Before you embark on any financial planning journey, it is imperative to explore various investment opportunities available in the market. It is advisable to maintain the balance between savings and investments, as just saving money might not be a wise decision. Besides, investing your money in the best investment plan can grow your savings considerably over a period of time.
However, as every individual has a different financial capacity, so is his/her risk appetite. It is inevitable to evaluate your risk capacity before investing in any financial product and choose the best investment plan aligning with your risk-taking capacity and long term goals. Irrespective of your life stage and financial capacity, there are a number of investment options available to support your financial goals.
Before you start investing, it is essential to understand the various types of investments available and buy one that matches your risk profile.
Types of Investment Plan
ULIPs prove to be one of the best investment plans for most the people. It is a multi-faceted life insurance product that offers life coverage and the investment benefits of market-linked securities. It is important to carefully choose the sum assured and the tenure before starting with your investment.
Thereafter, you just need to pay your premium at regular intervals, which can be monthly, quarterly, half-yearly or annually. A few lucrative benefits of ULIPs are:
- Withdrawal facility ( available post the lock-in period of 5 years)
- Triple E-E-E Benefit (Investment, withdrawals and returns are exempted from tax up to a certain limit)
- Return on your investment depending on market movements
- Life coverage along with wealth creation
- Top up Facility (You can add the amount to your sum assured during the tenure)
- Fund Switching Benefit ( Switch fund between different securities based on market movement)
Term Insurance Plans
Term insurance is a type of life insurance, which takes care of your family in your absence. In today’s time, it is inevitable to invest in a life insurance product to keep your loved ones financially protected. Under term insurance, the insurance provider compensates your family with an amount equal to the sum assured in case of your untimely demise.
Before investing in a term plan, it is advisable to carefully go through the terms and conditions to reduce the probability of claim rejection. Find below the common benefits of term insurance:
- High sum assured at an affordable premium
- Tax Benefits (Under Section 80C of Income Tax Act, 1961)
- Rider Options ( To widen the coverage of the basic term plan)
- Multiple pay-out options on death
- Return of Premium Option (Provided by a few insurance providers)
NPS (National Pension Scheme)
NPS mainly focuses on long-term retirement planning and is regulated by Pension Fund Regulatory and Development Authority. This scheme is open for all employees, be it public or private sector employees, unorganised sector’s employees, etc. You just need to pay out premium at regular intervals during the course of your employment to avail the retirement benefits later.
Also, tax deduction benefit up to Rs. 1.5 Lakh premium payment is also available. Earlier, the minimal yearly contribution required was Rs 6000, which is Rs 1000 now. If the need arises, you can withdraw a certain percentage from your account after your retirement and receive the remaining amount as your monthly pension.
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PPF (Public Provident Fund)
PPF is another attractive investment avenue, which is a preferred choice for most of the people. This is an ideal option for risk-averse investors looking for investment options with stable returns and lower risk. Usually, the lock-in period is around 15 years, before which you cannot withdraw your amount completely. Also, this tenure can be extended if required.
Depending on your financial capacity, you can invest a minimum of Rs 500 and a maximum of Rs 15000 annually at regular intervals and leverage the benefit of regular income later. Under PPF also, tax deduction on investment and returns is available. To keep your account active, it is essential to deposit the amount every year.
Objectives and Benefits of Choosing the Best Investment Plan
Protection to Your Loved Ones
If you choose the best investment plan, you can be worry-free about the financial protection of your loved ones if anything unfortunate happens to you. Upon your demise, the insurance provider provides compensation to your family so that they can be financially independent and live a standard life.
As mentioned above, you can save a considerable amount of taxes if you choose your investment plan wisely. These benefits are covered under different sections of the Income Tax Act, 1961.
You can effortlessly achieve your long-term goals if you choose the best investment plan, which might otherwise seem to be unachievable. You just need to pay the premium at regular intervals, and over time, you will have access to a corpus of funds to support your future goals.
If you invest in plans such as ULIPs, in which a part of your amount is invested in the market-linked securities, you can grow your money with the help of experts who have in-depth knowledge about the market movements.
Lastly, it is imperative to choose your insurance provider wisely to avail yourself of maximum benefits and be confident about the claim settlement if anything unfortunate happens.
To be sure about your choice of insurance provider and credibility, you can check through their record of claim settlement ratio, customer reviews, terms and conditions, etc. Once you have researched about the provider, you are ready to invest your money and let it grow exponentially.