We have heard a lot about retirement plans, under that, so many instruments are there to cover your retirement which in turn confuses you too.
ULIP, PPF, Annuity Plans are some examples. The important question remains the same, are they worth building your Retirement wealth?
Factors that affect the majority of your wealth :
1. Inflation that eats away your dwindling retirement income easily.
2. With increasing life expectancy, the longer you live, the more you spend.
3. Not preparing early to save enough to support your needs and wants.
What are Pension Plans :
Pension plans are investment plans that let you allocate a part of your savings to accumulate over some time. They provide you with a steady income after retirement.
Retirement & Pension Plans provide you with financial security so that when your professional income stops, you can still live with pride without compromising on your living standards.
Given the high cost of living and rising inflation, Retirement planning has become all the more important.
Types of Pension Plans in the Market :
1. ULIP :
ULIP is an insurance product that combines insurance and investment benefits in a single plan.
ULIP (Unit Linked Insurance Plan) offers life cover which is a major benefit over the traditional wealth creation tools.
But Does ULIP Returns that much which can build your wealth, with Inflation at 6% now? Majority of Ulips Return 8-10%. With just 2% Extra, will we build our wealth?
The answer is “BIG NO”. While the question is about your wealth building, you should think about compounding returns at a minimum of 12% YOY.
The only Plus point of ULIP is that it offers you a Life Cover. But it is good to sacrifice wealth building for mere Life Insurance?
If Not then the question arises, which instrument will give you 12%? Let us see another example.
2. Annuity Plans:
What is an Annuity Plan: An annuity is a long-term investment that is issued by an insurance company and is designed to help protect you from the risk of outliving your income.
Through annuitization, your purchase payments (what you contribute) are converted into periodic payments that can last for life.
At What Rate do our Annuity Plans Pay us :
Current average annuity rates are, between 2.15% and 3.50% ranging between 2 years and 10 years in length. is 2/3% enough to build your wealth?
Again Answer is “NO”. Annuities are to be bought at the time of retirement but not when you are young.
3. Mutual Funds + Term Plans (Combination – Why ? Answer with the Example Below )
Mutual Funds as we know are Stock Bundled and managed by Fund Managers and their team to give you more returns than the Market itself or let’s say benchmark on which it is defined.
So, what is the rate of return of Mutual Funds :
A Worst Mutual Fund returns 8% and a Good Mutual Fund Return 17-20% YOY. Also, Mutual Funds bring a bit of Risk involved with the Market. But when you are at age 40, will you not go with Double the Return and compound it.
Now you would think,” What About Life Insurance that ULIP Provides”. The answer is “Why not Take Term Plan of Crores for a mere thousand rupees a Month “.
With a Good Mutual Fund and a good Term Plan, You can have Crores when you Retire and also a term plan worth Crores for Your Family’s Safety.
Wealth Management is all about planning, Choosing Right Fund, Taking Care of the Risk Involved, Giving you Enough Information, and a plan that works for you.
With Equity Gyan Team, You get all this. Talk to our Advisor Today and we would provide you the best plan that will give you a tension-free Future.
Plan your Future Today.