Savings Alone Cannot Guarantee Financial Security, You Need More!

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Guarantee Financial Security
Guarantee Financial Security

“Spend Less And Save More”-It’s the virtue that we all grew up with. Unquestionably, saving is essential as it allows us to save for our life goals. However, considering the number of goals that we have in life, like buying a house, funding children’s educationand planning for retirement, sometimes even saving alone cannot help us in achieving all of these goals. Then how can one achieve financial independence? Or fulfill their life goals and live a comfortable life with theirloved ones?

The answer lies in investing!

Investing is the fastest way to grow our income. As perForbes, even the wealthiest people todayhave acquired wealth through investments.

Although both saving andinvesting enable us to achieve our goals in life, the difference lies in the fact that investing focuses on seeking better returns than thatfrom saving money. Another advantage of investing is that it takes a shorter time frame for us to reach ourgoals.

Why Do You Need To Invest?

To illustrate the power of investing, let’s look at two different individuals aged 25. We have Harshit, who saves his money in a bank that pays him6% return on savings accounts. Then, we have Rohit who chooses to invest his savings in aULIP-based wealth investment plan.

Both these individuals have decided to accumulate Rs. 1 Crore by the time they are 6o. In order to get to 1 Crore by age 6o, they need to save/invest a certain amount each month. How much? Refer to the table below:

Saving Harshit

 

Investing Rohit

 

Rate of Return 6% 10%
Monthly Savings Needed Rs. 7,000 Rs. 2,800

As you can see, even with a high-interest savings account, Harshit will have to set aside Rs. 7,000 per month in order to save Rs. 1 Crore by the age of 60. Rohithowever, will only need to set aside Rs. 2,800 each month, assuming a 10% annual rate of return.

The extra money that Harshit contributed to his savings could have been used towards his children’s school fees, vacations, or to have a larger retirement corpus.

Where did we come up with a 10% rate ofreturn for Rohit? Because of the historical ten-year rateof return for Sensex, which averages around 13% to 15%.

Where Should You Invest?

It’s clear that in order to achieve financial security, it is vital to invest money for a longer duration. Even if you don’t have Rs. 2,800 a month, let alone Rs. 1,000 a month for investing, you must start. There are low-cost wealth investment plans to get you started and get into the habit of disciplined investing.

In terms of return, ULIP-based wealth plansscore over other instruments and are considered as the best investment options for wealth creation. As a primary benefit, these wealth plans offer financial protection to the insured through a life cover. In the covered event, therefore, the insured’s beneficiary gets the pre-decided sum assured. As a secondary benefit, these investment plans offer multiple funds that one can invest in, to achieve his/her financial goals.

These investment cum insurance investments also offer tax benefits under Section 80C. They areeligible for tax deduction up to Rs 1.5 lakh per annum, and the maturity benefits are completely tax-free too.

Moreover, wealth investment plans offered by leading life insurers like Max Life Insurance, give you the option of switching funds as many times as you want. Thus, you can choose among five different fund types as per your risk appetite or changing goals. All in all, these investment plans are great wealth-creating tools for the long term, considering the diversity of funds that they offer.

Thus, if you want toearn returns that are higher than that from bank deposits, it is inevitable to invest in wealth plans that allow you to yield better returns!