5 Things to consider while buying the best investment plan

Do you want to grow your wealth in the future? By taking the right steps towards the investment, you will be able to not only create wealth but also safeguard your existing savings against contingencies.

The best investment plan is the one that teaches you the virtue of saving money and investing it in the right avenues to make your money work hard for you. But first you need to realize that not everyone is born in privilege. So, you need to use strategic planning in order to choose the right financial instruments that will make up the best investment plan. In this article, we will learn everything there is to learn about an investment plan and how you can get started with one.

Why should you invest?

If you are wondering what is investment and why do you need it, then you must understand that investment and inflation go hand in hand. It is the only method to grow your money and secure your future. By making investments, you can start saving and accumulate funds for the rainy day. Additionally, when you have an investment plan, it inculcates a habit of setting aside a certain amount regularly, thereby teaching you financial discipline in the long run.

Understanding Inflation and the Importance of Investing

Simply put, inflation is the surge in price of things and services over a period of time. It diminishes the value of your money and also decreases your purchasing power. When inflation rises, you are able to buy fewer things with same amount of money. While you cannot control inflation, you can control how you spend your money. If you want to stay ahead of rising prices, you need to start setting aside more money so that you are able to buy things in the future with the funds you have today. But for your money to grow, you need to have a financial strategy that will earn returns. Therefore, investment is the only way for you to tackle inflation in the future.

If you are looking to invest in the best investment plan, then here are some things you need to keep in mind.

1. Define Your Goals

What your financial goal may be in your 20s will not be the same when you have reached your 40s. Therefore, you need to define your goals as per various life stages. So, ask yourself questions such as, do I need money for retirement or my child’s education abroad? Do I need to raise funds for a real estate down payment or for an expensive car? Do I want to take a domestic holiday with family or a vacation abroad? Whatever goals you choose, your financial strategy should be able to fulfil those for you at the right time. For instance, for short-term goals, you can choose from fixed deposits, PPF, etc. But for long term goals, plans like ULIP work best.

2. Evaluate Your Risk Appetite

Many people falsely believe that the best investment plan requires you to make riskier investments. However, that is not true. An investment plan should be customizable to the fluctuating market conditions and suit your risk preference. Financial advisors recommend that it is better to opt for high-risk instruments for long-term investment instruments. On the contrary, short-term investments should be low risk.

3. Withdrawal Feature

Sometimes the money you invest in a certain investment plan is the only money you have. So, what happens when you are faced with a medical emergency or an immediate cash requirement? Would you always have to depend on expensive personal loans to pay for your needs right now? A good investment strategy is to adds instruments that allow you to make partial withdrawals when you are in need of funds. Therefore, it is best to find products that come with 5-year lock-in period.

5 Things to consider while buying the best investment plan

4. Death Benefits

If you are the sole breadwinner of your family, imagine what will happen to them if something happens to you. Who will pay your ongoing EMIs, or your child’s school fees? If these concerns bother you, then you need to add a term insurance in your investment portfolio. The best investment plan will cover all your financial risks with a suitable instrument so that you don’t have to worry about these eventualities.

5. Check the Insurer’s Reputation

Don’t just trust an insurance provider on their face value. Instead, do a thorough due diligence of their reputation by checking online reviews and claim settlement ratio. Only invest in an insurer that has the highest claim settlement ratio. A financially secure and reputed company will not only give you your dues in a timely manner but also enhance your wealth over a period of time by making the right investment decisions for you.

Keep all these points in mind when you are looking to invest in the best investment plan.