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An investor is a person who invests his/her hard-earned money on assets or funds to create more wealth. A smart investor is a person who intelligently does the same to achieve more returns in a short period with less energy and time spent on it. The financial world has introduced various avenues for investments. It is left to the investor to do the research and choose the best option. You can become an intelligent investor if you follow certain principles and financial practices. Let us discuss it here.
Investments are necessary for three main reasons.
Post-retirement, there has to be a fund to manage daily expenses and short-term emergencies.
You would have defined a standard of living for yourself. You need to maintain it after your employment phase amidst inflation influences.
You have to protect your family financially at different stages in life and secure them in case of your sudden and unexpected demise.
Investments in the 20s provide varied exclusive benefits that help you during uncertain situations. Here are a few reasons why it is an ultimate requirement.
Early investments provide better returns - The early you start an investment, and the longer you stay invested, the better are the returns. And, in the 20s, there are no major financial obligations that help you invest more. When you invest as you start earning, you will develop a disciplined financial practice that will last longer. Finally, investment products will be available at a cheaper rate when you start investing early by 20s in your life.
Creates an option for contingency fund - The recent pandemic issue created awareness on how a contingency fund can help you stabilise a financial crisis. Due to the recent pandemic, families had to bear unexpected hospitalisation charges and even lost the lives of the earning members. With an early, profitable, flexible and conservative investment, you can withdraw funds for such emergencies. It will help you manage the financial crisis and get strong mentally and physically.
Build a strong knowledge
Most of the investments fail because of a lack of knowledge. Financial institutions offer diverse products to serve as good investment tools. Every single option may not be suitable for all people. Based on age, income, personal and financial commitments, the type of investment chosen varies. As a young investor, build a strong knowledge by reading different valuable resources to understand the investment options to make the best and smart choice.
Make a financial plan.
Before you start investing, make a financial plan. It is important to analyse your income, expenses for your needs and the amount you can spare for investments and savings. You have to forecast the long-term financial obligations and make sure your investment plan will suffice the requirements. Some investments are considered a responsibility rather than an obligation; include that in your financial plan at any cost. For example, life insurance.
If you are the only earning member in your family, you have to consider your family's financial security in a case when you are no longer around. Life insurance will offer the sum assured as a death benefit to your loved ones. The life insurance can be attached with riders# to enhance the sum assured and made it payable early for critical illness, terminal illness, or total and permanent disability.
After acquiring sound knowledge and preparing a financial plan, you must start implementing it by investing early. The best long-term benefits are availed only when planned and invested early.
If you have many financial obligations at different stages in your life and don't have sufficient funds to invest in different essential products, choose a comprehensive product.
ULIP Plan - Unit Linked Insurance Plan is a life insurance plan wherein you get dual benefits. The ULIP policy investor has to pay regular premiums. One portion of the premium amount will be used as a life cover for a sum assured to your loved ones. The other portion is invested in equities, debts or hybrid funds.
Based on the risk appetite, you can choose to invest in the desired type of fund. As the ULIP returns are market-linked, there is always uncertainty. Given such a condition, you can always switch between the funds during the policy tenure. There is a lock-in period of five years, after which partial withdrawal is permitted. The premiums paid and the ULIP benefits qualify for tax* deductions and exemptions according to Section 80C and Section 10(10D) of the Income Tax Act, 1961.
If you are the only breadwinner in your family and looking for insurance and investment benefits, a ULIP policy with Tata AIA payment options will be a smart solution. The ULIP charges are slightly higher interest rate due to the policy administration and fund management charges. However, it is worth the benefits attached. As you start investing by 20 years of age, the sum assured and the returns from the ULIP plan will be a sufficient amount to lead a peaceful life ahead of retirement.
Choose long term investment.
When you start investing early, you can look for long term investments. Any investment will accrue maximum benefits only in the long term. If finance is a constraint and you feel it will always be the same throughout your life, make a smart investment with guaranteed1 returns insurance plan. With a guaranteed1 returns insurance plan, you can pay monthly premium amounts for a life cover and guaranteed1 returns. If you meet with an unexpected death, your family will get the sum assured. On the other hand, you or your family will receive a maturity benefit in guaranteed1 returns. It can be available as a lump sum, a combination of lumpsum and guaranteed1 annual income or as a regular monthly income for a set period or throughout life.
It is always important to stay focused and disciplined in your financial investment journey to maximise profits. When you neglect to pay monthly payments or premiums, the effect will be profound on your returns and credibility.
We have seen how to become a smart investor in our 20s. It takes a lot of effort to build knowledge, make a financial plan and start investing in smart choices. However, taking the best decisions on time will accrue the best benefits for life!
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Insurance cover is available under the product.
The products are underwritten by Tata AIA Life Insurance Company Ltd.
The plans are not a guaranteed issuance plan, and it will be subject to Company’s underwriting and acceptance.
For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale.
This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER
THE LINKED INSURANCE PRODUCT DO NOT OFFER ANY LIQUIDITY DURING THE FIRST FIVE YEARS OF THE CONTRACT. THE POLICYHOLDER WILL NOT BE ABLE TO SURRENDER/WITHDRAW THE MONIES INVESTED IN LINKED INSURANCE PRODUCTS COMPLETELY OR PARTIALLY TILL THE END OF THE FIFTH YEAR.
Past performance is not indicative of future performance.
All investments made by the Company are subject to market risks. The Company does not guarantee any assured returns. The investment income and price may go down as well as up depending on several factors influencing the market.
Please make your own independent decision after consulting your financial or other professional advisor.
* Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.
#Riders are not mandatory and are available for a nominal extra cost. For more details on the benefits, premiums and exclusions under the riders please refer to the Rider Brochure or contact our Insurance Advisor or visit our nearest branch office.
1Guaranteed Returns/Payouts depend on Plan Option, Policy Term, Premium Payment Term and Age at entry