Monday, March 26, 2018

ULIP vs Mutual Funds - A Battle and Confusion for every Investor.

Hello Investors. Shah Stocks once again for awareness of investors is pointing out which will the best suitable for you as an investor. This Information is for knowledge purpose only. Views are welcomed. ULIP vs MUTUAL FUNDS. So which is better. Simple answer is it depends on the Investors profile, its risk taking capacity and also the Time Horizon. But SHAH STOCKS will help you analyze which is the best thing suitable to you.

MAJOR CHARACTERISTICS
and Difference between the two are:

1. Tax Exemption : Investment in ULIP comes under Section 80C, which comes under Tax Benefit, while in Mutual Funds; only ELSS
(Equity Linked Savings Scheme) funds have this benefit. Normally its seen that Investments done in ELSS funds gives returns lesser than Regular Mutual Funds by 2% annually. ULIP wins.

2. Insurance Cover: ULIP gives an investor a Risk cover while investment in Mutual Funds doesnt have any such stuff. ULIP wins.

3. Lock In Period: One can exit from Mutual Funds even within a year, subject to 1% deduction charges, whereas ULIP is for longer period and so Lock-in of 5 years is compulsory. ELSS funds have lockin period of 3 years. (Both, mutual Fund as well as ULIP gives best returns over Long Term). For short term, Mutual Funds win.

4. Transfer from Equity and Debt: Well known ULIP gives an investor the provision to switch from Equity fund to Debt fund which helps the investors to manage their money smartly using (Systematic Transfer Plan), which is again chargefree. People are misguided that its chargeable. ULIP wins.

5. Charges: Fund Management charges are higher in ULIP than Mutual Funds but surely its worth it if considered for longer term. Earlier, this charges were very high but then, IRDA, the regulatory board has reduced them significantly, though its a little higher than Mutual Funds. As finally money is gonna be invested in Stock Markets only. Mutual Fund wins.

6. LTCG Tax: Earlier there was no Capital Gain Tax in Long Term investments, but after this year's budget, whole mathematics has changed. Any capital gain in Equities and Mutual Funds (combined) over 1 lakh are now under LTCG Long Term Capital Gain Tax, 10% of the profit has to be paid to govt, No Capital Gain Tax in ULIP. All the returns are Tax Free. ULIP wins.


These were some of the Key Factors one should know before making investment decision. 

MAIN POINT comes here is misguidance by people who aren't knowledgeable enough. You must have heard people saying,
"We have to keep Investment and Life Insurance seperate only".
ITS NOT AT ALL TRUE.
TRUST ME, its not always beneficial and I have seen many people making wrong decisions by keeping this misconception (myth) in mind.
ULIP is a great Product and one can surely think of Investing in it.

REASONS one can Invest in ULIP and Mutual Funds right now: Market is discounted almost 10% from peak of 36000.

One can get the Tax Benefit before 31st March.

For personalized recommendations, which will be the best investment decision for a particular investor, and where to allocate funds; one can contact me for the best plans available. As a Financial Advisor, I will be giving the best possible combinations with all the factors included. A personalized look over the Investor and his needs will only help giving the best decision for the same. Either call or Whatsapp me on +91-8849380276.