earned Factors affecting individual saving plans Savings can be maintained in liquid-form, in the form of accounts in banks along with their investment in long-interval instruments such as government bonds. The various factors which impact the individual saving plans include the following: Level of Income: With the increased income-level, the number of individual saving plans rises as the individuals would be able to save and invest more. However, the situation of boom could also result in increased expenditure as individuals with more income are supposed to borrow money from banks so as to supply funds for purchasing luxury articles. Income Allocation: Basically, the low income people would have fewer saving. However, with increased income, diminishing marginal utility takes place which results in encouraging individuals to invest more. Interest Rates: Higher interest rates induce individual saving plans as people are encouraged to invest more due to expected high returns for the savings made in a bank. However, the situation may not be similar in some cases, For instance: in case of recession during 2009, the interest rates were reduced to 0.5%, this still resulted in increased saving plans as individuals preferred to avoid much consumption and more savings. Inflation: High inflation works inversely in case of increased interest rates, say, interest rates of 10% with inflation level of 14%, in such a situation interest rates would be negative and people would no longer be induced to invest. Level of Optimism: Various uncertain circumstances such as level of unemployment, high inflation etc. would make an individual pessimistic and accordingly, there would be less spending and increased savings for contingent situations. Demographic factors: Particular life-stage also impacts the saving plans. For Example: young people are expected to get finance for different purposes like education, purchasing cars, home etc. At the age of 40-50, they are expected to save more due to increased income. However, retired people could enjoy their savings by consumptions still such conditions may vary from person to person. Thus, different variables have their impact on the consumption level which could have a further direct or indirect impact on saving plans. Determinants to be considered before investing into individual saving plans For the fulfilment of various short as well as long-term objectives, investment in a saving plan is a best option. There are different schemes available in the financial market, however; it is essential to conduct a complete market research before reaching to a final decision of investing in a particular saving plan. Following factors should be taken into consideration before making investment decision in any individual saving plan: Introduction The banks in Canada are acknowledged as the safest banks worldwide and well equipped with plans for future challenges. There has been a lot of financial restructuring of banks in Canada throughout the 1980s and 1990s. According to Engert et al. (1999), at present, the topmost banks of Canada facilitate customers with multiple investments, saving, and insurance plans to assist them towards financial stability. However, there are different variables which impact such saving plans. Proper consideration should be given before finalising any saving/investment decision as such decisions have a direct impact on the financial soundness of an individual making such investments. Relevant Saving/Investment and Insurance Plans There are different saving and investment options available through which an investor can contribute a certain sum of money and earn return based on such plans. Tax Free Saving Account Plan (case of Royal bank of Canada): TFSA is the Tax-free Savings account that the RBC (Royal Bank of Canada) provides to the customers as a registered investment account. This scheme deducts zero taxes on any investment earning made. The exclusive benefits under this scheme give the customers free access to the digital tools and an in-person advisor, or over the telephone and video conferencing. There is no specific amount to open a TFSA, and as the earned money from investments is not taxed, thus it grows faster in comparison to a non-registered account. One can also set up a regular automatic contribution into their TFSA registered account, which would result in a faster growth saving. The TFSA can be a good investment option for short or long-term goals, where your investment earnings or the withdrawals are not taxed. The age ability to contribute to this plan is also applicable beyond 71 years. Registered Retirement Saving Plan (case of Royal bank of Canada): Registered Retirement Savings Plan (RRSP) is the registered investment account that proposes distinct tax benefits for future assistance. The RRSP scheme of the Royal Bank of Canada lets the customers plan and saves for their retirement by shelving the taxes on the earnings from this investment type. There are different plans like Individual RRSP, Spousal RRSP, Group RRSP, Locked-in RRSP provided as per the requirement of an individual or a group, etc. Similar to the TFSA plan in the RBC, RRSP also facilitates you with in-person as well as telephonic and virtual assistance along with setting up regular, ongoing contributions. RRSP plans majorly contribute as a retirement plan where your contributions are tax-deductible 8. References Brown, C. (2018, April 25). 7 ways to create a successful savings plan that wont fizzle. Clark. Retrieved from https://clark.com/deals-money-saving-advice/how-to-start- a-savings-plan-that-won/ CIBC. (October, 2012). Financial priorities change over time, but a good savings plan lasts a lifetime. CIBC. Retrieved from https://www.cibc.com/en/personal-banking advice- centre/starting-a-savings-plan/build-a-successful-savings- plan.html Engen, R. (2021, May 5). Best Investments in Canada. Young & Thrifty. Retrieved from https://youngandthrifty.ca/best- investments-in-canada/ Engert, W., Fung, B.S.C., & Nott, L. (1999). Restructuring the Canadian Financial System: Explanations and Implications, 142–167. https://www.bis.org/publ/confp07g.pdf Kotak. (2019, June 29). 7 Important Things to Remember While Investing in a Savings Investment Plan. Kotak Life. Retrieved from https://insurance.kotak.com/insurance- guide/savingstax/7-important things-to-remember-while- investing-in-a-savings-plan Moneysense. (2021). Compare the Best Savings Accounts in Canada 2021. Retrieved from https://www.moneysense.ca/save/banking/best-savings- accounts/ Pettinger, T. (2019, April 6). Factors that influence saving levels. Economics Help. Retrieved from https://www.economicshelp.org/blog/146244/economics/fa ctors-that-influence-saving-levels/ Registered Disability Savings Plans (RDSPs). (2021). Scotiabank.Com. https://www.scotiabank.com/ca/en/personal/investing/disab ility-savings-plan.html Registered Retirement Income Funds (RRIFs). (n.d.). Scotiabank.Com. https://www.scotiabank.com/ca/en/personal/investing/retire ment-income-funds.html Registered Retirement Savings Plan (RRSP). (n.d.). Rbcroyalbank.Com https://www.rbcroyalbank.com/investments/rrsp.html Satov, T. (2021, April 26). Everything you need to know about life insurance. Greedyrates. Retrieved from https://www.greedyrates.ca/blog/what-is-life-insurance/ Shea, A. O., & Davis, C. (2021, May 18). Best Short-Term Investment Accounts for Money You Need in 5 Years or Less. Nerdwallet. Retrieved from https://www.nerdwallet.com/article/investing/where-to-put- short-term-savings Tax-Free Savings Account (TFSA). (2021. Rbcrovalbank.Com.
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