Money Back Policy Or SIPs
Updated On Dec 29, 2021
Table of Contents
- What Are the Benefits of SIPs (Systematic Investment Plans)?
- What Are The Benefits of a Money Back Policy?
A Systematic Investment Plan, or SIP, allows investors to contribute a set amount to a mutual fund of their choice on a regular basis, such as monthly. These payments can be as little as Rs. 500, making them an ideal investment choice for both novice and experienced investors. SIPs help investors achieve their financial goal of building a strong portfolio over time.
A money-back policy is a form of life insurance that permits the insured to receive periodical payments or a lump-sum payment at a predetermined time throughout the policy duration. A money-back policy's returns might be guaranteed, contingent on investment success, or a combination of both. This enables you to obtain money-back coverage that is tailored to your specific financial objectives.
What Are the Benefits of SIPs (Systematic Investment Plans)?
The following is a list of the advantages of investing using a systematic investment strategy.
SIP is one of the most straightforward and straightforward ways to invest. If you are inexperienced with the financial market and how it works, a Systematic Investment Plan is ideal for you. Now all you have to do is pick a reputable fund and give your bank standing orders to handle your SIP investment.
For those who don't want to invest in mutual funds all at once, a budget-friendly SIP is a terrific solution. With a SIP, you may begin with a monthly investment of as low as Rs. 500. It's a cost-effective way to invest your money without draining your bank account. As a consequence, SIP is suitable for investors of all levels of wealth. This form of investment may be beneficial to people who do not have a constant source of income. You may save a portion of your salary by making little investments at regular periods.
Compounding Effect's Strength
The opportunity to develop a larger corpus through the power of compounding is the most significant benefit of investing in mutual funds. When you invest in mutual funds through a systematic investment plan, you reinvest your gains in the same scheme. Your dividends may earn you more money as a consequence of the compounding impact. Compounding works best when you start investing early and continue with it for a long period.
Protection Against the Risks of Volatility in the Financial Markets
SIP protects investors against the turbulence of the financial markets. It safeguards investors against speculative and hasty judgments. You may acquire more mutual fund units at a reduced price when the markets are turbulent and falling. As a consequence, SIP shields investors against speculation while also allowing them to buy additional units at a lesser cost.
What Are The Benefits of a Money Back Policy?
Purchasing a money-back package comes with a number of benefits. Some of the reasons why a money-back plan might be useful to you are listed below:
Provides Insurance Protection
A money back plan may be used as both an insurance tool and an excellent investment tool. A policyholder can select appropriate insurance coverage that will assist them in meeting their family's financial needs. These plans provide consistency and allow your loved ones to live comfortably even when you are not present.
Provides a Guaranteed Sum
If an unanticipated incident occurs, the insurance company pays the recipient a lump sum amount, which is the total sum insured. This is the amount that your family members may use to pay their financial obligations while living a dignified and respectable life.
Stocks, mutual funds, equities, bonds, stocks, and other investment vehicles are all affected by market fluctuations. A money-back guarantee ensures that you will get your money back on a regular basis. These plans are hassle-free and trustworthy since they provide insurance coverage and monthly payouts. It may be an excellent alternative for you if you desire a reduced risk appetite. These strategies assist you in reducing risk in your portfolio.
Benefit from Taxes
The premiums paid for money back plans are tax-free under section 80 C of the Internal Revenue Code. It is, however, subject to the stipulation that premiums be less than 10% of the plan's total sum assured.
The motives for investing differ from individual to person, depending on their financial objectives. In the Indian market, there are a variety of investment products that may help individuals grow wealth over time and ensure their family's financial future. Choosing the best investment choice, on the other hand, might be a difficult task. Choosing between Money Back Plans and a Systematic Investment Plan is a constant source of consternation for investors (SIP). So, before you make any decisions, read the information above.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.