“Kuch bhi! Mutual funds jaise returns kuch nahi de sakta hai”, said Mr. Hurry-lal to his friend Mr. Shanti-lal.
You might agree with Hurry-lal, but over the years, everyone from financial gurus to your smart neighbor has realized that ULIP investments have given higher returns than mutual funds along with benefits like much lower tax burden, life cover, lower fund management charges, and so on. More on that later.
For your better understanding, we have illustrated the returns that Hurry-lal gained by investing in mutual funds and Shanti-lal gained by investing in ULIPs.
Why Invest Rs 2,000 Monthly?
Research suggests that above 75% of investors in India opt for a sum between Rs 2,000 and 5,000 for a single instrument. Here is why:
- Rs 2,000 is a small sum of your monthly income. Everybody can afford to invest such a small sum.
- Even though your salary keeps increasing with the years, the premium of Rs 2,000 will not increase.
Importance of Investing as Little as Rs 2,000 Monthly
Here are the advantages of investing Rs 2,000 per month for 25 years:
- You can re-invest the money in various other plans or schemes after the maturity of your fund
- Worry-free retirement because you wouldn’t have to financially depend on anyone
- Enough corpus for your child’s education and marriage
- Ready corpus for financial emergencies
Even with the ULIP features mentioned earlier, many argue that ULIPs have a drawback in terms of flexibility (five-year lock-in period). However, it is not a drawback at all, but one of the biggest advantages of ULIPs. The forced-investment nature of ULIPs ensures you do not move your eyes from the larger goal of financial independence and you end up building a huge amount of wealth.
After all, the best comes to those who wait rather than those who hurry for results!
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