Friday, 19 February 2016

Best Investment plans in India for Middle Class

A major portion of the Indian population comes under the middle class category. The middle class people in India are mostly educated and aspirational.  They want to have a financially secured life with an aim for wealth creation at the same time. This mentality of the middle class has led to a rapid growth in the investment sectors of India.
There are a number of different investment plans where middle class people pour in their money for wealth creation in the future.  Let us check out some of the best investment options for the Indian Middle class.
Unit Linked Insurance Plan: 
Unit Linked Insurance Plan or ULIP is a type of life insurance plans. It provides the twin benefit of insurance and investment.  It is a market linked product in which your fund is invested in stock markets, bonds and mutual funds.  The policy holder may invest only once or in regular instalments. But the returns depend on market performance. Hence it is a high risk profile. Only those who have a high risk appetite can invest in ULIP plans. However, some benefits of ULIP are listed below:
  • You may earn a huge amount of money depending on market performance.
  • You can opt for single payment or you can make regular payment of premiums.
  • You can partially withdraw your fund anytime you want provided you have paid regular premiums for first three years.
  • You can enjoy flexibility to switch between funds.
  • Many insurance companies offer rider benefits which are the added benefits of investing in a ULIP plan.
  • You get Income Tax benefits with ULIPs.
Endowment Plan: 
Endowment plan is a type of insurance cum investment plan. It assures substantial life cover. At the time of policy maturity if the policy holder dies, the lump sum assured will be paid to the beneficiary. If the policy holder survives till maturity, he is paid the entire sum assured along with bonuses (if any).  Some benefits of Endowment plans are as follows:
  • It gives complete life coverage
  • Low risk category
  • Maturity, reversionary, terminal and rider benefits are available.
  • Tax benefits are also available
Child Plan: 
Child plan is a good investment instrument. It is a combination of Investment and insurance plan. Child plans secure your child’s future. At the same time it helps in your future wealth creation. There are two types of child insurance plans available in the market. One is Child ULIP   in which your fund is invested in stock markets. The returns solely depend on the performance of the market. So it has high risk quotient.  The other is Child Endowment plans. In this plan, your fund is invested in debt instruments. The returns of this plan depend on the bonus payable at the time of maturity. So it has a low risk profile. However, some of the benefits of child plans are as follows:
  • You can avoid Capital Erosion
  • You enjoy Income Tax benefits
  • You can choose from different premium payment frequencies.
  • Different riders are offered with child plan that enhances the value of the plan.
Above are the three investment plans for Indian middle class. Apart from these, there are other instruments also. If your risk appetite is very low you can invest in Public provident fund (PPF) as it is absolutely risk free and provides guaranteed returns. If you can afford a high risk investment plan you can go for Systematic Investment Plan (SIP). You have to understand your own financial goal, risk appetite and personal circumstances, so that you can choose the perfect investment plan that suits your requirements best.

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