Wednesday 18 August 2021

Expecting a Bonus this March? Invest It with a Guaranteed Returns Plan

Expecting a Bonus this March? Invest It with a Guaranteed Returns Plan

 If you are a salaried professional, you might be expecting a bonus check by the end of this March. While a lot of you would have anticipated this cash windfall, some of you are still not clear about how to make the best use of the additional income. If financial security is your concern, then simply stacking your money away doesn’t make sense. For, you need a guaranteed income plan that can offer you a regular income during unprecedented times or a guaranteed returns plan that offers guaranteed returns on investment in India. 

Your bonus is a reward for the hard work that you did throughout the year. So, go ahead, and buy the latest gadget, splurge it on a vacation, or anything that brings you delight. But it’s also imperative to allocate a portion of it to guaranteed return investments in India that can help you achieve your short or long-term goals. Investment in equities and the stock market can offer you great returns, but they come with a risk factor as well. However, a guaranteed return insurance plan comes with an insured income on a quarterly, monthly, or yearly basis. In this case, you receive a certain percentage of the sum assured even if the interest rate fluctuates. Thus, these plans help you hedge against uncertainties while shifting the entire risk to the insurer. 

What are the guaranteed return investment plans?

Following are some of the recommendations that you can consider for investment to receive assured returns.

  • Endowment insurance plans: Issued by insurance carriers, endowment plans offer you a blend of life insurance and a modified savings scheme against the premium paid. These plans provide endowment plans guaranteed returns in a lump sum once the policy matures or ensure a death benefit to your loved ones upon your sudden demise. If you cannot afford the risk of losing the sum assured, then you can also opt for a single premium guaranteed return plan. Such plans let you pay the entire premium in a lump sum and secure all the returns and benefits attached to it.
  • Money-back savings plans: Money-back savings plans are quite similar to endowment plans. They also provide traditional life insurance coverage with systematic savings. The only difference as compared to endowment plans is in their mode of payout. While endowment plans offer you bonuses and a lump sum amount after the policy matures, money-back savings plans give you payouts every few years at certain specified periods. Therefore, they can be a great option to go with if you want to save up for a few years and, at the same time, want access to the funds whenever required. Both endowment and money-back savings plans are preferred savings policies as they offer a guaranteed rate of return, liquidity, and life cover.
  • Annuity plans: Annuity plans are the best financial investment options for people who are about to retire in 8-10 years. They help you meet the long-term needs with a decent investment corpus. So, if you are looking for a guaranteed income plan that can replace your monthly salary after retirement, then choose to invest your bonus in an annuity plan. Under this plan, you pay a lump sum amount in a specified period and then receive regular returns for a fixed duration or as long as you live. Annuity plans allow you to lock-in the existing interest rate for life. Hence, if you invest in an annuity plan with an interest rate of 6 per cent, you will be receiving the payout later at the same rate irrespective of the market fluctuations. Moreover, these plans reduce the longevity risk while guaranteeing a fixed payout until your policy term or till you survive, making them one of the best financial instruments to choose from.

How to invest your bonus with guaranteed return plans?

The best way to invest your bonus with a guaranteed return plan is online.

Here’re a few of the advantages of purchasing a plan online.

  • Economical: The most coveted benefit of buying a plan online is that you can avail of a discount on premium as the intermediaries, such as agents and brokers, are eliminated.
  • Easy: You can visit the website of the insurance provider of your choice. Input all the necessary information, pay the required premium, and that’s it, you have invested in a guaranteed return plan. You can opt for reliable plans.
  • Effortless: It is quite easy and convenient to make an online purchase. With minimal paperwork, the entire purchase process can be completed in a few minutes, and that too at your convenience.

To buy the policy:

  • Visit the website of the life insurance provider.
  • Navigate to the Guaranteed Plans section.
  • Browse through the different plans available and choose one based on the features.
  • Use the Guaranteed Returns Calculator to determine the returns you can earn on your investment.
  • Click on the Buy Now tab present on the page.
  • Provide all the necessary information as prompted by the screen.
  • As there is a life cover component attached, you may be required to undergo a medical test.
  • Once you provide all the information, proceed to the premium payment.
  • After successful receipt of the premium, the insurance company will send you the soft copy of your policy documents.
  • Ensure that you go through the policy documents carefully.

Why should you invest your bonus with guaranteed return plans?

Following are amongst the numerous benefits of investing your bonus in plans with a guaranteed rate of return.

  • Maturity benefit: With a guaranteed plan, you are ensured to receive a revisionary bonus in addition to a terminal bonus at the time of maturity. And, in case the payout duration is around 15 years, you will receive regular returns at pre-defined rates on the sum assured.
  • Death benefit: A financial tool that comes with life insurance ensures that your loved ones receive a death benefit in case of your untimely demise. Therefore, investing your bonus in a guaranteed return insurance plan cannot only provide you with decent returns but secure your family’s future as well.
  • Tax benefit: Another advantage of investing your bonus in guaranteed income plans is that you can avail of tax benefit under Section 80C against the premium paid and under Section 10(10D) against the returns received later as the policy matures.

Conclusion

Albeit, every investment scheme comes with its own set of risk factors, some options that promise more stability than others. Investment in the stock market offers high returns at a high rate of risk. So, if you are someone who has a low-risk appetite, it is recommended to invest your bonus in a guaranteed income plan and secure the sum assured.

Monday 9 August 2021

Flexi cap funds and their objectives

 

Flexi cap funds and their objectives

What is a flexi cap fund? If you are still wondering about the same, you should know that these are types of mutual funds India which are not limited towards investing only in companies with predetermined market capitalization levels. This fund structure type is clearly shown through the details or prospectus for investors. These flexi cap funds may offer greater choices for investments to managers along with ample scope of diversification alongside. The company size is not a limitation for these funds and they may invest in any entity, irrespective of its overall size and other aspects.

SEBI introduced this new category of mutual funds India, known as flexi cap funds, on the 6th of November, 2020, while retaining its multicap fund segment as well. The newly created flexi cap fund segment was a lot like the multicap fund category prior to SEBI mandating investment limits, i.e. 65% of capital for equity on the overall basis without segment-wise limitations. The circular from SEBI also enabled mutual fund houses to convert present multicap fund plans to the flexi cap segment. Equity markets have higher levels of volatility and the market will have higher risks and specific capitalization category risks and volatility as well.

In any correction phase of the market, there will be a requirement for investing a minimum capital proportion, thereby opening up an opportunity use a good scheme as a buffer. This will help in lowering overall exposure towards the minimum capital requirement. Segments like large cap schemes are usually required to possess at least 80% of capital in large cap funds all the time. Owing to such rigid factors, these plans cannot lower exposure to equity below the 80% threshold and hence keep themselves safeguarded from any anticipated downturn. The flexi cap segment should invest just 65% of capital in equity markets while being considerably flexible at the same time.

Similarly, when we observe volatility throughout multiple segments or when any particular category is expected to perform better or worse than other categories, flexi cap segment has a blessing in investment freedom throughout many categories as against small and mid cap segments. In the latter, they have to invest at least 65% of capital in companies falling within the purview of the same. When the large cap segment is anticipated to perform better than other categories, small and mid cap schemes cannot relatively perform since they will be bogged down with the requirement to invest at least 65% in the companies within their own segment. Similarly, when the midcap or small cap category is expected to perform better, then large cap schemes cannot get the benefits of this potential. They may invest just 20% in small and midcap entities. Flexi cap schemes always live up to their name. They help you get benefits at all times irrespective of whether the large, small or midcap category does better in the market.

Owing to the lower 65% threshold, the segment comes with ample legroom for foreign market investments and diversification at a global level. Profits from these investments are taxed at 15% irrespective of the slab rate. Retaining the investment for more than 12 months will classify the same as a long-term one and the rate of taxation will be 10% after INR 1 lakh as the initial exemption. Key goals of these funds include mitigating risks, diversifying the portfolio and tackle varying market cycles.