Have You Heard About The Best Saving Investment Plan? Here Are The Details

 

Each investor wants to gain the maximum financial return without risking the loss of capital. Today, earning money is not sufficient to reach our financial goals in this day and age, which is why investing in the right investment plan is crucial. Growth is imperative to achieving your financial goals. If your money is just in the bank, you're wasting your chances of reaching your financial goals. Investing will help you beat inflation and reach your financial goals, as well as help you maintain your financial security. 

By investing in stocks, equities, mutual funds, and fixed deposits, you can prevent money from sitting idle in your bank account. There are many investment plans to choose from in the market, which could make it challenging to choose the right one. Some types of saving plans are listed below that can help you grow savings. 

Equity: As far as investing in stocks is concerned, it might not always be the most preferred choice among people. In addition, picking the right stock is part of the art of investing in stocks. Investing in stocks also involves ten other important aspects, such as timing. Comparing inflation-adjusted equity with other types of assets, equity delivers a high level of performance over the long term. Similarly, there is a high risk of losing all the capital unless the investor takes the precaution of stop-loss to reduce the loss. When a stop-loss order is in place, an advance order is placed to sell the order at a certain price. 

Public Provident Fund: For generations, public provident funds have been a popular investment choice for Indians. There are multiple reasons behind its popularity. The main reason for the popularity of PPFs is that they are considered safe investment options. There is an attractive interest rate of 8% PA on the invested amount, and it can be claimed directly under Section 80C to reduce your taxes. In addition to this, the investment interest generated is also exempt from tax. 

Property: Houses that you live in should never be considered investments, as they are for personal consumption. It is possible to invest in a second property if it is not intended for living in. The location of your property determines both the value and rental income of your property in addition to its value. Rentals and capital appreciation are two ways that real estate investments deliver returns. 

Unit Linked Investment Plans: As the name suggests, ULIPs are investment plans in which the money paid by the investor as a premium is channelled into the stock market. Investments in ULIPs are made up of different funds. Each investor who invests in the best investments receives units of the fund. The correlation between the fund value of the investment and the premium put in by investors determines the value of these investments. 

Sukanya Samriddhi Yojana: In the Sukanya Samriddhi Yojana, girls and children between the ages of 10 and 15 can save for their future. There is a maximum of two accounts per parent or legal guardian for two girl children. When the account reaches maturity, it is either opened after 21 years or if the girl child marries after attaining age 18 years. When the child reaches 18 years of age, a premature withdrawal of up to 50% of investment can be done even if she doesn't get married. 

Debt Mutual Funds: Investors who wish to study returns should consider Debt mutual funds. Equities are less volatile than mutual funds. Therefore, the risk is lower. On the other hand, debt mutual funds generally invest in fixed-income securities. Government securities, corporate bonds, treasury bills, commercial paper, and money market instruments fall into this category. Despite this, it is not risk-free; it is subject to certain risks, such as interest rate increases and credit risk. Therefore, a detailed study is needed before an investor decides on a saving investment plan. 

The product you want to invest in must match your risk profile when selecting an investment avenue. A few saving investment plans carry high risks but are expected to produce higher inflation-adjusted returns than other asset classes over the long run. While, others carry low risk but higher returns over the long term.

How You Can Reach Your Financial Goals through SIPs

 

A Systematic Investment Plan or a SIP allows investors to invest a fixed amount every month in a mutual fund. This helps average out the purchase price, thus protecting them from investing a large amount at a high point in the market.

It is quite a popular concept among investors who use SIP calculators for ease to calculate how long it would take a SIP of a given amount to reach a specific financial goal. For instance, if your aim is to accumulate Rs 1 crore in 10 years, you need a SIP of ₹45,000 per month at a 12% return.

How Can You Reach Your Financial Goals through SIPs?

Investing in mutual funds SIPs is one of the ideal ways to invest and get decent returns. Using a good goal-based SIP calculator, you can get an approximate estimate of the amount that you would regularly require to invest to meet your financial goals.

Whether you're planning for a child's education, retirement, or purchasing an expensive asset such as a house, you can make use of a sip interest calculator that can help you get a rough estimate of the total amount of money you need to keep aside to achieve your goals within a defined period.

Let's understand this better with an example-

Mr. A is willing to invest around Rs. 50,000 a month in mutual fund SIPs and plans to gradually increase the amount by 5% every year to fulfill his goal of buying a second house by creating a total corpus of Rs 5 crore in the next 15 years.  

So, how can he do this by investing in SIPs?

First, let's understand how much corpus Mr. A can create by investing in a proposed SIP of Rs. 50,000 a month with an increase of 5% every year.

In this case, let's assume an average return of 15%- 16% on his equity mutual fund investments via SIP (based on the past returns from the mutual fund SIPs over the past few years). With this run rate, the amount of corpus Mr. A would create roughly is Rs. 3.50 crores which will not help him achieve his desired target. To be able to achieve his target of Rs. 5 crores, he has two choices-

a. Increase his stipulated amount for SIP to Rs. 60,000/- from Rs. 50,000/-  

b. Increase the annual percentage rise in the SIP figure to 10% from the initially planned 5%. 

The best strategy here would be to invest SIPs in more selected mid-caps funds with a combination of some small and large-cap schemes.

How Does the SIP Calculator Work Here?

The SIP calculator primarily works by using some important data to compute your SIP investment that you would need to make regularly. The most important steps that you need to follow while using the SIP interest calculator include-

• Enter the target amount that you would need to complete your financial goal.
• Enter the total number of years in which you would need to complete your goal setting.
• Enter the return rate expected.

Here is an example to understand the working of a sip calculator mutual fund in more detail-

Mr. X has a target amount of Rs 60 lakhs in the next ten years at an expected return rate of 12%. As soon he enters these details in the sip interest calculator, it will display the SIP amount (and lump sum amount) that Mr. X will have to invest to meet his desired financial goals.

Benefits of Using SIP Calculator

Some of the key benefits of using the goal-based SIP calculator include-

• Helps mutual fund investors strategically and efficiently plan their investments.
• Simple to use where the investor only needs to provide the financial goal details, and the calculator will automatically display the investment tenure and the results.
• The SIP calculator is an excellent tool that simplifies complex mutual fund investment calculations, thus saving a great deal of time.
• Free to use and can be used online anytime, anywhere, thus simplifying the overall investment process for existing and first-time investors.

To Conclude

PGIM India Mutual Fund offers an easy-to-use SIP calculator to help you plan for your life goals with great ease. All you need to do is feed your input in the SIP interest calculator, and based on your inputs, the calculator informs you how much amount you need to invest per month to be able to achieve your financial goals.

What Kind Of Insurance Should I Consider For Retirement?

 

Financial planning for retirement is an important step for your well-being during the sunset years of your life. Old age brings a set of unique problems such as health issues and the inability to work. You need a regular income to support yourself. On top of this, you may have a mortgage to pay off or meet your children's education expenses.

How can you manage so many expenses when you are not able to earn a living? The answer lies in having proper retirement plans. You should work out and follow a retirement plan that foresees all these scenarios.

Plan in Advance

For a financially comfortable retirement, you need to plan for it at least 15 years in advance. It takes many years of small savings to accumulate a reasonable sum of money. Also, you need to pay an insurance premium every month for ten or more years to see it mature. You can receive this money either as a lump sum or as a pension plan.

Assess Your Retirement Needs

Every person has their unique set of retirement requirements. For example, one may have to pay off the mortgage while someone else may have to pay for children’s education or own medical expenses. Having a car can mean many conveniences, but you need to pay for its maintenance and insurance. Given this, you need to evaluate your retirement needs and make appropriate financial plans to address them.

However, everyone needs a set of insurance plans and at least one pension plan for their retirement. Here are common insurance and pension plans that should make your retirement planning comprehensive and effective. 

Insurance Plans:

1. Life insurance

A pure life insurance policy is one of the most basic retirement plans. Under this, you pay a fixed amount every month towards your life insurance. In the event of your death during the policy period, your chosen beneficiaries will receive the assured amount. You don’t get any money at the end of maturity.  

2. Whole life insurance

A whole life insurance plan covers the entire life, and the benefits are paid to the chosen beneficiaries after the death of the insured. However, this plan has a savings component where the funds build up and can be accessed by the policyholder during his lifetime.

3. Health insurance

Hospital and medicine bills can add up to a big sum, particularly in old age when you consistently have one health issue after the other. Health insurance can absorb much of the financial shock you receive on this count. A health insurance policy after the age of 50 can cost a little more than usual. However, having a health insurance plan can give you a lot of financial protection and peace of mind.

4. Disability coverage

Workplace hazards are something most of us don’t take seriously. But they are real and rampant. An injury can often leave you out of work for weeks and months and, in some cases, forever. You should subscribe to a long-term disability insurance cover as part of your retirement plan. It will ensure you receive a regular income during the period you are out of the job due to an injury.

5. Auto insurance

Your car is big support during your old age as it keeps you mobile and lets you finish outside work with convenience. But the car needs a proper insurance cover to meet financial liabilities in the event of an accident or write-off. If you have a car, you should also have auto insurance.

Pension Plans 

Your retirement plans are not complete until you have subscribed to a pension scheme. It will ensure you have a regular income to meet your day-to-day expenses. There are many pension plans, and you can choose one or several of them as per your need and resources. Here are a few of them:

1. Term insurance

You can invest an amount in term insurance and start receiving a regular monthly income. It’s an investment plan that pays like a pension scheme. Under this, you invest a sum of money for a fixed term. Depending on the amount, you receive a monthly, quarterly, or annual payout while the principal amount stays intact and is paid back to you at the end of the term. There can be different types of term insurance plans depending on how the insurance company further invests your money.

2. National Pension Plans

To give every citizen an option to have a regular pension, the Indian government launched the National Pension System (NPS) in 2004. Any Indian between 18 to 65 years can subscribe to a pension fund and make regular contributions to this fund. When leaving the NPS, the subscriber can choose the accumulated fund to be partly paid as a lump sum amount and part of it purchase annuity/pension plan from empanelled life insurance companies. It’s simple, low-cost, flexible, and portable.

3. Endowment plan

One of the most popular retirement schemes, endowment plans, offers life insurance coverage and pays a lump sum at the plan's maturity. Like term insurance, an endowment plan can be of different types depending on where the money is invested.

4.   Money-back plans

In this type of investment, policyholders receive regular payouts while a lump sum amount with applicable bonuses is paid at the maturity of the policy. The investment can be one-time or through monthly premiums.    

Summing Up

A pension scheme should be one of the most important items on the list of your retirement plans. You can choose from a number of term plans for retirement that offer both annuity and lump-sum amounts.

Planning your retirement requirements and buying appropriate investment and pension schemes well in time is crucial for a financially comfortable retirement life. Given the importance of a sound retirement plan, you should not shy away from taking the help of an independent financial advisor to prepare a sound retirement plan for you. You can also visit Edelweiss Tokio to have a look at their retirement plans that will leave you stress-free about the future. 

 

Myths and Facts About Tax Saving Mutual Funds

 

The term tax-saving mutual funds may at first seem like an irony to you. This is because mutual funds typically tend to be investment and growth-focused whereas traditional tax-saving instruments are focused on well, savings.

However, this is no longer true.

Owing to the growing preference among salaried professionals and business persons for mutual funds, as well as tax-saving products that offer better returns and lesser lock-in, tax-saving mutual funds are now a reality. Commonly known as equity-linked saving scheme or ELSS, such tax-saving mutual funds help you deliver on your tax-saving goals without requiring you to make long-term commitments.

However, before you can go ahead and invest in such a tax-saving mutual fund, you need to be clear about the various myths and facts associated with tax-saving mutual funds.

Myths	Facts
Tax-saving mutual funds require you to invest a specific amount	You can start with as little as Rs.500 a month if you wish to invest in any good ELSS or any top tax saving mutual fund
You can save very little tax when you invest in an ELSS	Assuming your income falls under the 30% tax slab, and if opt for the maximum investment allowed under Section 80C, which is Rs.1.5 lakh, you can save as much as Rs.46,800 in just one financial year
It is very complicated to identify a well-performing tax-saving mutual fund	It is fairly easy; there are a host of online resources where you can compare yearly and longer tenure trends

 

Watch: #SavingsKaDoubleRole - Save Tax and Build Wealth with Mutual Funds Tax Saving Schemes

Now that you have a fair understanding of the various facts that make tax-saving mutual funds or ELSS mutual funds a viable instrument, there are some more things you need to keep in mind to get best value for your investment efforts.

Common Mistakes	Expert Approach
Investing all your tax saving amount in a single top tax-saving mutual fund	Diversifying your investment amount into multiple top tax-saving mutual funds
Withdrawing your investment after the mandatory three-year lock-in	Staying invested in the tax-saving mutual fund or ELSS even after the mandatory lock-in is over for continued taxation benefits on returns
Investing a lumpsum amount at the end of the year when tax-related investment becomes crucial	Investing through the year to benefit from the law of averages while gaining tax saving benefits

 

You are almost ready to invest in top performing tax saver mutual funds for tax planning. However, before you can get started, here are some final things to keep in mind.

Frequently overlooked things	Best practices
Having a tax-saving strategy, just as you have an investment strategy	Basis your taxable income or your tax slab, and the various tax benefits available under different sections, consider how much income should you keep aside every month for gaining adequate tax benefits
Considering all tax-saver mutual funds or ELSS funds to deliver similar benefits or returns	Compare top tax saving mutual funds in terms of historic returns and look out for add-on benefits, if any
Assuming all tax-saving mutual funds expose your investments to 100% equity	Understanding that tax-saving mutual funds or ELSS funds vary in their equity exposure, ranging from 80% to 100%

Basis all the above factors, you should invest your hard-earned money to gain tax-benefits not just for the current financial year, but for years to come.

 

Also Read: Tax planning with mutual funds

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.

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 6^th 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. 

 

A term insurance plan is easy to begin and convenient to continue due to the benefits inherent in the product itself. Life insurance means security to the nominees in the event of the death of the insured breadwinner. The main motive of this policy is to provide financial security to your family. That’s the reason why you should select the best term insurance plan. You want to give the best to your family, and you won’t settle for anything less than that. Term insurance policy is unique and gives you the option of an online term plan. The online feature entails a world of convenience and speed of processing. So, you should never miss out on your term insurance policy. There is least bother once you settle down and decide on this plan, and you can go for term insurance online that enables you to get yourself covered sitting comfortably at your home. No matter what your objectives are, there are multiple investment options with insurance cover for your family. There are policies to suit every budget.

If you are beginning your journey of insurance, you should set off with a term insurance plan. It is better you began investing today in terms of premium that’s going to give you peace of mind.

• Financial security to your family. You work hard to provide for your family and you want the family should remain protected forever. This policy makes sure that your family remains financially secure even in case you are deceased or defunct. Nobody can say anything about these unfortunate events. No other investment option offers this level of protection.
• It is cheaper than most of the popular investment schemes. Term plans are cheaper than usual life insurance plans. You can start with this plan at the very beginning of your career. The sooner you begin is the better for you in terms of the premium amount that you have to pay.
• Term insurance provides you with tax benefits. The premiums that you pay are deductible under section 80 c of the IT act. It’s a kind of saving for you. An annual premium up to 1.5 lakh is eligible for tax benefits. The death benefit is processed much faster and the nominee gets the payment quicker than any other insurance plan.
• There is no risk if you buy a term life insurance plan. All you have to do is continue paying the premium till the term ends. Your nominee will receive the benefit in case of the demise or you may claim the sum assured at the termination of the plan.