What is Wealth Creation?
Wealth creation is a process to increase and accumulate your earnings. You can generate wealth through value additions like business activity or financial instruments. Saving and investment plans are an inseparable part of the wealth creation process.
Savings ensure that your earnings are not lost quickly and investments will ensure that it remains safe over a long time. Investing also safeguards your savings from taxes and helps in further wealth creation from it.
What is a Wealth Creation Plan?
A wealth creation plan could be an investment instrument or an elaborate investment plan which focuses on maximising your saved money. Ideally, a wealth creation plan helps you park your regular savings and grows them to build a large corpus over time.
You can create a wealth plan using direct stock and bond market investments. However, using one of the wealth plans to automate your savings and grow your wealth is an easier way to build wealth.
The wealth creation plans in India are available for both online and offline investment. Some of the popular wealth creation plans include
a) Unit Linked Insurance Plans (ULIPs)
b) Equity Linked Saving Schemes (ELSS)
c) Equity and Hybrid Mutual Funds
d) New/National Pension Scheme (NPS)
Why Choose a Wealth Insurance Plan?
Life insurance companies including Canara HSBC Life Insurance offer wealth creation plans. These long-term investment plans are also referred to as wealth insurance plans. Insurance is the unique feature of these wealth creation plans.
Here’s why you should prefer a wealth insurance plan:
a) Flexible investment options
b) Choose your investment tenure
c) Automate your investments
d) Invest in multiple assets under one plan
e) Enjoy good liquidity with partial withdrawal options
f) Manage your asset portfolio automatically with market performance
g) Protect the financial goal with life insurance cover
h) Premium protection option for important family goals like child’s higher education and marriage
i) Active strategies to protect your wealth from market volatility when you are close to maturity
j) Bonus additions for long-term investors
k) Tax saving and tax-free maturity values
Benefits of Buying a Wealth Creation Plan
Investing in a wealth plan has several benefits for you. Following are the most prominent benefits of buying a wealth plan:
a) Turn your savings into investment faster
b) Professional management of funds
c) Invest in well-diversified portfolios
d) Reduce your tax outflow in the year of investment
e) Build tax-free wealth in the long-term
f) Meet multiple financial goals with the same saving and investment plan
g) Safeguard your market returns with automatic debt allocation/transfer
h) Enjoy additional portfolio growth with bonuses
i) Safeguard family’s important financial needs/goals
j) Withdraw tax-free regular income after retirement
k) Plan for the legacy you will leave for the next generation and grandchildren
How does a Life Insurance Policy help in Wealth Creation?
Life insurance fundamentally provides leverage, in a sense that you pay a relatively small amount of money to the insurance company in the form of a premium and in return, the insurance company will provide a guaranteed payout of a relatively large sum of money upon the occurrence of an unfortunate event, basically passing on wealth to your loved ones. So, here is how a comprehensive life insurance policy can help you in wealth creation:
| Guaranteed returns |
Loyalty Rewards & Boosters |
Flexible Fund Allocation |
| Mostly with ULIPs and saving plans you can gain guaranteed returns on your investment. So, you get the best of both worlds – insurance and savings. |
Staying invested for longer durations can boost your savings via additional units allocation through loyalty additions and wealth boosters. |
The great thing about plans like Invest 4G is that you can choose to switch funds to generate long term capital appreciation through investments. |
| Safety switch |
Protection for your Money |
Tax Benefits |
| Many life insurance plans offers you the option to switch your money to low risk fund as your policy nears maturity, ensuring you receive balanced wealth at maturity. |
The benefit your family would receive is not subject to market losses, like mutual funds and similar instruments that go down with a tank in the stock market. |
ULIPs can offer dual benefits –rebate of up to 1.5 lakhs under Section 80C and tax exemptions on the maturity proceeds under section 10(10D) of Income Tax Act, 1961. |
Who should Buy a Wealth Creation Plan?
You should invest in a wealth creation plan if you have sufficient regular savings which you can park for a long time. Remember that your money should first ensure long-term financial safety for your dependents. After that, it should create a pool for you to manage financial emergencies.
Finally, you can now invest in a wealth creation plan if you are:
a) Salaried
b) Self-employed / Business Owner
c) Investing for long-term financial goals
d) Looking to grow your money steadily
e) Looking for professional management of your wealth
f) Investing in your child’s important life goals
g) Aiming to build a huge corpus for your retirement
h) Looking to have a tax-free pension income after retirement
Wealth creation plans are long-term investments. These plans will give you the option to invest aggressively in pure equity funds or safely with fixed income funds. Thus, wealth plans are useful for both safe and aggressive investors.
Additionally, the wealth insurance plans also allow you to protect your family’s goals. Thus, it also fulfils the financial safety needs of your family.
Finally, online wealth plans like Invest 4G from Canara HSBC Life Insurance offer plan tenure up to 99 years of age. Meaning, you can use the same plan to save for your retirement corpus, pension and legacy goals.
How can you Ensure Maximize Returns with Life Insurance Plan?
Besides providing a life cover, plans like Invest 4G can help you grow your wealth and achieve your life goals with the help of unit-linked returns. All you got to do is choose the right funds. Here’s how –
1. Ensure you invest the right amount in equity and debt investments
Having a balance between your investments is important to gain better returns; nor would being too safe or being too adventurous help. There’s a typical investment formula that experts suggest – Take 100% as your total investment and minus your age. Say, you are 30, then 100-30=70, therefore you should invest 70% of your investment value in equities and the remaining in debt.
2. Make fund selection based on your current investment portfolio
So, if most of your investments are in safer areas like bank deposits, you can choose to invest in higher equity funds to balance your investment and get better returns, also vice-versa.
3. Figure how much time you have and the magnitude of your investment goal
In case you wish to invest for your child’s higher education or buying a house, you may want to invest higher in equities as you have more time in hand. The longer you invest for, more is the boost you can expect on your returns.
How to Grow and Save Wealth for Future Goals with a Wealth Plan?
| Identify the future needs |
Start as early as you can |
Have adequate insurance |
| When saving, the first step should be to identify a rough range of finances that may be required basis your aspirations. Create a broad plan and keep space for miscellaneous expenses that may pop-up. |
Saving is a habit that must be inculcated as early as possible. Also, with the rising inflation and expenses, you need to start at an early stage, considering what will be the rise until your goal is achieved. |
While we hope everything ends well, there can be unwelcomed surprises by life. Plans with an added life insurance benefit can ensure your family receives your savings and can reap the long-term benefits of the plan. |
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