Question

Discuss the advantages and disadvantages of establishing a regular, systematic savings plan. Discuss what circumstances would be suitable for an individual to use part of the savings accumulated over a number of years. What if you were saving for retirement? What if your savings were accumulated for the purpose of sending your child to college and that child did not attend college for some reason?

Answer 1

Answer: Advantages of establishing a regular, systematic savings plan- Are as following:

1. People who establish a regular saving plan, earn interest or other income regularly.
2. Regular saving plan protects the family in their bad times and whenever money is needed, it can be taken from that.
3. Regular and systematic saving plan develops habit of saving even in the lower income group, this habit is very good for future needs.

Disadvantage of establishing a regular, systematic savings plan- There are lot of other financial and investment alternatives available that provide higher return than regular saving plan. Regular saving plan checks people to meet their short term major requirements because they have to save a part of their income regularly.

Use part of the savings accumulated over a number of year: These circumstances are:

1. At the time of marriage
2. At the time or after retirement
3. At the time of higher studies of children
4. At the time of any accident or health issue.

Saving for retirement- If saving is done for retirement, it is very good, it provides you lump-sum amount at the time of retirement, you can fulfill your needs after retirement. It helps you when nobody is with you.

If Someone is saving and investing for the purpose of child's higher education and he does not go for the same then if he wants to set up some business or hobby then the same saving can be used. You can also invest that savings further for his marriage and future.