Be Money Aware

As is common knowledge and against previously held misconceptions, the securities market doesn’t imply gambling or guesswork and pure speculation. On the contrary, it has that degree scientific and mathematical calculations which when applied correctly can give the wise investor enough reasons to rejoice by predicting upto a majority percentage correctly how the market would go. In that sphere, a new generation product known as the ULIP burst on the markets and was popular for the initial period. The novelty though wore off as time passed. And with further passage of time, there were misconceptions about perceived misgivings of the product that made this product look like the black sheep of the portfolio.

In the case of the ULIPs gaining popularity in the initial days and then falling off the pedestal, there have been a few major reasons that have contributed to the fall in grace in the eyes of the average investor.

Long Term Product: In the case of a ULIP the investor should keep this fact in his mind, locked and secure that this is essentially a long term product. In the past or rather when it was a newly launched product in the market, it seems that the many investors that took to it like geese to water treated it like their day trades product or at the most like a short term investment, exiting the plan when the threshold was crossed and thus booking profits. But this action defeated the very purpose of the plan and hence in the next avatar or version, the government made it mandatory that the money invested in the ULIP should have a minimum lock in period, which was decided to be five years.

However, even after the initial lock-in period, it is not advised by financial advisers to exit the plan. This is because, with the passage of time and experience of the unit managers growing, the plan can then compete with the rest of the competitors and aim to be the best ULIP plan in India.

Flexible: Not many long term products offer the investor the flexibility that a ULIP offers. Furthermore, the investor can also avail of loans on the ULIP plan as well as partial withdrawal which help the investor to not only tide over their immediate need but also continue to reap the benefits of the ULIP plan that they have invested in.

Transparent: One of the unique features of all ULIPs is that unlike other investment products, the charges that are taken from the customers are explicitly stated and explained. This makes it a completely transparent form of investment.

Goal-based : Different people have different goals in life and thus their investment strategies can be as different as chalk and cheese. In accordance with this idea, there are a variety of ULIPs that you can choose from. This proves to be the best reason why you should invest in ULIP now.  This can be termed as the best reason to give ULIPs a shot at achieving the goals that you have always aspired for.

One stop solution: A ULIP can be a one stop solution when it comes to achieving many goals at the same time. This can be witnessed from all of the points enumerated above. Another point in contention is the fact that since the ULIP is a mixed product, it helps the person who has stayed invested in the product to not only earn a handsome return at maturity of the policy but also gain from the exposure to the securities market.

On the other hand, when it comes to the flip side of argument, there is a strong view circulating amongst the investors that since the ULIP policy is in sync with the securities market, there is an inherent and inbuilt risk since it is invested only in shares of companies. However, what is completely forgotten is that these plans also have a sizeable portion of their investment in debt portfolios as well. It is this strategy that helps offset the risks that are associated with such a strategy and hence that can be termed as a balancing act in such an investment.

One of the best features of a ULIP policy is that not only does it combine the best of both the equity as well as debt markets but also best from the money markets. This feature when studied closely has a lot of promise to deliver not just promised returns but also way above the projections. Of course, the choice of investments made by the managers of the fund also plays a pivotal role in deciding the outcome of the policy. And hence, the profitability and attractiveness of the investment plan will increase manifold. However, this product was designed to be unique and yet it seems not all products thrown to the public would be readily lapped up by the investing public. And to this end, the case of the ULIP investments seems to be the perfect example