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It is quite evident that an investment gives you financial freedom. If you invest your money from the beginning, you need not to worry about the future financial necessities. As future is uncertain, and there may be a situation in your life where you require a large amount of money to get out of that situation with minimal loss. So as to effectively protect yourself from such type of situation, you must inculcate the habits of saving and investing. It may be because of your children’s education, marriage or medication.
Let it be anything which demands lot of money, you may outdo it if you have invested your money from the beginning itself. Hence, investment gives you more financial freedom to rely upon. If you have a desire for having a luxurious apartment and a luxurious car of your own, then it is obvious that these desires may be fulfilled by a planned investment and savings. As you invest more, you tend to become richer. And as you become richer, you may find no difficulty in achieving your personal goal. Achieving personal goals is the essence of your success in every aspect of your life.
A good investment strategy requires choosing the right mix of safe and risky investments. Among safe investments, fixed deposits (FD) are the most popular. But think before investing in FD because there are some other investment avenues that provide you much better returns such as ULIPs and Mutual Funds. Following are the factors that you have to consider before investing in FD:
- What is the Rate of return you need to satisfy your future needs?
- Whether the returns generated by FD are sufficient to meet your future financial needs?
- Is there any other better investment option than FD?
- Tax benefits on the returns
With FDs you deposit a lump sum of money for a fixed period ranging from a few weeks to a few years and earn a pre-determined rate of interest. In ULIPs you invest money regularly and after a period of time you will receive the lump sum amount. The return on ULIPs will be normally greater than the return on FD. Following illustration will help you to understand the return on FD and ULIP.
The returns on ULIPs are normally higher than the mutual funds. ULIPs do not face redemption pressures as the insurance money is for longer term and hence offers room for fund managers to design better, disciplined investment strategies.
Unit-linked insurance plans have caught the fancy of investors in urban centres. ULIPs not only provided life cover, but also brought in a lot of transparency in the way the policyholders’ money is invested. Birla Sun Life Insurance Company revolutionalized the life insurance industry in India with its decision to offer only ULIPs. |
