Long Term Investment Plans

Your Path To Financial Abundance
Your Path To Financial Abundance

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    1 Healthy male age 21 years, premium paying term 12 years, policy term 13 years, benefit payout period 20 years, payment frequency annually, Assured Benefit Option: Income with Lumpsum Benefit, Sum Assured Rs.16.68 lakhs, Premium Rs.1.2 lakhs/year excluding GST), you get Rs.46.55 lakhs by age 54

What is a Long-Term Investment plan?

A long-term investment plan is a strategy or financial product designed to grow your wealth over an extended period, typically several years or even decades. These plans are focused on achieving major financial goals like retirement savings, purchasing a home, funding a child's education, or building a substantial investment portfolio. Long-term investments often involve a higher level of risk compared to short-term investments but also offer the potential for greater returns, leveraging the power of compounding and market growth over time.

How Does Long-Term Investment Plan Work?

Long-term investment plans work by allowing you to invest your money in various financial instruments, such as stocks, bonds, mutual funds, or retirement accounts, with the aim of achieving significant growth over time. Here's a general overview:

  • Investment Strategy: You choose an investment strategy based on your financial goals, risk tolerance, and investment horizon. This strategy guides your asset allocation and investment choices.
  • Regular Contributions: Many long-term investment plans involve making regular contributions, such as monthly or annual deposits, to build your investment over time.
  • Compounding Growth: The returns on your investment are reinvested, allowing your wealth to grow exponentially due to the compounding effect.
  • Diversification: To manage risk, long-term investment plans often involve diversifying your portfolio across different asset classes and sectors.
Let’s understand this with an example.
Meet Priya, a 30-year-old marketing professional who wants to secure her financial future and retire comfortably at 60. She decides to invest in a long-term investment plan with the following approach:
  • Investment Choice: Priya opts for a diversified portfolio that includes equity mutual funds, government bonds, and a retirement savings plan.
  • Regular Contributions: She commits to investing ₹10,000 every month into her long-term investment plan.
  • Growth Over Time: Assuming an average annual return of 8%, Priya's investment grows significantly over 30 years due to the power of compounding.
  • Retirement Corpus: By the time Priya retires at 60, her investment has grown to a substantial amount, providing her with financial security and the freedom to enjoy her retirement years.
This example illustrates how long-term investment plans can help individuals achieve their financial goals through disciplined saving, strategic asset allocation, and the power of compounding growth over an extended period.

Features of Long-Term Investment Plans

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Compounding Growth
The ability to earn returns on your returns, leading to exponential growth over time.
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Diversification
Spreading investments across various asset classes to reduce risk and optimize returns.
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Tax Advantages
Many long-term investment plans offer tax benefits*, such as tax-deferred growth or tax-free withdrawals.
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Flexibility
Options to adjust your investment portfolio based on changing financial goals or market conditions.
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Regular Contributions
The ability to make periodic investments, facilitating disciplined savings and dollar-cost averaging.
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Professional Management
Access to expert fund managers who oversee the investment portfolio, especially in managed funds.
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Liquidity
While long-term investments are intended for the future, some plans offer partial withdrawal options for financial emergencies.
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Automatic Reinvestment
Dividends or interest earned can be automatically reinvested to further fuel growth.

8 Benefits of Long-Term Investment Plans

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Wealth Accumulation
Provides a structured approach to building substantial wealth over time.
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Inflation Hedge
Long-term investments, especially those in equities, have the potential to outpace inflation, preserving purchasing power.
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Retirement Readiness
Helps ensure financial security in retirement, allowing for a comfortable lifestyle without the need for active income.
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Goal Achievement
Facilitates the realization of major life goals, such as buying a home, funding education, or leaving a legacy.
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Risk Mitigation
The extended investment horizon allows for riding out market volatility, reducing the impact of short-term fluctuations.
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Tax Efficiency
Offers tax benefits* that can enhance overall returns, such as tax deductions on contributions and tax-free growth.
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Disciplined Saving
Encourages regular savings habits, making it easier to stay committed to financial goals.
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Legacy Planning
Provides an avenue for estate planning, ensuring that wealth is passed on to future generations in a tax-efficient manner.

Who Should Consider Long-Term Investment Plans?

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Young Investors
Individuals in their 20s or 30s with a long investment horizon can benefit from the compounding growth offered by long-term plans.
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Retirement Savers
Those looking to build a substantial retirement fund to ensure financial security in their later years.
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Goal-Oriented Individuals
People saving for specific long-term goals, such as purchasing a home, funding a child's education, or leaving a legacy.
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Risk-Tolerant Investors
Individuals comfortable with market fluctuations and willing to invest in higher-risk assets for potentially higher returns.
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Wealth Builders
Those seeking to accumulate wealth over time and willing to stay invested through market ups and downs.

How to Buy a Long-Term Investment Plan?

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Define Your Goals
Clearly outline your long-term financial objectives and the time frame you have to achieve them.
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Assess Your Risk Tolerance
Determine your comfort level with investment risk to choose a plan that aligns with your risk profile.
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Research Options
Explore various long-term investment plans offered by financial institutions, focusing on their features, benefits, and past performance.
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Consult a Financial Advisor
Seek professional advice to get personalized recommendations based on your financial situation and goals.
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Choose a Plan
Select a long-term investment plan that suits your objectives, risk tolerance, and investment horizon.
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Complete the Application
Fill out the application form, providing all necessary personal and financial information.
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Make the Initial Investment
Pay the initial contribution as required by the plan, which could be a lump sum or the first installment of a regular contribution schedule.
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Set Up Regular Contributions
If the plan allows or requires regular contributions, set up automatic payments to ensure consistent investing.
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Monitor and Review
Regularly review your investment plan's performance and make adjustments as needed based on changes in your financial goals or market conditions.
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Stay Committed
Maintain a long-term perspective and avoid making impulsive decisions based on short-term market fluctuations.

What Documents Are Needed for a Long-Term Investment Plan?

  • Identity Proof: Passport, Aadhaar card, PAN card, or driver's license.
  • Address Proof: Utility bills, Aadhaar card, passport, or bank statement.
  • Income Proof: Salary slips, income tax returns, or Form 16.
  • Bank Account Details: Cancelled cheque or bank statement for setting up electronic payments.
  • Age Proof: Birth certificate, passport, or PAN card.
  • Photographs: Recent passport-sized photographs.
  • Application Form: Duly filled and signed application form for the investment plan.
  • KYC Documents: Know Your Customer (KYC) documents for identity and address verification.

When to Choose a Long-Term Investment Over a Short-Term Investment?

Factor Long-Term Investment Short-Term Investment
Investment Horizon More than 5 years, suitable for retirement or long-term goals. Less than 5 years, suitable for immediate or near-term goals.
Risk Tolerance Higher risk tolerance, willing to withstand market volatility. Lower risk tolerance, preferring stability and lower risk.
Return Expectations Seeking higher potential returns over time. Seeking modest returns with lower risk.
Liquidity Needs Lower immediate liquidity needs, can lock in funds for longer. Higher liquidity needs, requiring access to funds sooner.
Tax Considerations Taking advantage of long-term capital gains tax benefits*. Managing short-term tax implications, if any.
Financial Goals Long-term goals like retirement, buying a home, or education. Short-term goals like emergency fund, vacation, or a big purchase.

Long-Term Investment Plans in India (ABSLI)

Aditya Birla Sun Life Insurance (ABSLI) offers a variety of long-term investment plans catering to different financial goals and risk appetites. Some of the popular long-term investment plans provided by ABSLI include :

  • ABSLI Assured Income Plus Plan: A Non-Linked Non-Participating Individual Savings Life Insurance Plan that guaranteed long term regular income for 20, 25 or 30 years.
  • ABSLI Wealth Aspire Plan: A unit-linked insurance plan (ULIP) that provides the dual benefit of life insurance coverage and investment opportunities in various funds to build wealth over the long term.
  • ABSLI Vision LifeIncome Plan: A traditional participating whole life insurance plan that offers guaranteed# regular income along with life cover up to the age of 100, making it suitable for retirement planning and legacy creation.
  • ABSLI Empower Pension Plan: A pension plan designed to help individuals build a retirement corpus through systematic investments, with options for annuity payouts to ensure a steady income during retirement years.
  • ABSLI Child's Future Assured Plan: A plan specifically designed to secure a child's future financial needs, such as education and marriage, with the added benefit of life cover for the parent.

These long-term investment plans from ABSLI are structured to meet various long-term financial objectives, including wealth creation, retirement planning, child's future planning, and income generation. It's important to review the features, benefits, and terms of each plan and consult with an ABSLI advisor to choose a plan that aligns with your long-term financial goals . Some of the products offer guaranteed benefits whereas others are market linked( with non-guaranteed benefits).

FAQs on Long Term Investment Plan

Which investment is best for the long term?
Your financial goals, level of comfort with taking risks, and length of time horizon are some of the elements that should be considered while selecting the "best" long-term investment. Nevertheless, the following are some examples of long-term investment possibilities that are frequently suggested:
  • The Stock Market: Throughout history, stocks have generated strong long-term returns, despite the fact that they are associated with more volatility.
  • Bonds: Bonds are seen as having a lower level of risk than stocks, and they provide a regular and stable income. They may be appropriate for investors with a moderate risk tolerance.
  • Mutual Funds: Mutual funds allow investors to spread their risk by combining their money with that of other investors. They provide access to a diverse range of assets, including equities, bonds, and commodities, among others.
  • Real Estate: An investment in real estate, whether it be residential or commercial properties, has the potential to produce long-term appreciation as well as prospective rental income.
  • Contributions to Retirement Accounts: Making contributions to retirement accounts such as NPS can bring tax benefits* and the opportunity for long-term development.
Is long-term investing always safe?
When opposed to investing for a shorter period of time, long-term investing is generally considered to be connected with a higher level of safety. Having said that, keep in mind that there is always a degree of risk associated with any investment you make. Investing for the long term can provide prospects for growth and compounding, but investing for the short term might be susceptible to market changes and economic conditions, which can have an effect on the value of investments. It is absolutely necessary to maintain a diversified investment portfolio, to carry out exhaustive research, and to make financial decisions based on your comfort level with risk and your long-term monetary objectives.
What are the disadvantages of a long-term investment?
Investing for the long term has a number of positive aspects, but it also has a number of negative aspects, including the following:

  • Lower Liquidity: Long-term investments are often less liquid than short-term investments, which means that it may be difficult to access your assets quickly without suffering fines or selling at rates that are unfavourable to you.
  • Volatility in the Market: Long-term investments are susceptible to market volatility, and the value of investments can suffer both increases and decreases over time. The ability to endure short-term volatility is essential for investors to have.
  • The cost of missed possibilities When you invest money for the long term, that money might not be available for other opportunities that could present itself in the interim. This is known as the opportunity cost.
  • The risk of inflation: Over the long term, inflation might cause your investments to lose their purchasing value. It is essential to give serious consideration to investments that come with the possibility of outpacing inflation.
How do I begin for long-term investment?
To get started with investing for the long term, consider the following steps:

  • Establish Crystal Clear Financial Objectives: Determine Your Financial Objectives, as well as a Time Horizon for Achieving Those Objectives.
  • Evaluate Your Tolerance For Risk: In order to identify the optimal asset allocation for your investment portfolio, you should first evaluate your tolerance for risk.
  • Carry Out Research: Educate yourself about the many investing possibilities available, and get familiar with the risks and potential returns associated with each.
  • Make a Budget: Create a budget and determine the amount of money that you are able to invest on a regular basis while remaining within your financial means.
  • Establish a Financial Investment Account To establish a financial investment account, select a reputed financial institution or brokerage firm.
  • Diversify Your Portfolio: To lower your exposure to risk, you should disperse your investments over a variety of asset classes.
  • Remain Informed: Continuously monitor your investments, remain current on market developments, and perform periodic portfolio reviews.
What are some of the most stable long-term investments outside of the stock market?
In addition to the stock market, the following are some more examples of secure long-term investments:

  • Bonds: Bonds issued by the government or high-quality corporations offer a fixed income and are generally seen as being less volatile than other investment options.
  • Real Estate: Putting money into income-producing real estate or real estate investment trusts (REITs) is one way to secure your financial future and perhaps increase your wealth over the long run.
  • Certificate of Deposit (CD): Certificates of deposit (CDs) provide stability and predictable returns by offering a fixed interest rate for a predetermined period of time and are insured by both the government and the RBI.
  • Stocks That Pay Dividends: Certain stocks that have a track record of continuously paying dividends are ones that can offer both stability and the possibility of income.
  • Index Funds: Index funds are mutual funds that monitor specific market indices and offer both diversification and stability due to the fact that they are composed of a wide variety of equities and bonds.
  • Annuities: Annuities are insurance products that offer a guaranteed# income stream for a set period of time or for life, giving stability and predictable returns. Annuities can be purchased for a specific amount of time or for the rest of one's life. One of the options that you should consider for your retirement savings is a guaranteed# investment plan.
  • Debt Securities: Due to the fact that the government guarantees debt securities like treasury bonds, notes, and bills, these types of investments are seen as having a low level of risk.
  • Commodities: Commodities such as gold and silver, which have a long history of serving as a buffer against inflation and other forms of economic unpredictability, are examples of the types of investments that are suitable for the long term.
Can long-term investment always be beneficial?
It is essential to keep in mind that there are no guarantees in the world of investing, even while it is true that long-term investment methods have the potential to be profitable. The performance of life insurance investment plans can be affected by a variety of factors, including market conditions, economic considerations, and individual circumstances.

Nevertheless, investing for the long term has always been associated with prospects for growth, compounding, and the possibility of wealth building. Investors have a better chance of weathering the short-term market swings and profiting from the overall expansion of the market if they maintain their investment positions over a longer time period.

It is of the utmost importance to carry out exhaustive research, diversify your portfolio, and routinely analyse and modify your investments in response to the shifting conditions that may arise. In addition to providing useful insights, seeking the counsel of a financial advisor can assist in the process of optimising your long-term investment strategy.

Keep in mind that there is always the potential for loss while investing, and that previous performance is not necessarily indicative of future outcomes. It is crucial to base investment decisions on your personal financial circumstances, level of comfort with taking risks, and desired outcomes for the long run.
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  • Disclaimer

    *Tax benefits are subject to changes in tax laws. Kindly consult your financial advisor for more details.
    # Provided all due premiums are paid.
    1 Healthy male age 21 years investing in ABSLI Assured Income Plus Plan, premium paying term 12 years, policy term 13 years, benefit payout period 25 years, payment frequency annually, Assured Benefit Option: Income with Lumpsum Benefit, Sum Assured Rs.16.68 lakhs, Premium Rs.1.2 lakhs/year excluding GST), you get Rs.55.18 lakhs (Rs. 1.52 Lakhs p.a. for 25 years and Rs. 17.28 Lakhs as lumpsum at end of benefit payout period) by age 58
    ABSLI Assured Income Plus Plan is a Non-Linked Non-Participating Individual Savings Life Insurance Plan (UIN: 109N127V13). Some benefits are guaranteed and some benefits are variable with returns based on the future performance of your insurer carrying on life insurance business. If your policy offers guaranteed benefits then these will be clearly marked “guaranteed” in the illustration table on this page. If your policy offers variable benefits then the illustrations on this page will show two different rates of assumed future investment returns. These assumed rates of return are not guaranteed and they are not the upper or lower limits of what you might get back, as the value of your policy is dependent on a number of factors including future investment performance.
    ABSLI Vision LifeIncome Plan: This policy is underwritten by Aditya Birla Sun Life Insurance Company Limited (ABSLI). This is a traditional participating endowment plan. All terms & conditions are guaranteed throughout the policy term, except for the bonuses which would be declared at the end of each financial year. UIN: 109N079V06
    ABSLI Empower Pension Plan: This policy is underwritten by Aditya Birla Sun Life Insurance Company Limited (ABSLI). This is an Individual unit linked pension plan. UIN: 109L078V03 . IN THIS ULIP POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDERThis policy is underwritten by Aditya Birla Sun Life Insurance Company Limited (ABSLI). Aditya Birla Sun Life Insurance and ABSLI Empower Pension Plan are only the names of the Company and Policy respectively and do not in any way indicate their quality, future prospects or returns. The linked Insurance Products do not offer any liquidity during the first five years of the contract. The policyholder will not be able to surrender/withdraw the monies invested in Linked Insurance Products completely or partially till the end of the fifth year from inception.
    ABSLI Wealth Aspire Plan is a non-participating unit linked life insurance plan. (UIN:109L100V05)
    ABSLI Wealth Aspire Plan is only the name of Company and Policy respectively and do not in any way indicate their quality, future prospects or returns. The name of the funds offered in this plan does not in any way indicate their quality, future prospects or returns. The charges are guaranteed throughout the term of the policy unless specifically mentioned and subject to IRDAI approval. The value of the segregated fund reflects the value of the underlying investments. These investments are subject to market risks and change in fundamentals such as tax rates etc affecting the investment portfolio. The premium paid in unit linked life insurance policies are subject to investment risk associated with capital markets and the unit price of the units may go up or down based on the performance of segregated fund and factors influencing the capital market and the policyholder is responsible for his/her decisions. There is no guarantee or assurance of returns above the guaranteed returns from the segregated funds. GST and any other applicable taxes levied as per extant tax laws shall be deducted from the premium or from the allotted units as applicable. An extra premium may be charged as per our then existing underwriting guidelines for substandard lives. Linked Life insurance products are different from the traditional life insurance products and are subject to the risk factors. Past performance of the Unit Linked fund of the company is not necessarily indicative of the future performance of any of these Unit linked fund(s). For further details please refer to the policy contract. Tax benefits are subject to changes in the tax laws" For more details and clarification call your ABSLI Insurance Advisor or visit our website and see how we can help in making your dreams come true. Insurance is the subject matter of solicitation.
    ABSLI Child Future Assured Plan (UIN: 109N124V01) is a non-linked non-participating individual life insurance savings plan. All terms & conditions are guaranteed throughout the policy term. GST and any other applicable taxes will be added (extra) to your premium and levied as per extant tax laws. An extra premium may be charged as per our then existing underwriting guidelines for substandard lives, smokers or people having hazardous occupations etc. The insurance cover for the life insured (including minors) will commence on the policy issue date.
    ADV/4/24-25/146