Purchasing an Investment Plan? Take Care of These 4 Things
In India, the values of savings and investments are deemed in the highest regards. Whether it is making efforts in learning new skills or making small savings, we have seen how regular investments can benefit us. We put efforts into being healthier, learning new things, and make our future better than our present. Instead of achieving all our goals at once, however, we take small but definitive steps in the right direction today so that we realise our dreams one day.
The value of an investment becomes more pronounced when we talk about investment plans. With the best investment plan in your portfolio, you can make regular contributions to accumulate returns over time. Eventually, your contributions grow into a significantly larger fund than what you had invested. Besides knowing about ‘what is investment,’ however, there are a few key elements that you need to take care of first so that you can maximise the benefits of having the best investment plan for yourself.
1. Choose an Extended Period of Investment
To make sure you have the best investment plan in India to help you grow your savings, you need to choose an extended period of investment. In other words, you have to stay invested in an investment plan, for as long as possible. This way, you allow your contributions to grow and accumulate compounded returns for the maximum period.
Popular investment plans in India such as ELSS (equity-linked saving schemes) and ULIPs (unit linked insurance plans) allocate the premium that you pay into a variety of equity and debt schemes, whose rate of returns may vary with the market conditions. When you keep invested in an investment instrument for an extended period, you allow your contributions to make up for any loss in value because the financial market suffered a downslide.
2. Review Your Investments Regularly
If you invest in a ULIP plan, you must remember that your premium paid is allocated into separate ‘units’ – each having a specific Net Asset Value (NAV). Whenever you decide to switch between available equity and debt fund options, it is these units that are sold/bought as per their NAV.
The NAV of different fund options and investment plans varies regularly – higher the NAV, more is the value of your accumulated units and vice-versa. Hence, you must check the performance of your investments regularly to identify high-performing assets and the one’s which are not. Subsequently, you can leverage the switching option to stay invested in fund options that provide comparatively higher returns and maximise your profits.
3. Compare Different Plans Before Investing
To make sure you have the best investment plan in India at your disposal, you must do thorough research of the financial market and the available investment plans. Nowadays, most financial corporations and insurance companies publish the details of their top-performing investment plans online, including risk ratings, NAVs, and year-on-year growth data.
You can take your time in reviewing the performance of each investment plan through the years and compare the features and benefits of different investment plans. This way, you can make an informed decision about purchasing the best investment plan for yourself and your loved ones. Remember, you must give special attention to aspects such as the maximum investment tenure available under the plan and the offered rate of returns to identify an instrument that offers maximal chances for your money to grow while being cost-effective on your pocket (in term of affordable premiums payable).
4. Automate Your Investments
Nowadays, most top-performing investment plans allow tremendous flexibility in paying the premiums. The best investment plans in India will enable you to pay the premiums either monthly, quarterly, or annually – based on your ease of payment. At the same time, these investment plans also enable you to automate the premium payments through ECS (Electronic Clearing Service), as approved by the Reserve bank of India (RBI).
ECS is an automated mode of making the paymentsand receiving the transaction receipts for transactions that are periodic and repetitive in nature. By automating your investment based on your chosen modality (i.e. you wish to pay the premiums every month or on an annual basis), you are free from the responsibility of making the payments yourself.
You can make sure that you have enough funds available in your bank account to cover the premium payable. Every month, the ECS facility will automatically debit the premium payable form the account. This way, you can avoid the hassles of missing the deadlines of making the premium contributions and risk lapsing your investment.