Investing is important, as it allows you to accumulate wealth over the long-term, which enables you to meet various life goals. However, there are a large number of available investment avenues, which may be confusing.
Inflation increases the cost for everything, which means you need to choose investments that provide higher returns. You can select from asset classes, such as real estate, derivatives, equity, commodities, fixed-income securities, and insurance-linked plans. With a variety of choices available, you must make your decision based on certain factors like your age, investment horizon, risk appetite, and financial objectives.
Here are the different investment options in India:
- Term plans
These are pure life insurance policies that let you avail of a higher sum assured (SA) at an affordable premium. A term plan is available for a certain period. In case of an unfortunate event during the time, the insurer pays the benefits to your nominees. Term plans are the simplest way to ensure the monetary security of your family in your sudden absence.
- Savings plans
Such plans offer a package of life cover along with an investment component, which can prove valuable for you and your family. You can opt for either assured maturity benefits or regular income at pre-specified periods. Savings plans combine insurance and investment while providing flexibility in the premium payment.
- Retirement plans
You can work for a certain number of years, after which you can enjoy your retirement period once you have fulfilled your family responsibilities like children’s education and their wedding. However, if you do not plan for these years, you may find yourself in financial distress, as there is no regular source of income. Retirement plans help you to accumulate a corpus for a particular duration, and then you can earn regular annuities that provide financial stability during your retirement. You may also opt for a continued pension for your spouse in your absence.
- Unit-linked insurance plans (ULIPs)
Some portion of the premium paid on a ULIP is used towards life cover. The insurer invests the balance sum in offline and online investments like equity, debt, and balanced funds. Therefore, ULIPs combine insurance and returns on investment benefits. In case of an unforeseen event resulting in your absence, your nominees will receive the SA. In addition, they will get the maturity benefits based on the net asset value (NAV) of your investment. ULIPs offer immense versatility with multiple premium payment and investment options.
- Health insurance
When thinking about how to invest money, you may often not consider a health insurance plan, especially if you are young and healthy. However, with higher stress levels, unhealthy eating habits, and erratic lifestyles, the number of people being affected by critical ailments like hypertension and diabetes is rising. It is expensive to treat such conditions, as the treatments last for several years and a lifetime in some cases. Additionally, a medical emergency can strike announced, and an immediate hospitalization can wreak havoc in your economic well-being. A health insurance plan will cover the hospitalization and treatment costs along with other expenses like surgery and diagnostic tests. Moreover, such a plan takes care of treatment expenses if you are injured in an accident.
As there are many kinds of investment options, the first step in financial planning is to pick the right product that matches your requirements. So, evaluate and research the different options and do not fall prey to schemes that offer higher returns in shorter periods. It is essential to review your life goals on a timely basis to make the necessary changes based on different life situations. You can compare different online investments to make your choice. It is recommended that you avoid investments that you do not understand and keep it simple.