ULIPs

In a first-ever 100% digital Budget session, Finance Minister Nirmala Sitharaman delivered the Union Budget for FY 2021-22 on Feb 1, 2021. And the reaction of the markets has been more or less reflective of the general population’s sense of the Budget – positive. The SENSEX rose 5% (nearly 4,000 points) in the immediate aftermath of the Budget, which was the most it has gone up by on any Union Budget day since 1999.

For many years, our country has been moving in the direction of other developed economies of the world. With the globalization of the economy and liberalization of policies in the early 1990s, entrepreneurs have been given a free rein, foreign funding has flowed, and privately held businesses have ample freedom to operate, market, and thrive successfully in India.

When the markets are struggling, the time is right to opt for equities. With the triple blow of an already sluggish Indian economy, the Yes Bank crisis, and the COVID-19 pandemic that is taking the global economy to a likely recession, some of the top names among publicly traded companies have taken a blow that they are not likely to recover from soon. The story of intermediate to smaller companies are even worse.

Gadgets have always fascinated men. And the larger the gadget, the larger the excitement and anxiety to own one.

Exit poll results and counting day trends for the 2019 General Elections gave an unprecedented boost to those who invested heavily in market-linked instruments. We have all heard stories about those who became overnight lakhpatis during the 2014 General Elections. And similar stories are expected in 2019 too.

“Kuch bhi! Mutual funds jaise returns kuch nahi de sakta hai”, said Mr. Hurry-lal to his friend Mr. Shanti-lal.

While the Mutual Funds industry has marketed their products intensely and gained large mindshare among well-to-do urban Indians, the market-linked product that the Insurance industry has to offer—Unit-linked Insurance Plans (ULIPs)—enjoys a poor reputation in comparison. Earlier, ULIPs were sold and marketed clumsily. Neither the insurance companies nor their customers were comfortable with an insurance product that could be used as an investment.

There is no doubt that with all the talk and heavy marketing around mutual funds, it is easy to get carried away and begin investing in mutual fund products like Equity-Linked Savings Scheme (ELSS), which is well-known as a tax-saving product.