- Date : 10/05/2019
- Read: 5 mins
Worrying about the future causes tension. Rather than worrying one must prepare for the future by investing in different financial instruments.
Are you tensed about where you would stand financially, 10 to 20 years down the line?
Do you see yourself racing fast in luxury cars, or maybe you want to be a world traveller with 100 stamps on your passport? You could also want to own that beachside property that you have always coveted. Or you want to soon start up your own business and need the capital to help you begin.
While all of them are dreams worth living for, having a plan in place is what will help realise them.
Are investments the best route to wealth creation?
Investments have two purposes to serve that can help you achieve your life goals. The primary intention is to get started with saving money for all your needs. The secondary purpose is to strategically design an approach to increase the value of these savings. Yet, there is a third dimension that insurance plans add to your investments – security.
To reap the rewards of great investments, you need to identify the tool that gives you maximum value Return on your Investment (ROI) with minimum risks over a long period of time. Towards that, check out these insurance investment tools which help you make the most of your hard-earned money in a disciplined manner.
1. Public Provident Fund
This is one of the most trusted investment platforms that people turn to. With an investment tenure of 15 years, PPF has the impact of compounding of tax-free interest. This is especially huge if you intend to save with long-term goals in mind. Furthermore, this mode of investment is extremely risk-free as the principal invested and interest earned is backed by a sovereign guarantee.
2. Mutual Funds
A tremendously popular investment avenue, investors can potentially garner really strong returns through fixed or recurring deposits. You have the option to invest in either low-risk mutual funds, for example, liquid funds, or opt for higher risk categories like mid-cap equity funds. You can also mix and match as per your risk-taking abilities.
The smart way to invest in mutual funds is via a Systematic Investment Plan on SIP. This makes your pattern of investing more disciplined especially with upward and downward market trends. If the markets are down, you can invest more funds at lower costs through SIP. Therefore, when the markets rise again, you gain more with higher returns.
3. Unit-Linked Plans
Unit-linked term insurance plans, popularly referred to as ULIPs, offer access to a dual bonus – investment coupled with life insurance. Apart from providing you with the opportunity to earn market-linked returns, ULIPs additionally allow you to enjoy life cover that protects you and your family from unforeseen emergencies.
With ULIPs, you can invest in large-cap, mid-cap and small-cap funds, either singularly or in combination. Since ULIPs are flexible and customisable, you can change the premium payment terms, the sum assured and also the choice of payment frequency.
However, ULIP is best suited for investors looking for long-term growth and wealth creation. It is ideal if you are looking at a period of 10 years or more aiming to get higher returns that will help fulfil your life goals.
4. Bank and Company Deposits
Fixed Deposits with banks along with company deposits are one of the traditional investment options for individuals of any age. Typically, company deposits offer higher interest rates in comparison to bank deposits. Generally, interest rates on bank deposits range between 4%-8%. For company deposits, it is usually between 8% and 8.90%.
Related: FAQs about fixed deposits
Start investing early to fulfil your life’s aspirations
An ideal investment instrument would be something that gets you decent returns over a period of time. Check out these scenarios which can become realities after having invested in a disciplined long-term manner.
- Your child’s college fund:
Sending your children to study abroad is always a coveted dream. By investing from the time, the child is born will allow you to amass enough liquidity to help them realise their dreams of a distant education abroad.
- Buying your dream home:
Owning your own home is a dream we all share. A long term investment plan can help you achieve this ever so distant dream. With the flexibility and the compounding of interest, you can build a large enough corpus over time to buy your own home one day.
- Providing comfort for retiring parents:
Investing helps you save money for a more assured future for your parents once they have retired. By investing you could give your parents financial freedom to live a comfortable life and pursue things that make them happy well into their golden years.
Travel is an integral part of enriching experiences and making memories. Being able to travel the world and see newer cultures will always leave you and the family in good stead.
Investing early and wisely can help you achieve your life’s aspirations and dreams. Apart from helping you with your goals, by being invested one also learns the value of financial discipline; something that will help you and stay with you for life. If you think it is too early to start investing, here's why you are wrong.