Every individual strives to have a savings or investment plan to set aside money for the future. But only seldom do they find an investment plan that allows them to reach their desired financial goals. A major reason for this failure to find an investment model that provides expected high returns is the lack of knowledge on plans. To solve this dilemma, you must know what each type of investment holds for the investors. The major category of distinction of an investment plan is its market dependency. Read on to go through different sub-categories under that category, with a clear definition of different investment plans.
Market Independent Investments
Most market-independent investments are conventional modes of savings. Due to their limited competency in providing a higher return, you can even call them savings plans. But a great benefit of market independence is secured capital. Even with limited growth over the years, your capital funds are mostly secure and sometimes even guaranteed. Given below are some of the market-independent investments you should know that can achieve great profits compared to others.
Gold is the OG of investments among the elders of Indian families. Even if their prices fluctuate, it increases because it is a precious metal. This is a major reason why people prefer gold rather than any other precious metal or investment, for that matter. Even the reserves of every nation are in gold, which gives a slight idea of its importance.
Another prominent investment mode, especially for future generations, is the purchase of assets. These can be land, houses, companies, or any property. Due to inflation, the value of all these assets tends to increase over the years.
Savings plans and fixed deposits are the most common and popular banking instruments. Several people use these to invest excess money or money saved from income. The benefit of banking instruments is that they provide assured interest rates along with capital protection. These interest rates can further increase depending on the duration of the investment.
Insurance is a savings plan that life coverage and high returns. The returns can be in the form of maturity benefit for the nominees or survival benefit at term-end for the insured person. A great benefit of investing in insurance is that they are tax savings plans. The premium you pay for insurance has tax deductions in income tax returns filling. Sometimes, these plans also provide interest rates at maturity, attracting income tax. But the final amount that you get at maturity or term-end, which is the repayment of the total invested money, is completely tax-free. Please note that tax benefits are in accordance with the current tax laws that are subject to change from time to time.
Market Dependent Investments
Market-dependent investment is an investment plans that puts money into a financial security instrument. The returns of these investment plans depend upon the invested product’s performance. Even if there are high risks in market-dependent investments, the benefits are much more. Rarely, but sometimes, it can even multiply your investment several times. But always purchase such market-dependent products after thoroughly understanding the risks and liabilities. Given below are some of the sought-after market-dependent investment plans.
Stock market investment is the direct equity purchase of a share in a company. There are several risks in investment, but stock market investments can provide huge returns.
Investment securities are performance-based equity such as bonds, mutual funds, or debts. While all these modes have different functioning, they all have a common purpose. The major purpose of each investment security is to raise funds from the public or investors through selling ownership, stake, or debt of the company.
Unit-Linked Investment Plan is a term plan, but with the added benefit of investment in bonds. The major benefit of the combination is that it can provide a much higher interest rate than conventional insurance.
Knowing these definitions, you can clearly understand how each investment plan can provide the best results. You must also have a slight realization of how insurance can combine the benefits of investment and life cover. And with the help of their tax savings plans and ULIP plans, you can further increase your returns from a single plan.