The Biggest Personal Finance Trends You Will See in 2019
The number of mutual fund investors will decline
Equity mutual fund investors lose up to 34% in the past one year. – Economic Times, Sep 28, 2018
More people will insure themselves and their family
Insurance penetration in India increased to 3.49% in 2016-17 from 2.71% in 2001. – TOI, January 2018
Life insurance industry saw its annualized premium equivalent (APE) at 7% year-on-year for the first six months of the current financial year with private players witnessing the higher growth at 13%. – The Financial Express, October 2018
There is no doubt that 2019 will observe increased growth of the life insurance industry with more participation from the uninsured population and superior product solutions.
Healthcare costs are skyrocketing, especially if we consider the actual cost of treating life-threatening diseases, chronic illness and emergencies in urban India. The figures are likely to escalate with time and are irreversible in nature. The rising healthcare expenditure and massive bills are pushing people to opt for health insurance. The trend is likely to accelerate with the launch of Ayushman Bharat – National Health Protection Scheme, launched in 2018. The scheme deserves a special mention here as with this the health sector in India stands to gain like never before. Ayushman Bharat will potentially benefit nearly 100 million families by providing them health insurance of up to 5 Lakh per year. Moreover, the remaining population would hush to protect their families under some kind of health insurance coverage.
According to the National Health Profile 2018, around 43 crore individuals or only 34 per cent of India’s population was covered under any health insurance in 2016-17. The remaining 64 per cent of the population is a huge customer base for the health insurance sector. – Down to Earth, September 2018.
Real estate will accommodate to the latest changes
Real estate has already observed a rapid change due to multiple factors including demonetization, RERA, GST implementation, and the new ICBC guidelines. Although the regulatory changes have positively affected the industry in the longer term, frequent jolts in the last four years have massively blown the industry. It has impacted the pace of construction of projects. However, the positive aspects of the reforms have transformed the market which has attracted the eyes of domestic as well as foreign investors. Developers are expected to revamp their business models in the new year which is likely to bring more confidence to investors.
ULIPs will get an edge over mutual funds
When it comes to tax planning, Unit-linked insurance plans have got an edge over mutual funds. The reason is that investors need to pay a long-term capital gain tax of 10% on equity-related mutual funds. But there is no tax on unit-linked insurance plans under the new regime. The new tax-regime has driven a portion of inflows from mutual funds to ULIPs, and the trend is likely to continue in 2019. What is attracting customers to ULIPs? The reasons are – low charges as compared to mutual funds, guaranteed and good long-term returns, flexibility to choose asset allocation depending on the risk profile of investors. Best of all the worlds!
What to do as a smart investor?
Systematically allocating funds towards different financial goals is the best way to deal with financial market volatility. If you are looking forward to building your savings, it is wise to allocate to equity assets to generate long-term capital. Divide your savings into different financial avenues to generate a stable income in the long term.
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