Switching amongst them is tax-free and there is no exit load either irrespective of holding period. There are different fund options representing different asset class within a single Ulip scheme. 1.5 lakh under section 80C of the IT act,” adds Reddy. “Under Section 10(10)D of the Income-tax Act, the maturity proceeds or sum assured of an insurance policy is tax-free, provided the sum assured is 10 times or more of the annual premium. Ulips, under the present tax laws, do carry certain advantage as well. ULIPs have various tax advantages (due to their long-term nature), and regulations have also made cost (expense ratio) of new-age ULIPs quite competitive,” informs Reddy. “ ULIPs typically have a longer-term orientation (5 year lock-in period) and help investors in achieving their medium to long term financial goals. The average 10-year Ulip return for large-caps has been about 6.3 per cent, while it is nearly 7.3 per cent for mid-cap Ulip funds over the same period.Įquity Mutual Fund: Here’s the 1% formula to get Rs 1 lakh/month salary pension and retire by 45Īnd, what about Ulip policyholders who wish to save with a long-term perspective. Ulip, however, is a combo of insurance and investment and, therefore, suit those who are unable to keep them separate. In addition to large-cap and mid-cap mutual fund schemes, there are equity funds of unit-linked insurance plans (Ulip) also available for an investor. The risk still exists as the markets may slide even further from current levels. But, these are point-to-point return as on Apwhile the rolling returns could be different from it.įor a long term investor, the market is also providing with an opportunity to buy at lower prices. However, the real picture, as it stands today is this – The average 10-year return of equity large-cap mutual fund category is about 7.5 per cent, while for the mid-cap MF category it is nearly 10 per cent. That is largely because several studies done in the past have shown that equities have the potential to generate high inflation-adjusted return among different asset classes such as real estate, gold and debt. Mutual Fund Investments: A majority of investors invest in equities to save for a long-term financial goal.
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