When is it a good time to invest in market-linked products?


The COVID-19 pandemic has significantly brought the necessity for money planning among people of all ages. Financial stability is very necessary for this one has to start financial planning at an early age, not for COVID-19 pandemic but unforeseen circumstances, like death, disease, and disability, retirement planning.

You should start preparing a financial portfolio before investing anywhere, it is first important to know what you are expecting in financial terms for the future This makes financial planning important and for setting your financial goals early and plan your investments accordingly.

Unit Linked Insurance Plans (ULIPs) are the most preferred choice of young investors, ULIPs promise the right exposure to equity or debt or even both it gives an effective path to participate in the market as well as insurance cover to deal with uncertainties of life or uncertain events.

ULIP has dual benefits of life insurance and a low premium to accumulate wealth. A part of its premium buys a life cover while the rest is invested in equity, debt, or a combination of both based on one’s allocation based on risk appetite.

ULIP Plans allow the policyholders to switch between multiple assets like equity, bonds, or hybrid funds, whenever they want, free of charge. Policyholders can choose to allot future premiums between different ULIP funds basis on the current scenario. 

One can also change the allocation of future premiums from equity to bonds or vice versa to take advantage of the market. one must always invest in equities with a long-term horizon in the mind like a kid’s education and marriage, retirement, etc for generating a large amount of wealth. 

Yet another impressive advantage of investing in ULIP is that it helps you earn the inflated returns in the long term– majorly between 7 years and 10 years – most equity ULIP funds have outperformed their benchmark index. By systematic investment in equity products, you can ensure compounded wealth in the long term. 

ULIPs provide a tax advantage while switching funds and helps in saving income tax up to Rs 1.5 lakh under Section 80C of the Income-tax Act, 1961. In Section 10(10D), the maturity amount is tax-free if the annual premium is lower than Rs 2.5 lakh.

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