

1. M. Varlakshmi

2. In Economics,
Savings =
MinusINCOME Consumption
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3. Savings is the heart of the economic growth
 Aids in economic investment in an economy which
is limited to the amount of money available
(savings) to fund investment projects.
 Production of capital goods
 Raises people's living standards
 Comfortable Room for Future consumption
This short-run pain but long-run gain is at the root of
economic growth.
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4. Savings are done by Three Entities in
the Economy:
Money is to serve as a medium of saving.
Instead of saving goods, which must be
stored, people can save money.
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Households GovernmentCompanies

5.  Households save to cover Future Expenses Provide
emergency cushion for medical expenses Children
Needs like Education, Marriage Buying goods and
Property Tide sudden loss of income, unfortunate
contingencies Retirement and the like….
Company save to finance future investment in the business
(expansion of existing facilities and the replacement of
outdated equipment).
 Government Surplus spend on the building of new roads,
bridges, hospitals, schools, Infrastructure etc.
Saving money can help the Entity become financially secure
and provide a safety net in case of an emergency.
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6.  If Households fail to save sufficiently they will struggle
financially without sufficient funds to cover future expenses
and during retirement. They will eventually become
dependent on others or the government.
 If Companies do not or cannot save sufficiently, they will not
have the capital available to finance replacement or
expansionary investment. This will put a dampener on the
company’s efficiency and growth potential, as well as its
ability to employ more people.
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7.  If Government does not save, it simply means it will
have no money available for fixed investment in
social infrastructure (schools, hospitals, low cost
housing, etc) or physical infrastructure (roads,
bridges, harbours, airports, etc).
Insufficient investment in an economy means sub-
optimal economic growth, sub-optimal job creation
and inferior overall living standards relative to
nations with a better savings performance.
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8. The Three entities respective savings
behaviour are closely interlinked.
For example, low saving households will
eventually increase the burden on government
to provide social services, limiting
government’s ability to rather spend money on
social and physical infrastructure (ports,
roads, bridges, schools, hospitals, etc).
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9.  Government could, of course, raise taxes to
generate additional revenue to cover the additional
social expenditure, but this will further limit
households’ ability to save and spend, and, if the
additional tax burden falls on companies, it will
reduce their profitability and limit their ability and
willingness to invest (as overall demand prospects
worsen owing to the higher tax burden). So, there is
unfortunately no easy answer other than that at all
levels need to develop a much stronger culture of
savings.
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10. The factors that need to be considered when
determining how much a household must save
will depend
√ The length of time over which savings will
be made (the longer the better),
√ the expected investment returns before and
during retirement (the higher the better) and
√ the ‘targeted amount’ of capital that will be
needed to retire comfortably.
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11. Make sure you fully understand your future financial
needs (including your pension provisions)
Start saving early – time is your best friend
Beware of ‘quick-rich’ schemes as much money has been
lost on these over the years – if it sounds too good to be
true, it most likely is
Entrust your money to reliable financial institutions with
proven track records
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12.  ** The recent global panic around huge and growing
government debt levels around the world has, in effect,
highlighted the need for individuals to save more.
With many governments around the world needing to
focus heavily on reducing their budget shortfalls and
containing their outstanding debt levels, an early casualty
of fiscal tightening has been social security cutbacks
(cutting pension benefits, raising retirement age, etc).
People worldwide will have to accept that governments
will not be able to lend much support during their
retirement years. People will have to care for themselves
and this will likely require much higher savings during
their working years.
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13.  Insurance is an arrangement / Contract
represented by a policy by which a company or
the state undertakes to provide a guarantee of
compensation for specified loss, damage, illness,
or death in return for payment of a specified
premium. The individual or entity receives
financial protection or reimbursement against
losses from an insurance company. The
company pools clients' risks to make payments
more affordable for the insured.
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14. Savings & Insurance 14
The purpose of any insurance is
to provide economic protection
against the losses that may be
incurred due to chance events
such as :
Death
Illness
Damage to Property
In current scenario, insurance
has become widespread to cover
Retirement
Children Education & Marriage
Needs
Property & Debt

15. To protect from the negative economic
impact to the dependents of the earning
member government encourages savings
in the form of insurance under various
exemptions / deductions to certain limits
of the Income Tax Act.
Savings oriented insurance policies have
been chosen widespread across
individuals.
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16. The choices are many and super specialized which in
many cases encouraged by the Government with an array
of Tax benefits as Deductions under certain sections /
provisions of the Income Tax Act.
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Insurance
Life Insurance, Term
Insurance, Medical
Insurance, Group Insurance,
Accident insurance, Property
Insurance, Key-Man
Insurance & Debt Insurance
Savings
SB A/cs in Bank, FD, RD, CD
PPF, EPF, KVP, Sukanya Samridhi
Yojana, NSS, PO Savings &
Schemes
Investments
Shares
Securities / Debentures
ELSS
Mutual Funds etc.
Gold, Land etc.
Precious Metals &
Re-Sale Valued
Assets

17. Thank You !Wish You All a
Healthy Life with
Abundant Savings
duly Insured And
a Great Lifetime.
THANK YOU !
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