ULIPs are some of the best investment plans that you could use to invest your money on. Even if you decide to start off with a small sum, you will be assisted by a fund manager who will help manage all your money and also advice you on which bond or stock you should invest in. However, you should also be involved with your financials and investments and try out strategies that will help you in getting good returns.
A ULIP Plan is considered to be one of the most-effective ways to enter into the equity market and make good returns in the long term. In simple terms, ULIPs are life insurance plans that come with an additional benefit of also investing in capital market. You could choose from a wide variety of different insurance companies to invest part of your premium in some of the best investment plans with high returns. Here are 5 tips to ensure that your investment delivers higher returns.
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1. Optimizing Asset Allocation
Asset Allocation simply means to expand your investments across different asset classes. Correctly doing this could help determine your risk to return ratio. Hence, optimizing your asset allocations in different asset classes will save you from big losses that you could suffer when you invest in a single asset class. When you go in for a ULIP investment plan, you are allowed to switch between different asset categories like cash, equity and debt, depending on the risk you’re willing to take and your financial goals.
2. Selecting Between Debt and Equity Funds
Each type of investment comes with their own set of risk and returns. Equity funds are known for their high risk and high returns, while debt funds come with lower returns and lower risk over a long-term. Debt funds will make your investment less risky and solid – a balance of both these are called Balanced Funds. ULIPs generally come with about 40% exposure, hence making them a safer option.
3. Life Stage Requirement
Your financial goals play a very important part in defining the risk you are able to take. Let’s say for example, your kid’s education needs would require proper long-term planning. For such a situation, equities cover early to mid-tenure of your ULIP investments, so it is safer to save the money you’ve made by switching to a debt fund when it’s time for your kid to pursue higher studies. You can use the saved money to pay your child’s admission fees.
4. Keep Up with Premiums regularly
ULIP plans come with few charges that would be deducted only at the beginning when your plan is activated. These include charges like policy administration charge, fund management charge, surrender charge, mortality charge, etc. Sometimes these charges would also be paid back to you as a loyalty. The 5-year lock-in period of ULIPs help with being discipline with your savings which then can also be used for other investments as well to generate good returns on your investments in the long run.
5. Stay Up-to-date with the Market
With a ULIP investment plan, the beneficiary of your policy would get either the fund value or the sum-assured, whichever one is higher at the time of claim due to unfortunate circumstances like death. Secondly, you are paid the value of the fund in the event of maturity of your policy. Staying up-to-date with market conditions will ensure that your benefactor will receive higher fund value benefits just because you were regularly monitoring your funds throughout.
Other Important Tips to Consider
Purchase Direct Plans
Instead of giving a brokerage amount to an agent or broker, you could purchase funds directly. You can easily purchase any type of investment plan by visiting the Bajaj Allianz Life website too. There are many different online investment companies that offer you free advice and assistance if you wish to purchase a plan online.
Opt for SIP
Opting for Systematic Investment Plan or SIP is another best investment strategy that helps an investor to be disciplined when it comes to paying premiums. Because of the rupee-cost averaging that comes with SIP investment plans, you do not have to keep a track on market conditions. It also helps get better benefits through compounding too. You can even invest a small amount as Rs. 500 on a monthly basis, which makes SIP investment plans one of the most attractive ways for investors.
Age-wise Asset Class Investing
Try and make your investments in debt or equity funds as per your age. So, take your current age and minus it from 100 and then invest the same percentage in equity funds. If you do not mind taking a little more risk, you could increase your equity to a higher level.
ULIPs are excellent when it comes to investments. They offer you a number of investment strategies to help increase your returns over a long-term basis. There are also other types of investment strategies that can prove to be quite helpful. However, each type of strategy and plan would always depend on the investor’s financial capability and risk appetite. Although most plans offer you an advisor’s help and guidance, it’s also necessary to be proactive and keep a tab on your investments as well.