Aditya Birla Sun Life Insurance Company Limited
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There are so many contrasting ideas out there. One, for example, will tell you it's important to be aggressive and chase your dreams and wants. On the other hand, others will tell you it's important to avoid losses and maybe, even risk.
The truth is, there's no easy answer. It cannot be one over the other. It has to be a little bit of both.
The same applies to your money too. On one hand, you need to put your money in options that can make you more money. At the same time, you also need to ensure there are basic protective measures in place. Protective measures like these five below.
Think about it this way. You would be able to step out and go to work freely only after locking your house and safeguarding it, right?
So here we are. Read on.
You go to any financial advisor, and the first question they'll ask you is if you have insurance. Ok, it may be the second question, (the first being if you have a bank account), but you get the point, right?
But not any insurance. The most basic and simplest of all protections—term and health insurance. One protects you from medical bills, the other protects your family in case of any unfortunate event.
Both are fairly simple. The premium payments are relatively lower and affordable. Yet, many make two key mistakes with something as simple as insurance.
If insurance is the first layer of protection, then products that earn guaranteed returns are the next layer. This includes fixed-income or 'Debt' options like Fixed Deposits or even your Guaranteed plans provided by insurance companies.
The idea is simple—get a fixed amount of return for the money you invested in it. But it's important to keep in mind 3 key points when investing in such options.
Now that your house is safe and locked, you can peacefully go to work and earn money.
This is where equity comes in the picture. No, it's not gambling, like many believe. It really isn't.
Let's say your friend started a company and you gave him/her Rs 1 lakh—35% of the initial investment. Now, wouldn't this mean that you have a say in the company's matters? And more importantly, a 35% share in the company's profits?
Equity investing is exactly that—you buy a stake in companies and earn the benefits over time. As the company grows, so does that value of your stake in it.
This is why it's important to research diligently and understand which company you are investing in and why. Following tips blindly is where the mistake lies.
Alternatively, you can pass on the task of doing due research to expert fund managers whose sole job it is to invest money on your behalf. That too is possible.
Either way, the idea is to ensure you have some money in options that get you fixed returns, and some money invested in options that can get you higher returns.
How much should you split it? That depends on your age, your ability to take risks and the amount of disposable income you have. We'll explore this in-depth in a later newsletter.
Experts suggest that you should have 5-10% of your money invested in gold. This is because gold is a tangible investment that can always come handy during crises. In fact, gold prices typically rise when the stock markets fall.
The mistake that people often make is investing too much in gold, or investing in a type of gold that attracts extra charges. For example, jewellery makers charge you extra as 'making charges'. This increases your cost and reduces your return.
This should ideally come at the very top. In fact, it can be clubbed with insurance. After all, insurance mainly comes handy during emergencies, right?
But there is more to an emergency fund that just insurance. It's about having liquid cash and money.
This is because, in life, there will always be days when you face sudden expenses. That trip to the dentist for a root canal treatment worth Rs 15,000, for example. Or a bad puncture that needs you to replace all your car tyres for Rs 25,000.
At such times, you have to shell out money. Why take it out from your regular expenses and bank account, when you can set aside a small sum for it? Ideally, it should be enough to cover expenses for 3 to 6 months. But you can build it slowly. We can go through this in detail on a later date, if you want.
The purpose of this content is to provide information about industry trends and news of general interest of our customers, potential customers and other professionals. While every attempt is made to ensure the accuracy of the information provided, we do not guarantee the accuracy of the information. ABSLI recommend that these general views should be cross-verified and reaffirmed before being used for personal financial planning purpose. The recipients of this material should rely on their own investigations. The past performance is not necessarily an indicative of the future performance.
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Get immediate income payout after 1 day of policy issuance^
Guaranteed# Income
Life Cover across policy term
Lumpsum Benefit at policy maturity.
Get:
₹33.74 lakhs~
Pay:
₹10K/month for 10 years
Guaranteed returns after a month¹
ABSLI Nishchit Aayush is a non-linked non-participating individual savings life insurance plan (UIN No 109N137V12)
^ - Provided 0 year deferment & Annually in Advance payout frequency is chosen at the time of inception of the policy. Annually in Advance payout frequency is only available in "Annual" premium payment mode.
~ Male- 25 yrs invests in ABSLI Nishchit Aayush Plan with Level Income + Lumpsum Benefit. He chooses premium payment term 10 yrs , policy term 40 years, benefit option -Long Term Income, Sum Assured 7 times of Annualized Premium and Deferment Period 0 years. Annualized Premiu
m is ₹1,20,000 (Exclusive of GST.). Annual Income of ₹ 42,360 (42,360*40= 16,94,400) + Maturity Benefit (₹16,80,000)= ₹ 33,74,400
#Provided all due premiums are paid
ADV/4/21-22/72