Tag: insurance policy

There are two main concerns in our everyday life. One is savings, and the other is an investment. Investment is any money spent s today to reap benefits in the future. These two concerns will always dominate your thoughts, even if you live paycheck to paycheck. If you have already begun saving and have no idea where to invest your money, we have a solution for you. There are numerous investment products in the market, but choosing the right one is the key to generating wealth. Investing your money in financial products will ensure that your money grows instead of being idle in the bank account.

Different types of investment plans in the market

Here are some of the traditional investment plans available in the market.

Fixed Deposit

A fixed deposit is an ideal investment option for those who want to bear no risk and expect a regular income. Fixed deposits have been prevalent for many years and are a safe investment option. If you want to invest for a specific goal, you can do so for fixed deposits. It carries a lock-in period and a particular rate of interest. You will receive the amount back at the end of the maturity period. You can opt for a quarterly, monthly, or annual receipt of a claim on the same. Compare the interest rates the banks offer before investing in a fixed deposit.

Stocks

Investing in stocks is investing in the shares of a company. Stocks are one of the most popular investment avenues in the country and have shown significant results over time. However, the returns on these stocks are subjected to market volatility. Stocks are a good option if you can bear the risk of market movement. They can generate huge returns if you have invested in the right companies. The market movement will impact your investment, but it pays to remain invested long enough to earn higher returns.

Mutual funds

Mutual funds are investment instruments that professionals manage on your behalf. They are classified according to the type of securities the fund is invested in. These include balanced, open-ended, close-ended, and stock funds. Based on your risk appetite, you need to choose a fund that meets your needs in the best manner. If you have a high-risk desire, you can opt for stock funds. Stock or equity funds will purely invest in the equity market, while a debt fund invests in the debt market and carries a low risk. Mutual funds are a diversified investment option since the asset allocation varies in each fund. These funds are professionally managed and have become a prominent investment product in India.

Life insurance

If you are wondering where to invest money, you might not know the benefits of a life insurance policy. Multiple insurance products are available in the market, but life insurance is the most important. You must invest in a life insurance policy to ensure your family’s financial security in unforeseen circumstances. Investing in life insurance could be the best financial decision you have ever made. If you are not around for your family, life insurance will provide for the economic security of your loved ones. If you have a debt to pay, the life insurance cover will ensure your family does not suffer under a debt pile. Another benefit is the tax exemption on the investment. The premium amount is exempted from taxation under Section 80C of The Income Tax Act. Consider insurance as the most important investment option before you look for alternatives. It is much more than a cover for your life. It will provide for your family and help them maintain their lifestyle in your absence.

Unit-Linked Insurance Plan (ULIP)

ULIP is an insurance product that divides the premium amount into two segments: one is for your insurance plan, and the other is invested into funds. Investment in ULIPs is exempted from tax and has a minimum lock-in period. This investment will give you returns at the end of the lock-in period. The acquisition will depend on the type of funds you choose. If you have a high-risk appetite, you may opt for growth funds. However, you could select balanced funds if you do not want to take much risk.

Choosing the best investment plan is not easy. Before deciding to invest, consider your long-term financial goals and risk appetite. While life insurance is one of your most important investment products, various alternatives will help grow your wealth. Consider the tenure of your investment and make the right choice of product. It is important to remain invested long to generate higher returns.

You no longer need to worry about how to invest money. It has now become easier to invest in the comfort of your home. You only need to choose the investment product and can support it online. You can also set up a systematic investment plan to make small but consistent investments in your selected products. Making the right investment decisions today will reap significant future benefits.

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One can rarely forget the first time they land a real job. After all, getting your first paycheck is a big deal. But, sometimes, these fond memories may carry with them uncertain spending habits based on a grave need to celebrate your entrance into the adult world and excitement about finally earning a good wage. However, nothing is more harmful to your wealth than wasting money when you are young. Managing your finances wisely after you land a new job is a skill every individual must master. Even if you are not drawing a hefty paycheck, these financial habits can set you down the right path to building wealth and securing your future:

Finance

1. Keep Your Budget in Check

Don’t fret – a budget is just a plan for how you spend your hard-earned money. There’s nothing worse than realizing Rs. 10,000 evaporated into pizzas and new clothes, and setting a budget is a way to forestall that disappointing phenomenon. So, get an idea of your cash flow. If you see spending more than you make, think about areas you can cut back. Ultimately, it’s all about knowing the difference between a necessity and a luxury.

2. Get Health Insurance

You’re young, fit, and can certainly wait until your 40s to worry about health coverage, right? Wrong. Most individuals find out the hard way about the pain of not having health insurance when they are young- after a simple doctor’s visit for a sore throat leaves them with a hefty bill of thousands of rupees. That’s a best-case scenario. You don’t even want to imagine what happens if you end up in a hospital bed. Therefore, understand the need to sign up for a health insurance plan on your own. Though it may not feel like it’s worth the money now, this is another cost you will have to get used to.

3. Get Insured for Life

As a young adult, you would consider prioritizing moving into your apartment, paying off your debts, and kick-starting a career. Purchasing a life insurance policy may not be a consideration, but it should be. Numerous arguments can be made for buying the best life insurance policy at a young age – the most significant advantage being the affordable premiums. Understand that getting a life insurance cover is the ultimate financial tool for those big “what if” moments. To decide if you need a life insurance policy, ask this question: “Would someone be financially affected if you were to pass away suddenly tomorrow?” If the answer is “Yes,” you must buy life insurance at the earliest.

4. Build A Cash Reserve

Insurance alone will not cover all your problems; as an added precaution, you must have liquid funds in hand. For that purpose, stash away enough funds so you can weather a job loss or a sudden major expense without having to take drastic measures. The first thing you want to do is start building an emergency fund and save three to six months’ worth of living expenses. Increase that to nine months’ worth if your income is more volatile.

5. Prepare for Retirement

The age you are right now is the best time to start saving for retirement, thanks to the phenomenon called ‘Compounding.’ Here’s how: A 25-year-old individual investing Rs. 4,500 a month, assuming an 8 percent return, can accumulate Rs. 1.08 crore by the time s/he turns 60. That’s a considerable amount! So, start automating a little money in investment plans (like ULIPs or mutual funds) and maybe even increase it each time you get a salary hike. By doing this, you are better positioned to use your hard-earned money to achieve your goals in the future. What’s more, your older self will love you for it.

The Bottom Line:

Right from your first job, it is critical to make the best use of your money. Getting on the correct path to managing your money will set you up for life. Finally, always aim towards making money a source of security and freedom— not a source of ongoing stress.

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