Invest. Earn. Repeat

One cannot grow money if there is no investment. So, the foremost thing is to have a sustainable source of income and then save the amount, to invest it later on in some appropriate policies that will help you in doubling your sum, after years. This is the normal process through which maximum of us do our financial planning. But what if you come across policy, where both insurance and investments are integrated together?

What To Look for?

Yes, such policies exist and are termed as Unit Linked Insurance Plan. So, this is basically a life insurance policy where the risk is covered for the policyholder, and even you have an investment option at the same time that will give you the chance to invest in bonds, stocks or mutual funds. But such investments do have market risk and is with the policyholders.

Meeting the Goals!

The policies can be used for many purposes- retirement, health, child’s education, marriage and even for investment purposes. So this plan very well acts as a savings vehicle while at the same time is loaded with benefits of the insurance contract. So when one buys units in ULIP, the individual purchases units with a large group of investors, just like doing it in mutual funds. Different types of ULIP offer different types of qualified investments. So, it is a must to read the scheme prospectus carefully before investing.

Who Should Do ULIP?

1. Individuals Who Want To Closely Track Their Investments: ULIP helps investors to closely monitor their respective portfolios and even you are given the flexibility to switch funds to varying risk-return profiles.
2. Having Medium To Long Term Investment Horizon: This is ideal for those individuals who want to invest for a longer duration of time.
3. Individuals With Varying Risk Profiles: A choice of fund is available for all investors- from risk averse to those investors having strong risk zone.
4. Investors For All Life Stages: The plan can be selected based on your current status of age, your financial needs and different liabilities at different point of life.

Advantages

There are many advantages which you can avail time to time. Look at the points below for understanding it in a better way.

1. Market Linked returns
2. Life protection, savings, and investments
3. Flexibility
4. Single premium

Charges

There are different charges deducted by different insurance companies at the end. Some of the basic charges are

1. Administration charge
2. Fund management charge
3. Surrender charge
4. Switch charge
5. Premium allocation charge
6. Mortality charge
7. Partial withdrawal charge

Switching Between Funds

The insurance companies allow you to switch between funds after deduction of an amount. However, this helps in switching between debt and equity funds when the market is volatile or even when there is a fluctuation of the interest rates. This is one of the pros of ULIP, where your investments still tend to remain safe and secured. Even in the case of liabilities, financial standing, and risk profile, the investments can be changed accordingly.

Later, not sooner, to buy your dream home

Waiting for the festive period, when investor sentiment is high, is a wise move when looking for a home loan product. 

Every person wishes to buy a house for themselves and their loved ones. However, expensive real estate in India makes this dream an impossibility for most people. But those who properly plan the purchase account for the right timing.

The ‘right timing’ denotes a confluence of one’s personal finances, reduced interest rates and the best property that is available for purchase at that point of time. However, while one may or may not have adequate money at their disposal, or even find their dream house at the time, getting the right home loan is a matter of research. Most buyers wait patiently for the festive season to come around, when they believe that it is auspicious to buy a house – and when home loan rates are lower. 

Why wait for the festive period?

The festive period (generally spanning Ganesh Chaturthi, Navratri, Diwali, and later Christmas and the New Year) comprises of many days and dates that Indians consider auspicious for new beginnings. Thus, weddings, christenings, house and car purchases etc. are all timed to coincide with these dates.

Housing finance companies and banks are well aware of the positive sentiment towards big ticket purchases during this time. Thus, they maximise this sentiment by offering limited period home loan offers. Chief among these are lower interest rates (applicable for the tenure of the loan) and zero processing fees. 

Other home loan offers include discounts on online application of home loans, or transfer of existing home loan to another lender at a reduced rate, etc. 

Reduced interest rates are the biggest magnet during the home purchase process: a lower interest rate translates into a lower EMI, and hence, lesser repayment to the lending institution. A good offer also includes no processing or legal evaluation fees when granting the loan – this is a significant saving for the buyer. 

Not just banks and lending institutions, but real estate developers may also have offers to attract buyers. However, these are not always timed to coincide with the festive period, and may include such incentives as paying only 5% of the project cost to book the house, and paying the balance 95% on flat possession. Or they may include many free amenities or discounts for booking within a limited period of time. Many have pre-approved home loans on the project, so this also saves a lot of time for the buyer. 

However, do resist the temptation to buy a property only because there is a home loan offer being pitched at the moment. Do take some time to find the right home, and book it so that the developer or home owner does not sell it to someone else. You can then apply for the home loan at a suitable time, when a good offer comes along.