The Union budget of 2020-2021 was received amidst much anticipation and brought a welcome change for many investors. As part of the new budget, the government introduced a new tax regime and has also repealed the Dividend Distribution Tax (DDT). Under the new tax regime, salaried individuals can enjoy the benefit of lower tax payments. However, they will have to forgo the tax saving investments and this includes the deductions and exemptions. This new move will essentially leave an investor with more cash in hand.
With the introduction of the new regime, you as a tax-payer can choose between the two options. Either continue with the current tax regime, or opt for the newly proposed tax regime. Well, the new regime gives you the opportunity to have more and a better control of your money. This sounds like a great plan, but it is absolutely essential to invest your money wisely and avoid using it for consumption purposes. Opt for investments as it will help you build a solid fund over the years.
If you are wondering about which are the best invest options in India, here are some reasons why saving plans from insurance companies make a good choice:
Supports long term investment goals – The savings plans offered by insurance companies allow you the opportunity to build your corpus over the years. They offer the opportunity of a long term investment and you are required to make regular premium payments. This way, you have to maintain payment discipline as your investment grows over time. After the completion of the term or at the time of maturity, the insurance company offers you a lump sum payout. This money can be used to support any long term investment goals such as the education of your children, home down payment, retirement and more.
Guaranteed returns – Opting for a savings plan with money-back returns from an insurance company lets you avail of guaranteed returns. Premium payments remain secure as they are not linked to the capital returns of the market. This essentially means that you do not have to be worried by the uncertainty within the economic market. You receive a total of your sum assured at the end of the policy term, as guaranteed by the insurance company.
Safety combined with wealth creation – An insurance product such as ULIP or Unit Linked Insurance Plans brings you the right mix of wealth creation opportunities with the safety of being insured. It essentially directs a part of your money towards building a life cover, while the other portion is invested in the stocks or bonds fund. It lets you reap the benefits of the stock market while you also rest assured with a life cover.
Security for the nominee – Money-savings plans from insurance companies offer life insurance covers. If the policy holder passes away under natural circumstances, the legal nominees are offered a cover of the total sum assured. Life is unpredictable and there is nothing better than securing the interest of your loved ones in the case of an unfortunate event.
The new regime indeed brings to you as an investor, the opportunity to make investments in products that align with your long term financial goal. You can make an online investment by carefully assessing your risk appetite and growth horizon to make more informed choices. It is advisable to seek help from a finance professional who can understand your profile and lead you to make the best choice. Understand all the variables attached to the new regime and use the freedom wisely.