A unit linked insurance plan (ULIP) is preferred by people for many reasons. And one such reason is that these plans come with the benefit of offering major returns. If you play your cards right, you can maximize those returns even further. On that note, here are a few tips on how you can increase your returns within ten years with your ULIP investment.
Determine the financial goals you have
As any financial advisor will suggest, always invest in Kotak e-Invest Plan with a goal in mind. This will not only help you be more disciplined financially but also invest consistently in the plan. You will have a better idea of which funds to choose when you know how closer you are to your goal.
For example, if you plan to buy a house in ten years, you will need a sizable sum of money for that. If you get a ten-year ULIP and start saving from now in the right way, you will be able to fulfill your dream in ten years.
Choose the right fund allocation
Though there are several fund options when you invest in Kotak e-Invest Plan, the most important choice is between equity funds and debt funds. The way you allocate the funds will have a major role to play in the returns you earn. Of course, your fund manager will help you with this.
If you are starting to invest as you get a job, you have a bigger risk appetite and go for more equity funds than debt funds. As you get older and have dependents to take care of, lean more towards debt funds. Or, you can keep a balance between the two throughout the tenure and earn a good amount as returns at the time of maturity.
The power of compounding for long-term benefits
Keep in mind that you should stay invested in the plan even when the lock-in period is over. Do not withdraw the funds after five years and then get another ULIP for the next five years. Your returns will be lower in this case because you will not be able to benefit from compounding the interest.
When you remain invested for the entire duration of ten years, the money you invested initially will get reinvested. It will make the principal amount grow consistently for each year. Therefore, you will get to maximize your returns when you withdraw completely after ten years.
Keep an eye out on market conditions
You need to make the most of the fund switching option that ULIPs offer. Switch between equity and debt funds as per the market conditions. All you need is a basic understanding of the market volatility to switch fund allocation. Remember that you have the opportunity to switch funds as many times as you want in a year.
The bottom line
The tips mentioned above offer a general idea about how you can maximize those returns. However, if you want more specific suggestions, talk to your bank or financial advisor for more ideas.
Click here to know more about Kotak Life ULIP Plan: https://www.kotaklife.com/online-plans/ulip-plan