This gives a chance to your home-grown “family” experts to hold court more effectively. Towards the end of the year one topic of conversation definitely veers towards tax, savings and insurance. Many points of view emerge, and you might get lost in the various options being discussed.
One reason contributing to the confusion is that many know their favourite option very well, and not as much as the others. So, if you follow the financial advice of your friends and family, your portfolio will be more suitable to cater for their needs rather than yours.
Thus, make sure to identify and acknowledge your financial needs before selecting the investments.
Here are the best options for you to consider based on your financial goals.
Key Takeaways
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ULIPs are one of the most flexible and useful investment options of modern times. If you are the kind of person who is always setting aggressive goals and puts in all of the effort to achieve them, this option may just be the right one. You have the freedom to choose whether you want to invest in equity or debt, or balanced liquid funds.
You also have the option of managing your asset allocation yourself or choose an automatic strategy to work for you. If you want to achieve large long-term financial goals, automation is the best way forward. An automated investment plan by Canara HSBC Life Insurance will keep your portfolio safe from sentimental errors, which we as humans are often prone to.
The best advantage of ULIP investment is that you get the tax benefit regardless of which asset you are investing in. Also, going forward, all your partial withdrawals are tax-free after the lock-in period of five years. So, you can also think of using ULIPs as your post-retirement income option.
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The National Pension System(NPS) is a government-sponsored pension scheme. Though initially launched for government employees only, now it is open to all Indian citizens between the ages of 18 and 70.
If you want a perfect retirement savings solution, NPS is second only to a ULIP plan in investments and tops the tax benefit scale. If you use an NPS Tier-1 account for your retirement savings, you have the following benefits:
You can redirect your employer’s retirement contributions to NPS
Allows partial withdrawals to help fulfil specific needs, and it is tax-free
Premature closure is also possible under particular conditions
It is eligible for tax deduction.
Full portability means your NPS account number is with you for a lifetime, regardless of how many times you change or employment.
Around ₹ 1.5 lakhs of investment is eligible for tax deduction under Section 80CCD(1).
Claim additional tax deduction of up to ₹ 50,000 under section 80CCD (1B)
Enjoy automatic portfolio management based on your age (highest equity allocation of 75% (for Aggressive Life Cycle Fund LC-75), which gradually reduces to 0% at retirement) with NPS Tier-1’s “Auto Choice”
There are two main categories in the NPS: Tier I and Tier II. Everyone who joins the NPS comes under Tier I, and Tier II has different options. Many options are available from banks and financial institutions for NPS accounts for retirement and additional tax savings.
Even if you do not need the tax benefits, you can still enjoy the growth of your investment with Tier-2 accounts.
Some banks link savings account interest to the RBI repo rates for dynamic returns.
Source: Economic Times
A whole life term plan is a term insurance policy that can continue to cover your life up to 99 years of age. A whole life term plan is one of the best long-term plans to offer financial estate to your next generation. This plan allows you to automatically convert your normal term insurance cover into an estate if you survive beyond 60.
While you have the option of paying premiums throughout your entire life, you can opt for premiums to be paid only till retirement, i.e., 60 years of age. Your life cover, however, will continue till you are 99 years old or your natural death.
The plan also has the feature to pay ₹1 crore to the nominee in case you get diagnosed with terminal illness or on death, if illness is covered by the plan. This option has all the tax benefits available to a term life plan under sections 80C and 10(10D).
The above options can cater to your long-term life goals, wealth accumulation goal, retirement goal and estate transfer goal. All options allow you to invest as per your risk appetite and fund needs in future.
Selecting the right financial plan starts with understanding your unique goals and risk appetite. Whether securing your family’s future, accumulating wealth, or planning retirement, each investment option offers distinct benefits. Careful evaluation ensures your portfolio aligns with your personal needs rather than others’ preferences.
Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.
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