How to Catch Up with Your Wealth-creation Goals Using ULIPs

Setting up a financial goal is easy, but it is difficult to execute and achieve it. After a few years, you may have to work harder to accomplish your monetary objectives. However, by thinking wisely and opting for the appropriate investment instrument, you can grow your money intelligently during the long run and fulfill your financial aspirations. Putting your money smartly in a ULIP plan is a great option, as it can help in building your wealth. 

With ULIPs, you can follow strategies to manage your portfolio. A few tactics can safeguard your capital and the returns accumulated from investments. Besides this, ULIP enables you to maximize your investment returns by helping you capitalize on the opportunities created by the equity market.  

Opportunity to generate wealth with ULIPs

Top ULIP funds enable you to choose portfolio management strategies that can help you earn substantial returns in the equity market. You can pick from different techniques. Here, it all depends on the mode of premium payment that you select. ULIPs enable you to pay the premiums in monthly and yearly installments.

How to utilize the monthly premium payment option

You can fix the ratio of investment in equity or debt funds when planning to pay monthly premiums. This helps you reap the benefits of rupee-cost averaging for your investment in the capital (equity) market. ULIP performance is dependent on how well the equity market fares. With this premium payment alternative, you can switch from debt to equity fund when the market is doing well. Similarly, you can move your investments from equity to debt fund when the market is bearish.

Annual premium payment option – Things to remember

If you prefer paying the premium towards your policy annually, you can choose the methodical transfer strategy to invest effectively in an equity fund. Here, it is advisable to invest in both equity and debt funds.

For instance, if you invest a sum of INR 60,000 annually in your ULIP funds, you should allocate around INR 20,000 in debt funds and the balance INR 40,000 in a liquid fund. You can then transfer the sum from the liquid fund to the equity fund systematically every month.

Investing in a debt fund is advisable, as it can help you earn a steady income. Besides this, you can utilize the money from this fund to meet your financial goals or in case of any emergency. Based on your risk-bearing appetite and your financial goals, you can decide the ratio between equity and debt fund.

Advantages of wealth boosters in ULIP 

Besides the portfolio management strategies, ULIP provides the necessary support to increase your wealth. Loyalty addition is one such wealth booster that most of the top ULIPs offer. However, to avail of the loyalty addition benefits, you must:

  • Pay your premiums on time
  • Invest regularly
  • Stay invested with a long-term perspective of ten to 15 years

The insurer will deposit additional units in your ULIP account as a loyalty addition. It is a reward offered by the insurer for your continuous use of service.

Ideal time-frame for ULIP investment 

There is no such perfect tenure to stay invested in ULIP, but it is advisable to continue with your policy for a minimum of ten-15 years to earn maximum returns. If you are young and are planning to invest, it would be wise to consider a 30-year duration. Starting at an early age has various benefits, like:

  • ULIP performance grows with time
  • Possibility to earn high returns from the equity market
  • Facility of partial withdrawal, which ensures that you have funds to meet crucial life goals 

Investing in ULIP is a good option, but the returns are subject to market risks. Therefore, it is essential to closely monitor the market and reap the benefits of switching funds to earn lucrative returns on your investment.