We all wish to live a secure life with the right financial support in the future. But do we know how to go about it? Is there a way to generate income without having to put in years of hard work? Well, the simple way is by putting our hard-earned money to work via investments. However, investing is a tricky business. First, you need to look for the right investment vehicle. Second, align your financial goals according to the assets. The last and most crucial step is to develop a strategy to generate high returns on investment.
Investing is no rocket science. However, the chances of making mistakes while choosing a suitable investment option for you is high due to several alternatives in the market. Hence, to make it easy for you, we’ve listed down the top four investment options that will make your money work for you:
- Unit Linked Insurance Plan (ULIP)
A ULIP Policy is a market-linked product, meaning that your gains will be dependent on the market performance. However, it offers dual benefits of investment as well as insurance. The dual benefits ensure that you can protect your family in your absence as well as participate in the equity markets and reap the maturity benefit as a living benefit. Moreover, a ULIP plan allows flexibility to not only select different fund options but also switch between those ULIP funds. In addition to this, it provides tax deductions under Section 80C and Section 10 (10D) of the Income Tax Act, 1961.
- Pension Plan
Retirement is the most exciting as well as the critical stage of your life. If not planned well, it might affect the well-being of the entire family. Retirement period is an age where regular income is absent. Hence, you should purchase a suitable pension plan to ensure sufficient coverage for your requirement during retirement. After retirement, you will require additional coverage to meet your routine expenses. With a pension plan, you can fulfill your needs without the fear of exhausting your life savings.
- Health Insurance
The popular adage, “life is unpredictable” holds true. As you grow older, the chances of falling sick are high. In case of an unfortunate event like suffering from a critical illness or temporary or permanent disability, your health care expense will utilize a major chunk of your savings. Therefore, it is crucial to own a health insurance plan to cover for all your medical expenses in times of an unannounced emergency.
- Equity and Debt instruments
You should selectively allocate your funds according to your risk appetite. Ideally, there are two types of fund options: equity funds and debt funds. While an aggressive investor opts for equity funds, a conservative investor will prefer debt funds. Therefore, see to it that you choose the type of funds based on your preference. Equity funds offer high returns depending on market performance. Debt funds involve low risk, which aims at covering the risks that your equity investments could face.
Conclusion:
In brief, the best way to invest money is through ULIPs. It offers tax-saving investments, which will benefit you in the long run. However, the key to investing is by starting early as it allows you to enjoy the power of compounding. When you invest early, you’ll be able to generate more funds due to the benefits of compounding, which will eventually help you yield high returns. Moreover, the earlier you begin, the more time you have in hand to achieve your life goals.
