While talking about investment plans and the world of investing, three words come to mind - intimidating, overwhelming, and scary. For a ‘regular Joe’ this question seems perpetual.
Everyone wants to make investment so that they can gain maximum financial return without the risk of losing money. Investing in the right investment plan is important in this day and age, because earning money is not sufficient to fulfil the financial objectives of life. It is important to make the money grow. Just keeping your money ideally in the bank account is an opportunity lost.
For different stages of life one needs funds. One has to build the financial corpus - be it child’s marriage or education, or his/her retirement savings. While seeking different ways to build this financial corpus, one often tends to look out better investment plans and higher returns from them. Due to a number of investment options, there’s no simple and easy solution to it. However, the ease of different investment plans offered by various life insurance providers is one of the reasonable options available.
Investment plans are financial products to create wealth for future and match financial goals by investing periodically in different investment plans, funds and schemes. Investment plans also offers comprehensive life coverage.
Here is the list of top investment plans
|Investment Plans||Plan Type||Entry Age||Maximum Maturity Age||Policy Term||Fund Options|
|Aegon iInvest||ULIP||7 - 55 years||70 years||10/ 15/ 20/ 25 years||5|
|Aviva iGrowth||Unit-Linked life Insurance plan||18- 50 years||60 years||10, 15, or 20 years||3|
|Bajaj Future Gain||ULIP||1 - 60 years||70 years||10 - 25 years||7|
|Bharti AXA eFuture Invest||ULIP||18 - 60 years||70 years||10 years||6|
|Bajaj Allianz Fortune Gain||ULIP||1 - 63 years||70 years||7 - 30 years||7|
|Bajaj Allianz Retire Rich||Unit-Linked pension plan||30 - 73 years||80 years||7 - 30 years||3|
|Birla Sun Life Vision Endowment Plan||Endowment Plan||1 -55 years||N/A||20 years||N/A|
|Canara HSBC Smart Monthly Income Plan||Monthly Income Plan||18-55 years||80 years||25 years||N/A|
|Edelweiss Tokio Guaranteed Income Plan||Endowment Plan||3 -55 years||65 years||15 years||N/A|
|Exide Life Secured Income Plan||Traditional Savings Plan||0-55 years||70 years||25 years||N/A|
|Future Generali Easy Invest Online Plan||ULIP||0-60 years||18-70 year||10-20 years||5|
|HDFC Life Click2invest||ULIP||30 days - 65 years||75 years||5 - 20 years||8|
|HDFC SL YoungStar Super Premium||Unit-Linked child plan||18 - 55/65 years||65/75 years||10 - 20 years||4|
|ICICI Pru Smart Life||ULIP||20-54 years||20-64 years||10 - 25 years||8|
|IDBI Incomesurance Guaranteed||Money back plan||18-55 years||65 years||10 years||N/A|
|India First Maha Jeevan Plan||Endowment Plan||5-55 years||70 years||25 years||N/A|
|Kotak Assure Income Accelerator Plan||Endowment Plan||0-60 years||85 years||15/20/30 years||N/A|
|PNB Metlife Money Back Plan||Money Back Plan||13-55 years||65 years||10 years||N/A|
|Reliance Fixed Savings||Endowment Plan||8-60 years||80 years||5/7/10 years||N/A|
|SBI Life- Smart Scholar||Unit-linked child plan||18-57 years (for proposer) 0- 17 years (for child)||65 years||8-25 years minus child's age at entry||7|
|SBI eWealth||ULIP||18 - 50 years||60 years||10 - 30 years (both inclusive)||4|
|TATA AIA Secure 7 Plan||Endowment Plan||18-55 years||69 years||14 years||N/A|
Investment plans are of different types. Here’s a rundown to various investment plans in details:
Unit Linked Plan, commonly referred to as ULIP, is a type of investment plan that provides coverage wherein the money paid as premium by the investor is channelized into the stock markets. Each ULIP has a different set of funds that they invest in. Individuals who invest in the best investment plans get a certain number of units of the fund. These investments are based on the correlation of the fund value of the fund they are investing in and the premium the investors have put in.
New age ULIPs, also called 4G ULIPs offer more flexibility in comparison to the traditional ULIPs, and at a relatively lesser cost. Moreover, the exemption of LTCG tax in the Union Budget 2018 made ULIPs even more popular. 4G ULIP plans have low charges and almost zero charges.
The Unit Linked Insurance Plans are amongst the best investment plans option in India in case you are looking for some coverage cum investment options. The ULIP plans give both financial security and life coverage. And one of the best investment plans, ULIPs also give you the leverage to make direct market investments. ULIPs funds can be invested into equity funds or debt funds or both parts. The value of the debt fund or the equity fund is evaluated as Net Asset Value the criteria.
Below is a brief on how ULIPs and Mutual Funds justify your investment needs:
The best investment plans offer the policyholder both life cover plus the added advantage of saving fund. Life insurance investments are always chosen with a long-term or a short-term objective, like buying a house, child's marriage, and education or just building up a corpus for future. The best investment plans act as a two-in-one solution.
Endowment plans are the traditional form of insurance products that offer an individual a life cover with very low profit. Endowment plans are usually taken by individuals who are looking to increase the value of the fund plan but one which offers them guaranteed profits in lieu of a higher life cover.
Endowment plans are the best investment plans for investors who are not looking for a large corpus but are actually more concerned about keeping their funds safe and secure and still receive a certain amount of profits on their assets.
These plans offer a guaranteed amount of fund to a policyholder at the end of a specific investment plan term. The policyholder needs to compare and know that the guarantee he gets here is specific to set of terms and conditions of the plan. These conditions could be either:
When it comes to investment, individuals look forward to investment options, which can give them high returns with no risk of losing the principal amount. Therefore, the investors are always on a hunt to invest in the best investment options, which can help them to double the invested sum within a specified time frame with either no risk to little risk.
However, it is to be noted that the investment options with absolutely no risk do not exist much. Moreover, risk and returns are two concepts that are related and simultaneously go hand in hand, which implies that higher the returns than higher will be the risk and likewise.
So before you make an investment decision, it is important that when you are selecting an avenue of investment you need to take an understanding of the risks associated with the particular investment option. There are investment options, which do have high risk; however, the returns offered are high as well.
The investment options can be segregated into financial and non-financial assets. When it comes to the financial assets it can be segregated into fixed income product, which includes bank fixed deposits, PPF and market-linked product, which includes mutual funds, stock, and much more. On the other hand, non-financial assets, which include real estate, physical gold and so on.
Listed below are some best investment options for 2020 in India that will help you to achieve your financial goals:
Investing in a bank fixed deposit is always a secured and the most preferred choice for the investors in India. From February 04, 2020, the depositor of a bank will be insured up to a sum of Rs 5 lakh maximum for the principal and the amount of interest within the rules of DIGC. Before, the coverage was Rs 1 lakh for the principal and the amount of interest. As per the requirement, one could opt for the tenure that could vary from month to month, quarterly, annually or cumulative interest alternative in them. Now, the earned interest rate will be added to the income, which is taxable as per the tax slab.
Any investor who wishes for study returns should consider investing in debt mutual funds. When compared to equity funds it is less volatile, which means that the risk is less. Moreover, debt mutual funds essentially invest in securities that will generate fixed interest such as treasury bills, corporate bonds, commercial paper, government securities and money market tools. However, this does not mean that it is risk-free; it has certain risk factors such as the credit and interest rate risk. Therefore, a detailed study is a must before an investor makes his mind for the investment.
Well, when it comes to investing in the stocks, it might not just be a preferred choice of the individuals so easily. Besides, investing in a stock is an art and you need to be good at picking up the right stock. Likewise, ten timing is yet another important aspect when it comes to investing in stocks. On the brighter side in regards to long-term, equity delivers high when compared to other classes of assets that are inflation-adjusted. Likewise, the chances of losing all the capital are slight on a higher side until the investor goes for the method of stop-loss so that the loss can be curtailed. Under stop-loss, to sell order at a certain cost an advance order is placed. And to a certain extent, the risk is reduced so that one can diversify in all sectors and capitalizations of the market. In case one wish to invest in direct equity, a Demat account is a must beside bank permits the 3 in 1 account opening.
As for equity mutual funds the investment is predominantly done in equity stocks. With the present mutual fund regulations and Securities and Exchange Board of India (SEBI), when it comes to a scheme based on equity mutual fund, it is important that the investor holds 60 per cent of the assets in regards to the equity and likewise equity-related tools. The equity mutual fund can be managed both passively and actively. When it comes to a traded fund that is active, the returns essentially depends upon the manger of the funds' ability to generate the returns. The equity schemes are segregated on the premise of the capitalization of the marker or even the areas where one wishes to invest. Moreover, it is also segmented on the premise wherein the stocks are invested in Indian companies that are domestic or the investment is done in the stocks of overseas companies that are international.
Having gold as adornments have its interests, for example, wellbeing and significant expense. Moreover, making charges are applicable, that is regularly extended between 6-14 per cent of the price of gold, which can easily move as high as 25 per cent if there should arise an occurrence of extraordinary structures. For the individuals who might need to purchase gold coins, there's as yet a choice. Numerous banks sell gold coins these days. A substitute method of claiming gold is employing paper gold. Interest in paper gold is more practical and should be possible through gold ETFs. Such a venture (purchasing and selling) occurs on the stock trade that is BSE or NSE with gold as the basic resource. Putting resources into Sovereign Gold Bonds is the other alternative to claim paper-gold. A speculator can likewise contribute through mutual funds of gold.
Next, the investment option is the National Pension Scheme, which truly focuses upon the long-term retirement and is duly managed through the Pension Fund Regulatory and Development Authority. Earlier the minimal yearly contribution towards an NPS for a tier-1 account was Rs 6,000, which has been changed and currently is Rs 1,000 for the account to remain active. It is an amalgamation of liquid funds, corporate bonds, government funds, fixed deposits and others. On the premise of the risk appetite, the investor can likely decide the amount of money that should be invested in the NIP via NPS.
The Pradhan Mantri Vaya Vandan Yojana has been specifically designed for the senior citizens who are 60 years of age and above as that they can be provided with an assured return every year of 7.4 per cent. This scheme provides the income of pension, which is payable easily on an annual, half-annually, quarterly and monthly as opted. The maximum amount of the pension is Rs 9,250 and the minimum amount is Rs 1,000 each month. The amount that can be invested in the scheme can go up to a maximum of Rs 15 lakh and the period of the scheme are 10 years. The invested sum is payable to the senior citizen at the time of maturity, however, in case, the senior citizen passes away, the sum will be paid to the beneficiary/ nominee. This scheme is accessible until 2023, March 31.
The Public Provident Fund is another investment avenue, which is preferred and opulent choice for most of the investors. The highlight of a PPF is that it has tenure, which is long enough that is of 15 years and the effect of the tax-free interest quiet big specifically in the coming years. Now, as the sovereign guarantee backs the principal investment and eared interest therefore investing in a PPF is safe. Moreover, the interest rate on the PPF is generally reviewed at every quarter by the government.
Some time back the Reserve Bank of India used to raise 7.75 per cent savings bonds that were taxable as an investment avenue. However, from May 29, 2020, the Central bank stopped the issuance of such bonds. These securities were propelled by supplanting the recent 8 per cent Savings (Taxable) Bonds 2003 with the 7.75 per cent Savings (Taxable) Bonds with impact from January 10, 2018. These bonds had a period of 7 years. The Central Bank with impact from July 1, 2020, has propelled Floating Rate Savings Bond, 2020 (Taxable). The greatest contrast between prior 7.75% reserve funds securities and recently propelled gliding rate security is that the loan cost on the recently propelled investment funds security is liable to reset in at regular intervals. In the 7.75% securities, the financing cost was fixed for the whole span of the venture. Right now, the securities are offering a financing cost of 7.15 per cent. The principal reset on the loan cost is expected on January 1, 2021.
If you are residing in a house with your family then do not consider it as an investment avenue. Although, if you have a property wherein you do not reside by then, in that case, it can be considered an ideal investment option. The value of a property is mostly determined with the location of the property primarily. The other factor is the rent that one would gain from the respective property. When it comes to investing in a real estate it implies that the returns will be in two manners one would be rental and the other would be capital appreciation. It is to be highlighted that real estate is illiquid on a higher side when compared to other classes of assets. Another aspect is to get the approvals of the important regulatory authorities, which had its fair share of risks, associated.
A Senior Citizen Savings Scheme is surely the preferred choice of almost every retiree and an investment option, which is on every retiree’s investment portfolio. It is a scheme specifically designed for the senior citizens and can easily be availed from any of the banks or the post offices for anyone who is 60 years of age and above. The scheme is available for 5 years, which can also be extended for up to 3 years only when the same gets matured. Besides, one can easily open more than one account and Rs 15 lakh is the limit for upper investment. When it comes to the interest rate it is completely taxable and paid on a quarterly base on the premise of the revisions and subject to review. However, if once the investment has been done in the scheme the rate of interest will be the same until the scheme matures. The senior citizen can also claim Rs 50,000 as claim deduction in one financial year within section 80TTB with the earned interest from the scheme.
There are various investment objectives for different investors. Here are some of the common objectives of investment plans:
Every investor seeks safety while investing and safety is one of the prime objectives. There are some investment plans in the form of ULIP that offer guaranteed return possibility.
After safety, comes income. The safest investment plans are the ones that are likely to have a lower yield or rate of income return. The investors should inevitably take risks and sacrifice a certain degree of safety in order to earn better returns. As the returns increases, so does the peril.
The investors might pursue some investments so as to leverage tax minimization as a part of their investment strategy. An investor’s another key investment objective is tax saving. The investor can avail tax benefits under section 80C and section 10(10D) of the Income Tax Act, 1961.
The best investment plans or savings schemes offer more than one benefit to the consumers. Primarily, they offer:
Return on investments with coverage provides the dual benefit of life cover and returns. This means that if anything unfortunate happens to the insured, his/her family will receive the sum for which they were insured in addition to the fund value either as a single or in the form of monthly/quarterly/half yearly payments. These returns help to secure the family needs and monetary goals if the insured party is unable to earn a living or in the unfortunate event of his demise.
A goal-based investment plan is a great way for saving money for a goal - whether it is buying a house or a car, paying for children's education costs, or planning for marriage or after you retire. The endowment funds offer a secure yet safe way to plan for retirement if the insured is not keen on the unit market linked plans. The ULIP plans offer alternative opportunities to invest and the investor can take a look at their historical profits to calculate his/her returns and builds financial corpus in a few years.
The best investment plans with coverage cum investments and lock-in period help to save money that can be used to fulfill financial management. Whether the investors want to buy their first house in seven years and/or save enough to buy a second home in the next five, their saving plan feature can help accomplish their goals.
The premiums paid under these investment plans qualify for deduction under section 80C of the Income Tax Act, 1961 up to applicable limits. This means that the investor is not taxed on the funds he invests in these options or best saving schemes and additionally the profit is reduced by the investing fund. The exemption, however, is limited to the total exemption limit under section 80C and cannot exceed that statutory limit. In addition, the pay-out received on maturity is exempted from taxes under section 10(10D) of the IT Act.
Banking institutions take these plans as collateral for any loans given to the insured. These instruments act as a security for the loan. Since the loan is in the form of a secured loan, the interest rate is generally lower and other terms and conditions more favourable as compared to unsecured loans.
There are certain factors to be kept in mind while choosing investment plan. They are:
The monetary goals of the investor should determine what type of scheme he should buy. These goals may include marriage, buying a house or a car, providing for children's education and marriage or building a corpus amount. In fact, even small-term goals such as foreign trips can be financed by ULIPs. If an investor has just started with his/her career or have a small family, then s/he can definitely opt for the best saving scheme such as a ULIP to fund his/her short-term goals. On the other hand, if the investor is in his/her 40s or even 50s, then endowment plans are better as best saving schemes in combination with ULIPs or other options like a mutual fund. The monetary goals of the investor will help him/her to determine the best investment plans options for him/her to make an investment.
In order to meet the financial goals the amount an investor spends or saves has a larger role to play. With less saving and more expenses, it is unlikely that s/he can define large short-term goals that can be met by coverage plans. In such a scenario, if the investor lives at home with his/her parents and has no major outgo like rent, and s/he is likely to save money every month then it is best to buy an adequate life cover with return benefits and get their two-in-one benefit.
The amount saved for the future will also determine what kind of scheme works as the best for the investor. If the investor has fewer expenses now because the children are young, s/he can plan for the major expenses that will come his/her way in a few years like the children's college education or marriage. Therefore, s/he can choose an option that charges a premium for a few years and then pays out enough that it can itself pay for any premium from the annuity or other regular benefits. Moreover, the investor investing a higher amount would now mean that a good profit plan will grow to a larger capital base in 20-30 years when s/he needs it for his/her monetary goals or basic expenses. Planning his/her expenses is a good way to filter the ones to invest on.
These schemes are a smart way to get the cover an investor needs and also grows his/her fund at the same time through the best saving schemes. The major expenses like buying a house or to meet the living expenses after the investor retires can be easily covered by ULIPs and even endowment plans. Also, s/he can plan for the major expenses that are certain to occur and take them into account while determining the best saving scheme. For example, suppose the investor’s child is in primary school, then s/he knows that within 8-10 years s/he will have to bear major expenses for their education. As such, it makes sense to invest in a Child ULIP plan that ensures s/he can meet this definite expense in a few years. Moreover, Child ULIP has a special feature known as Waiver of Premium option.
The insurance cover of the best investment plans saving scheme should be adequate to take care of the investor and his/her family in case s/he is unable to work anymore or in the unfortunate event of him/her being no more. The cover provided by the product should be able to pay for him/her or his/her family's expenses in the years to come until his/her children can take care of him/her and his/her spouse in addition to themselves. To understand how much the investor needs, s/her must make an estimate of his/her current and future expenses vis-a-vis what a scheme offers. If the investor’s cover is less than what is required, then opting for ULIPs or endowments as best saving schemes are a better way to ensure s/he increases his/her money while protecting him/her and his/her family at the same time.
The number of dependents should also determine the assured sum the investor needs to invest in the best options. If the investor has only a wife and child as dependents then his/her needs would be lesser in comparison to when s/he may be taking care of his/her siblings, parents, parents-in-law, grandparents, nephews, nieces, etc. The investor’s monetary insurance product should not only be able to cover for all the necessary expenses but also help him/her build a financial corpus for all the major goals of his/her family and himself/herself. Moreover, the age of the younger dependents matters while choosing the best investment plans saving scheme. If s/he has teenage children, then it is likely s/he needs a good plan to save up for their college education or marriage. ULIPs investment plans are better for such cases than endowment plans.
To understand how much cover a person needs in the best saving scheme, s/he has to take stock of their existing expenses, compute to the extent possible the number of future obligations that are likely to crop up and how much money they need to meet their living expenses. A key factor is also the age of dependents as this would determine how long before they can meet their own living expenses without having to depend on the pay-outs from the schemes.
The existing loans, be it a car loan, personal loan, or a home loan, must be considered while calculating the amount of life cover required in the best investment plans saving scheme. It may also include loans that a person or his/her dependents may have to take in the future and their EMI payments. For example, a child may have to take an education loan to cover for further studies or foreign studies. In such cases, an ideal financial portfolio should be adequate to cover for repayment of these loans for 2-3 or more years until the child lands a job and can repay the loan himself or herself.
This is perhaps the most important aspect of applying for the best investment plans saving scheme in the first place. The payment from the best plan on the happening of an unforeseen or unfortunate event must be adequate to cover for the loss of income without any material change in one's lifestyle.
Suppose the sole breadwinner has a salary of Rs. 12 Lakh per annum, then the plan should be able to cover for a substantial part, if not all of the income loss suffered by the family, if the insured is unable to work due to a partial or total disability or in the unfortunate event of his demise. Saving money also helps to build up a corpus that can yield interest income.
A good product should be enough to cover any major expenses at present or in the near or distant future. So, larger expenses such as marriage, retirement, continuing treatment of illnesses, etc. has to be accounted for in the calculations along with saving fund while arriving at the life cover required for the family.
The expenses should be thought out with some rationality to select the best saving scheme. Considering medical expenses or hospital stay for the family does not make sense if there is already a Mediclaim plan covering all such expenses. However, the annual premiums on such options should be factored in while making the calculations.
The existing cover should be discounted while calculating the cover required if it is an individual financial scheme. If it is the employer's group policy, then the coverage under it can be considered. For more clarity, it is always better to ask the employer for the benefits under the group financial policy. Once the facts are clear, the individual can reduce the amount they are likely to receive under these policies from the new cover they need under the insurance products.
While calculating the coverage required, it makes sense to discount the income of the spouse or other members of the family. This will help provide a more realistic picture of the amount of coverage and returns required. If the spouse earns then the amount of cover should be able to take care of all the major expenses that are likely to occur and also take care of most of the expenses that are being met by the earnings of the insured. The rest of the expenses can be met from the income of the spouse.
To plan your financial future better insurance service providers have developed various tools to aid individuals to calculate premiums and plan better for their future financial aims. A premium calculator helps to make a cost-efficient decision and examine different plans that meet the basic requirement of the investors. The calculator helps the investor to use their fund in a more systematic manner in order to have a good portfolio.
There are different options to invest and not necessarily all of them can fulfil the basic objective of an investor to invest. To know more about this, it is always good to compare before you can purchase. When we are comparing we need to look at a few things:
The coverage that is offered is a good indication of which products are better as compared to the others. The better scheme will always offer the most comprehensive and yet practical coverage. Though most of the schemes offer similar options to save, some of them may offer increased cover if the ULIPs reach a certain milestone or may offer the same cover at a lower premium. Also, with the IRDA keeping a strict vigil on the insurance market, most insurance providers now focus on ULIPs as long-term products unlike before when they were mostly sold by unscrupulous agents as short-term options to invest. This means that companies now are more likely to offer better cover than before as the investors are buying the policy for the longer tenure instead of looking at it as a short-term plan.
A good financial product offers extra covers and riders at significant discounts. These add-on riders may include increased life cover for smaller premium addition, cover for parents or larger number of family members, health cover, timely health check-ups, and so on. These rider add-ons, though not always a feasible option, may offer the specific cover that a person may be seeking. For Instance, some riders may include personal accident cover, and child cover, among others. All of these are available at a discount as compared to what taking one of them as a single unit plan may come up to in terms of premiums. An investor can opt for the add-on covers or riders that suit their needs.
Some options allow the insured to increase or even decrease their cover during the policy tenure. This is essential as the cover needs vary according to your age and responsibilities. During your early years, the cover can be less but it has to increase as your expenditure and responsibilities grow with age. This is because the investment amount should be able to cover for any loss of income without the need to make any major changes to your lifestyle. A good plan will let you increase or decrease your cover according to your needs.
Though most of the premiums of the assured amount are similar, extra fees and charges may affect the benefits on the investing funds. Endowments, as a rule, are costlier than ULIPs due to the guaranteed profits they offer. Some things to look out for include what part of the premium is used for investing. Some ULIPs may load more of their costs during their initial years while others may spread them over a few years. This means that the sum allocated to the ULIP is less in the initial years. This affects the returns as the higher the initial investments, the higher the long-term benefits.
A good plan will offer an option to increase or decrease your premium depending on the payment capabilities of the investor. Some may offer to top-up covers that let the investor increase his/her cover on payment of extra premiums. This is a good option to have as s/he may want to pay a higher premium to gain higher profits when s/he can and then reduce his/her premium when s/he has other responsibilities where s/her needs to put his/her fund.
In most cases, the profits offered are a good way to understand which option is better. For one thing, there are two types, the market-linked ULIPs whose benefits are dependent on the market and may offer higher profits, and the endowment options that offer sure profits but on the lower side.
Another point to note is that the profits in endowment choices only come after a few years while in the case of ULIPs, the insured can make complete withdrawals once the lock-in period has expired. If an investor prefers sure but safe profits, then endowment options are ideal. Alternatively, if s/he is comfortable with a higher risk for the higher profit, then the ULIPs are best for his/her needs.
Different savings options offer different types of returns. For instance, some may offer a single payment while others may offer an annuity while others may offer a bit of both.
The choice of returns will depend on a few things - the goal for which the fund is put into the product is being made, the time for which the fund is invested will be made, the type of return desired, etc. In case, the scheme is being chosen for a specific goal such as a child's education or a dream house or retirement, then the type of profits desired will vary.
For instance, in case of child plans it will be better to receive annuities over a few years that will cover graduate and post-graduate costs whether in India or abroad. For retirement, it is better to receive a single payment near retirement to cover any relocation or other costs and then receive monthly pay-outs that serve as regularized monthly returns. What option of pay-outs the investor chooses will depend on the expectations of his/her needs.
ULIPs invest into funds that are linked to various units - whether trading on the market or otherwise. For instance, some ULIPs may offer near guaranteed profits that are on the lower side as compared to market-linked funds that are riskier but higher returns. The lower near guaranteed ULIPs invest in non-risky debt securities and savings options and are thus able to protect the capital of the investor from market volatility.
Most companies offer a choice of fund that may sometimes depend on the investor’s age bracket. Some may offer a choice of debt and equity market fund with an equal proportion of his/her funds (50:50) invested in each type of fund units or slightly skewed in favour of debt or equity (say 70:30).
Most experts suggest taking a higher exposure to fund market at a younger age and then slowly moving to debt as s/he ages so that by the time the investor retires all his/her money is in debt funds. Such a strategy works better as the investor is exposed to the market risks at a younger age when s/he can recover from any downswing, and this risk decreases with age as his/her responsibilities increase.
Moreover, the financial corpus the investor has built up remains safe from the vagaries of the market. Consequently, the funds available are an important thing to check before making a choice.
Insurance companies allow the insured party to change the number of their funds for investing in the funds of their choice. This is especially good as the savings increase over the years and investors have the option to considerably grow their asset base. The increase in the investment amount is generally accompanied by a corresponding increase in the life cover, though the increase in the cover may not be proportional as the focus is more on the growth of the fund.
An important thing to check and decide if the investor should invest in a good financial product is if the fund offers alternative investment and insurance options. This works well if the investor already has some sort of cover gives coverage or a term plan. In such cases, investors can use their funds for investing in mutual funds, which even though they may not provide coverage, are likely to offer better returns. However, if the investor does not have a choice for investing in the market and are looking for policies that give returns and coverage then are the best options for him/her to put his/her money into. One can use endowment schemes as a backup for definite profits and ULIPs for other goals such as a house, car, retirement, foreign travel and child's education, among others.
Most funds give the investor an option to make monthly, quarterly, half yearly or annual payments. In certain instances, the quarterly, half-yearly or annual options make sense as the payment outgo may be less since the companies may offer a discount due to the lesser paperwork involved.
However, the premium is generally high and as such only makes sense when you have enough funds to pay the premiums due. If an investor is starting out on his/her career or do not have the necessary schemes to make a single premium payment, then the monthly payments make better sense.
There are products that have the option to change the periodicity of the premium payment for certain policies. One can begin with the monthly or quarterly payment options at the policy inception and then switch to the semi-annual or yearly payments in the later years.
The premiums of these policies are exempted under the Tax Act up to the prescribed limits. This means that when the investor makes any premium paid for the policies s/he has, s/he can claim a deduction of the amount thus advanced from his/her total earnings.
For instance, suppose one invests Rs. 50,000 annually in life coverage options from his/her annual income of Rs. 4 Lakh. In this case, while calculating his/her income tax, s/he can deduct Rs. 50,000 under section 80C of the Indian Tax Act. Only the remaining amount, Rs. 3.5 Lakh will be liable to taxation, provided there are no other exemptions available. The pay-out from these policies qualifies for exemption under section 10(10D) of the Income Tax Act.
The planning for children can be further sub-divided into two: the first for the children's education and the second for their marriage. Both education and marriage are major expenses and need proper asset planning. The best investment plans are ideal for these purposes as they provide the child with the necessary covers in addition to helping the parent prepare for the eventual expenses.
The meet the expenses to educate one’s child start taking gargantuan proportions after secondary education. From taking tuition classes to studying for competitive exams, all preparations for furthering their education and career prospects are expensive and need a good financial portfolio. In addition, college fees in private colleges and foreign universities are quite exorbitant and will only increase gradually.
All these expenses cannot be met out of the monthly salary of the parents and need to be properly planned. These are ideal for such cases as they provide the necessary cover for the child and also help the parent build-up a financial corpus for major expenses. Some things to check out while choosing a plan for children's educational expenses include:
Waiver of Premium (WoP) is an inherent rider of a child insurance plan. WoP rider is applicable in the event of demise of the insured in a stipulated period. In such cases, SA is paid to the nominee while the due premium for the rest of the term of the policy is paid by the insurer.
Timely pay-outs are better to pay the tuition and college fees while a single payment is best to meet major expenses that crop up at the beginning of college or a foreign education course. Some offer both options with a single payment when the child reaches a certain age like 18 or 21 years and customary pay-outs.
Children have their own set of unique ailments and the better option will cover such contingencies. They will also provide reimbursement for illnesses and diseases that require hospital stays.
Since the parents meet most of their children's expenses, it makes sense to go for a good scheme to invest with a higher return in the initial years and lesser cover. This will also help to build up a larger financial corpus in the later years.
The individuals generally sketch the funds to invest in order to meet the expenses of children's marriage with a good financial option. The best investment plans are those that give a pay-out at a certain age of the child such as 23 or 25 years. An early move into the products that provide coverage when the child is young helps to build a large financial corpus of premium.
The ideal move for retirement is to begin at a young age; this can help in building a considerable financial corpus by the time the investor/insured person retires.
A good retirement option is one that provides a lump sum pay-out at the retirement age or just before, to meet the relocation expenses from the place where the person is working to his hometown, and regular payments thereafter that serve as monthly earnings for the individual.
The insurance providers offer a range of annuity or periodic pay-out options that the persons can choose from based on their needs. The schemes chosen should depend on the age of the insured person.
Earlier, ULIPs offered the best returns, they were not ideal for people above a certain age due to their higher risk profile. However, 4G ULIP plans offer a very good return potential and systematic withdrawal option. These plans are flexible and offer tax free income.
The investments can be classified based on three factors namely, the type of schemes they provide, the duration in which the premium needs to be paid and the life stage of the investor/ insured person.
Guaranteed insurance products offer lower but secured profits. These are ideal if the investor is looking for safeguarding their assets and looking for stable growth of their money. Most of the guaranteed plans invest the insured party's money in secure instruments that are definite to provide the necessary benefits.
The non-guarantee insurance products offer better profits but do not promise definite profits as they are market linked. The funds that are invested can range from aggressive funds that invest in equity growth stocks and focus on capital appreciation to conservative funds that invest in debt, money-market instruments or bank deposits and focus on capital preservation.
The single premium offers a lower premium as the paperwork and other administrative charges are less. However, from the insured's perspective, these options make sense only if they can afford to pay the cost. Regular premiums are better for younger people who are just began with their careers and do not have much savings.
The life stage and non-life stage options allocate assets according to the investor's age. Those in their 20s or 30s are given adequate stock market exposure as they can manage the risk in better way. For people in their 40s or 50s, the fund allocation shifts to less-riskier stocks and instruments that provide stable and secure profits. The financial options for people in their 40s or 50s focus on gradual asset growth and conservation of the financial corpus already created.
At present, just earning money is not sufficient, as the money one earns may not be adequate enough to fulfill the financial goals of life. Thus, it is very important to make an investment. The savings lying ideal in the bank account is an opportunity lost. Therefore, one should invest the money smartly in various investment plans in order to receive profitable returns out of it. By choosing the best investment plan, one can gain maximum returns on investment over a long-term period and can accumulate wealth to fulfill the major objectives of life.
Savings and investment are often used interchangeably, however, both are different. Savings accounts are basically no-risk accounts. In a savings account, the interest is earned on the money one saves. The returns are guaranteed in a savings account and are more accessible whenever one needs it. Savings account entitles him/her to save money for a particular purpose within a short-term period.
On the other hand, investment plans are aimed to create wealth over a long-term period. In investment plans the risks are higher, thus the potential of returns are also higher as compared to the savings account. In investment plans, one’s money is invested in the different assets that have a good probability of generating high returns over a long-term period. While investing in investment plans, it is important to have a diversified portfolio so that s/he can diversify his/her risk and can gain potential returns across a wide range of investment classes.
The earlier one starts investing in the investment plans, the more benefit s/he can reap in the long-term. It is advised that the best age to start investing is the age when one starts earning. By investing at an early age one can compound his/her money over time. Moreover, the longer the investor stays invested in the market the higher returns s/he can avail in a long-term period. Not only this, but by making an investment at an early age also helps him/her to deal with the market risk as in long-term s/he can overcome the risks related to the market. Thus, in order to create maximum wealth, it is always advised to start investing in investment plans at an early age.
There are a plethora of options available in the market. Some of the best investment plans available are discussed below:
As one of the best investment plans in India, Unit-linked Insurance Plans (ULIP) offers the combined benefit of insurance cum investment. Besides this, the ULIP plan also helps one to save on taxes under section 80C and 10(10D) of the Income Tax Act. The lock-in period of ULIP plans is 3-5 years. In ULIP investment plans half of the premium amount is used to provide the insurance coverage to whereas the rest of the premium amount is invested market-linked instruments such as shares, bonds, etc. in order to gain return of investment. ULIPs have 0% capital gain unlike 10% in mutual funds.
This is considered as one of the most profitable options of investment plans in India. Mutual funds are market linked investment products in which the investment is made in different assets such as debt, equity, stocks, etc. with an objective to provide higher returns on investment. Even though, mutual fund investments include higher risks the potential of returns is also higher. In the mutual fund investment plan, the ROI totally depends on the market performance of the fund.
Bank fixed deposits are guaranteed return investment plans, which offer fixed return over the tenure of investment. The returns on fixed deposits are payable annually, monthly or quarterly. FDs generally offer two types of investment options cumulative and non-cumulative. As one of the safest investment plans, bank FDs offers an interest rate of 6.05%- 7%.
National Pension Scheme (NPS) is a government-backed investment plan, which aims to provide pension solution to its investors. In NPS, the investment is made in binds, equity investment alternatives, and government securities according to one’s own requirement and choice. NPS scheme only matures after the completion of 60 years. In this scheme, the accumulated interest is tax-free. Moreover, in case of lump-sum payment after maturity 40% of the amount is tax exempt as per the Income Tax Act of India.
Public Provident Fund (PPF) is the safest and most secured investment plans available in the market. The returns offered under Public Provident Fund (PPF) entirely tax exempt. One can open the PPF account in bank or post office and the money gets locked for the tenure of 15 years. Moreover, in this investment plan, one can earn compound interest from this account.
Depending on the amount one is capable to keep aside for investment a suitable investment plan can be suggested. The safest investment plans for a college student is to invest in Banks Fixed Deposit and Recurring Deposit plan. As in FDs and RDs, the interest rates are fixed throughout the fund tenure and a guaranteed return of investment is paid to the investors.
Moreover, Banks FD and RD investment can be done for a short-term period. In case one is above 18 years of age and if s/he has a medium risk appetite then s/he can consider investing in mutual funds through the process of SIP. One can start investing in SIP investment plans with a minimum amount of Rs.500. This will help his/her to inculcate the habit of savings in a long-term and will also help him/her to accumulate wealth over a long period of time.
In order to secure one’s life after retirement, it is very important to make the right investment choice at the right time. Nowadays, there are many different types of investment plans, which are specifically designed to provide financial security to the individual after retirement.
Some of the best investment plans to invest for senior citizens are the National Pension Scheme (NPS), Public Provident Fund (PPF), and Senior Citizen Savings Scheme (SCSS). These are government-backed pension plan, which aims to provide financial stability to the individual after retirement.
Moreover, these plans also offer the benefit of tax exemption. Apart from this, one can also consider investing in investment plans such as Post Office Monthly Income Scheme (POMIS), FDs and Mutual Funds in order to create wealth in a long-term and have a secured life after retirement.
With the increasing cost of living, it is imperative to make investments. With a wide range of investment plans available in the market, making the right investments decision can always be a little challenging. However, if one’s objective is to generate high returns with the minimum risk involved then s/he can consider investing in long-term best investment plans such as mutual fund scheme, banks FD, ULIP plans, NPS, PPF, SCSS, etc. These plans not only provide a high return on investment over a long-term period but also help him/her to create a financial cushion for the future so that s/he can achieve the financial objectives of life.
Any residential Indian citizen above the age group of 18 years can invest in various investment plans of their own choice. While making an investment in investment plans the important eligibility criteria that are required to be fulfilled are:
Purchasing the investment plans online is the most beneficial thing to do, as it is hassle-free and saves one from getting into a lot of paperwork. In order to purchase the best investment plans online, one just needs to follow a few simple steps:
Step 1- Visit the website of the investment plan in which s/he wants to make an investment.
Step 2- Once s/he logs into the investment page enters the basic information such as income, date of birth, etc.
Step 3- Enter the preferred policy tenure along with the investment amount.
Step 4- Choose the additional benefits, if any and click on search.
Step5- According to one’s preference, s/he will get the listing of all the suitable plans.
Step 6- Go through the plans carefully and check the terms and conditions, benefits and returns offered by the policy.
Step 7- Purchase the best investment plans after comparing various plans online.
It is important to note that while investing in any investment plans, it is important to complete the KYC and keep handy all the important documents mentioned above.
In order to provide the best to our customers, Policybazaar provides one-stop solution for all the financial needs of the individuals. Consider the extensive range of insurance companies operating in the market and together with their wide range of investment plans, it often becomes of the herculean task to choose the best investment plan for making an investment. Policybazaar aims to bridge this gap and guides the investors through the difficulty of purchasing the most suitable investment plan for themselves and their family. Let’s take a look at how Policybazaar helps to choose the best investment plan.
Policybazaar helps you to make a quick and informed decision. At Policybazaar you can compare the costs features benefits and coverage of various plans online and make an informed decision.
Moreover, you can also check various products available in the market.
We have a team of experts who provides assistance to the customers 24X7 and guides them and help them to make an informed choice.
As an online portal, our website enables customers to purchase the product directly from site save you money and time.
Apart from generating higher returns on investment, as an investor, one’s investment goal should be to save on taxes and to generate tax-free income. While choosing the right tax savings best investment plans, it is important to consider the important aspects such as liquidity, safety, and returns. With an array of investment options available in the market, some of the best tax saving investment plans that not only provides the benefit of tax exemption but also helps him/her to earn tax-free income are: