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ELSS vs ULIP

ELSS vs ULIP

Sep 8, 2020

ELSS vs ULIP, Almost all investors who are contemplating an investment in market-linked securities must have thought about this puzzle at least once. And to search for the right answer they might have to go through volumes of literature available on financial websites, which might confuse people with their conflicting views. This article aims to provide detailed information on the difference between ELSS and ULIP. Let’s begin by understanding what ELSS and ULIP is.

What is ELSS?

ELSS mutual funds, also known as tax-saving mutual funds,are investment securities that offer dual benefits of capital generation and tax-saving benefits. These funds invest a majority of their corpus in equity and equity-related instruments.

What is ULIP?

Unit-Linked Insurance Plan (ULIP) is a combination of investment and insurance. Under the ULIP scheme, a part of your premium goes towards life cover insurance and the rest of it is assigned to a common pool of money, called a fund, similar to a mutual fund, which invests in equity or debt or a combination of both.

ULIP vs ELSS

The following table summaries ulip and elss difference:

ULIP ELSS
Objective These funds combine the elements of insurance and investment with tax-saving attributes ELSS funds are professionally managed funds that offer dual benefits of tax saving and wealth creation
Returns Returns on these investments may vary depending upon the combination of asset classes (equity, debt and hybrid) chosen by the investor Mutual fund investments are subject to market risk. However, an investor can expect returns between 12-14% in the long run
Lock-in period 5 years 3 years
Tax computation The invested amount offers tax deduction of up to Rs1.5 lakh u/s 80C. However, the gains are taxed LTCG (long-term capital gains) is taxed @10% over and above Rs1 lakh
Liquidity Low – funds are available after the lock-in period of 5 years High – funds are available after a lock-in period of 3 years
Charges applicable ULIPs have multiple complex charges such as premium allocation charges, policy administration charges, mortality charges, etc. Fund management charges and exit load are specified clearly and are easy to comprehend
Regulator ULIP plans are regulated by the Insurance Regulatory and Development Authority (IRDA) ELSS mutual funds are regulated by the Securities and Exchange Board of India (SEBI)
Loyalty additions Loyalty addition is offered under the ULIP policy for staying invested through the tenure. Loyalty addition bonus is given as per the T&Cs of the policy No such loyalty additions are applicable
Transparency The fund manager manages ULIP plans ELSS mutual funds offer full transparency as the investor can check the funds regularly
Risk ULIP plans have a certain degree of risk as the returns are dependent upon the performance of the fund. However, ULIP plans offer guaranteed life cover ELSS funds have a certain degree of risk as the returns are dependent upon the performance of the fund

Whether you decide to choose between ELSS or ULIP should entirely depend on your investment portfolio. Compare the two and make the right decision for your portfolio. Happy investing!

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Creating the perfect trading plan for mid-2020

Creating the perfect trading plan for mid-2020

Aug 18, 2020

The world has gone through a pretty bad phase in 2020. From the last month of 2019, China was observing disasters which peaked in 2020. Within a few months, the world caught up and look at the present situation. For the past few months, life has come to a halt. No transactions are taking place, people have been living in isolation, the mask has become a new part of daily life and the economy has crashed. Although countries like New Zealand have recovered, a long way awaits for most nations. It is safe to say that the first half of 2020 has been destroyed. Global prices surged an all-time low, redundancy was imposed in reputed agencies to tackle bad business operations and the Forex market is no exception.

The United States observed a significant rise in corona cases and it affected the price trend as well. As major currency pairs are paired with Dollar, major shifts occurred in the market. Volatility displayed erratic movement and investors lost funds in a few months.  Professionals are at a loss to decide what to do in this unprecedented contexts.  Among these adverse situations, the second half of 2020 is approaching as we speak. Forget what happened in the past and look towards the new goal. This post will describe some effective ways investors can come up with smart solutions to tackle future trends. As this year surprised the world, expect regular strategies may not work expectedly. Special schedules are needed to cope with changing times.

Stop getting confused

While creating the trading plan, the novice trader often become confused with their state. They don’t know the process by which they can take the trades with confidence. In order to survive as a trader, you should know how the option market really works. Stop chasing trades blindly as it will confuse you. Stick to the trading plan to become a great trader. Feel free to get professional resources or check here to learn from Saxo.

Don’t invest further

Many geniuses may persuade you to invest capital and take advantage of this existing phenomena. Sounds enticing, right? The volatilities are sporadic and it is a wonderful chance to make some big money. Many investors will feel compelled to advance careers by doing so but this is not the right way to go about it. Investing a single cent in the current condition proves those people lack common sense. The sector is already in a big muddle and you should withdraw funds regularly to stay safe if trading takes place. Forget the stop-loss for the time being and be skeptical. The future is still uncertain so don’t endanger the balance anymore.

Ditch the old plans

Prior techniques may not work successfully. We are not implying to develop a brand new formula but focusing on possibilities. Already, many expected events had occurred and been triggered by the latest global pandemic. US and China are in a war against each other and this has made the global economy more volatile. Before you decide to trade, ensure a backup plan is in motion to protect the fund in an emergency. Experts are not trading as they are uncertain of future volatilities. This is common when huge funds are managed alongside personal accounts. If leverage were used, stop for now. Observe the industry before taking a crucial step. Investors need to be more alert to make a profit.

Trade as little as possible

If necessary, take a long break from trading. Motivation is hopeful but excessive inspiration can distract from impending dangers. There are reports of second wave so cautious at all times. There is no certainty when this nightmare will end so proceed with precautions. As every order exposes balance to risks, it is highly advised to trade when it is deemed essential. Never imitate full-time traders as it is their profession. If you are a part-timer, focus on your primary source of income for the time being. Let this market stabilize and wait for the right opportunity.

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TAX SAVING INVESTMENT OPTIONS FOR SALARIED

May 16, 2020

Salaried individuals often end up paying too much tax. Astonishingly, a lot of these investors pay more than they are liable to since they are unaware of the Income Tax Act and various tax saving investment options available to them. Let’s look at some of the popular tax-saving investments offered to salaried individuals:

National Pension Scheme (NPS)

It is a retirement-focused scheme which matures when you turn 60 years old. Among various options under NPS, an investor can invest a maximum of up to 75% in equity funds and the balance in debt funds.

Tax saving mutual funds – ELSS

Equity Linked Saving Schemes, also known as ELSS funds, is the only tax saver mutual funds with the lock-in period of just 3 years. A lot of individuals invest in ELSS as they offer dual benefits of capital appreciation and tax deductions. You can save up to Rs.46,800 each year by investing in ELSS mutual funds.

Public Provident Fund (PPF)

Backed by the Government of India, PPF offers safety and attractive returns to its investors that are also fully exempted from tax. The scheme aims to muster small savings by providing an investment which is endowed with reasonable returns combined with income tax benefits to individuals.

Tax saving bank fixed deposit (FD)

Tax saving FDs are offered by banks and carry a fixed interest rate. The investment tenure of an FD is 5 years and it does not permit any partial withdrawal before the lock-in period ends.

Planning taxes isn’t rocket science. However, individuals should try and not take it lightly, either. After all, it is your hard-earned money which is withheld, an amount that could have been used for a better and more significant purpose. What’s more, if you succeed to invest your money wisely, you might be able to reap some profits from it too. Invest if possible, it could be better than paying taxes. Happy investing!

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What Kinds of Loans Are There?

What Kinds of Loans Are There?

Jan 11, 2020

It can generally go without saying that money is an important part of life. Without it, it becomes difficult to pay for the important things, such as various bills. In some cases, not having enough money means that a business needs to shut down, and that’s something that no business owner wants to have happen. With that being said, it is important for you to know that if you are struggling with money, there are options. For instance, you can consider taking out a loan to try and overcome the financial struggle that you are facing. First things first, you need to know about the different types of loans that are available.

When you choose to work with a reliable loan lender, such as Universal Finance in Australia, you can rest assured knowing that you will be able to get the money that you need. However, knowing the difference between the types of loans that there are is important, as it will help you choose the right one for your situation.

Business Loans

Running a business is expensive. From the cost of renting out a place for your business to paying all of the employees who are working for you, there are many reasons why you might find yourself in a financial problem. Thankfully, there are a few different kinds of business loans that you can choose from, depending on your situation. For instance, some loans are meant specifically for starting up a business, since this is often one of the most expensive parts of beginning your business. Other loans are short-term loans that will help you get over the problem at hand. There are also commercial loans, which function similarly to a general business loan.

Personal Loans

Living life can be incredibly expensive at times, and this can leave you struggling for enough money to make important purchases and pay off bills. If you find yourself in this type of situation, you might want to consider taking out a personal loan. There are several kinds of loans to choose from, depending on your needs. There are home loans and several types of mortgages you can take out. There are also vehicle financing options, if you find yourself needing a vehicle. There are also personal loans that can be used for whatever you need at the time.

Special Occasion Loans

There are also some types of loans that are meant for specific situations and occasions. For example, there are loans that are meant for people who have a bad credit history. This is important, as many banks won’t lend to people who have a poor credit score. Other types of loans, such as a low-doc loan, are designed to be as quick and efficient as possible, taking the immense amount of paperwork out of the equation. These are just some of the different types of loans that you will want to look for when you are searching for a good lender.

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Understanding the Differences between Debt Resolution and Debt Management and How They Affect Your Credit

Understanding the Differences between Debt Resolution and Debt Management and How They Affect Your Credit

Jan 8, 2020

If you are facing a growing mountain of debt and are unsure how you can possibly climb out from under it, it may be time to talk to a debt specialist who can help you understand your options. Debt management plans and debt resolution are two common choices that can help you manage payments and eliminate your debt. They function differently, however, so it is important to understand the basics of each. Keep reading to learn more.

Debt Management

If you can afford a high monthly payment and meet certain criteria, a debt management plan may be a good option for you. It consolidates your high-interest debts into a single payment, which is made to a third-party management company such as Rescue One Financial. During this type of program, you will be responsible for the full balances of any debts and your credit will reflect that a third party is being paid.

Debt Resolution

In cases where your debt has spiraled out of control and you aren’t able to even pay the interest that is accruing, you may want to look at other debt options. Debt resolution involves negotiating with creditors for lower balances. Those are then consolidated into a single lower payment which is made to a third party lender. While there are no guarantees, many people end up paying about 50 to 60 percent of their original balances through a resolution program.

Debt and Your Credit

There are no guarantees that a debt repayment plan will improve your credit score. Lenders generally look at long-term history, so the fact that you fell behind in the first place will remain visible to them for several years. However, it can stop collections and missed payments from appearing going forward. Take time to understand the factors that affect your credit score and work toward improving it if you have concerns.

No matter how you got into debt or how much you owe, know that there are ways out. Take steps toward repaying your balances and reclaiming your financial future today. Then, work to achieve healthy spending habits and a solid credit score to make borrowing easier in the future.

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