What is the meaning of long-term investments?

Best Long-Term Investment Plans in India 2024

• ULIPs:

  A Unit-Linked Insurance Plan (ULIP) is one of the best long-term investment plans that offers the dual benefit of investment to fulfil your long-term goals and a life cover to financially secure your loved ones in case of an unfortunate event. The returns from ULIPs are market-linked. They can help you earn better returns on your investments. ULIPs help you meet long-term financial goals such as buying a house, your child’s education, or marriage, starting a new venture and more.

• Stocks:

  Stocks can be considered as a long-term investment option that can help you achieve your financial goals. They provide you with a fractional ownership in a company. This ownership comes with the potential for gains through increased stock price and dividends. While stocks are known for their potentially higher returns, they also come with market-related risks. Stocks are suitable for experienced investors or those with a high-risk appetite.

• Public Provident Fund:

  The Public Provident Fund (PPF) is a government-backed savings scheme. It is a long-term investment that comes with a lock-in period of 15 years. On maturity, the account can be extended for an additional five years with the option to make further deposits.
  PPF offers a fixed rate of return, decided by the government. It helps you save for long-term goals like retirement, starting a new venture, and more.

• Fixed Deposits:

  Fixed deposits (FDs) are a short or long-term investment offered by banks and non-banking finance organisations (NBFCs). You can deposit a lump sum amount for a fixed tenure of your choice and earn interest on the same. FDs are risk-free investments that offer a guaranteed rate of return and are not affected by market volatility.

• National Pension Scheme (NPS):

  NPS is one of the best long-term investments that is backed by the government of India. It is a voluntary retirement savings scheme that allows you to save for your retirement.
  You can invest between 18-65 years of age and continue investing till you are 75 years old. NPS offers tax* deduction of up to ₹ 50,000 per annum under Section 80CCD(1B) which is over and above the limit of ₹ 1.5 lakh offered by Section 80CCE. While investing, you can choose to allocate your money in four asset classes – equity, government bonds, corporate debt and alternative investment funds (AIFs).

• Mutual funds:

  Mutual funds are managed by fund houses or Asset Management Companies (AMCs). They invest money collected from multiple investors in different instruments, such as stocks, bonds, commercial papers, certificates of deposits and more. Mutual funds carry risks depending on the type of instrument your money is invested in.

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How to plan for long-term investment?

• Power of compounding:

  The more time you give your investments to grow, the higher the returns will be. For instance, a small amount of ₹ 500/- invested monthly at a 15% rate can grow to ₹ 16.42 lakh after 25 years.

• Security from short-term volatility:

  It is difficult to predict the market conditions correctly, hence in order to get maximum benefits, it is good to invest for the long term. By staying invested for a longer duration, you can overcome short-term volatility.

• Goal-centric planning:

  As you are investing for the long-term, you can use it to plan for significant milestones like buying a house, a child’s education, retirement, and more.

• Convenience:

  You don’t need to worry about the investment due date. You just need to send a one-time instruction to your bank to facilitate Auto-debit from the bank account or credit/debit card. In addition, you can buy long-term investment plans online with a few clicks^* of the mouse anytime.

• Tax benefits^~:

  Long-term investment plans make it easy to do tax^~ planning every year. All you need to do is buy a long-term investment plan and invest regularly to avail tax benefits^~ as per the Income Tax Act, 1961. It means, you not only grow your money but also save tax^~.

• Lesser effect of market fluctuations:

  Small market fluctuations do not impact long-term investment plans as much as they affect short-term investment plans. Hence, you can stay worry-free with long-term investments.

• More time to try different funds for maximum returns:

  Long-term investments give you enough time and opportunity to switch between different funds and make up for any non-performing fund.

When you buy ULIPs as a long-term investment option, you can enjoy all the above-listed benefits and much more.

• Flexible investment options:

  ULIPs give you the flexibility to invest in different fund options— equity, debt, and balanced funds— as per your risk appetite. They also let you switch between funds as per the market condition. Staying invested for a longer duration with a switching option can help you reap maximum benefits.

• Goal-oriented planning:

  As there is a minimum lock-in period of 5 years, you can use ULIPs to fund your long-term goals, like buying a house, funding your child’s higher education, retirement, etc.

• Loyalty additions^{^}:

  By staying invested for a longer duration, you can earn loyalty additions^{^} which grow your money without any further investment.

• Partial withdrawal^$:

  Starting from the sixth year, you can withdraw up to 20% of your investments in ULIPs provided monies are not in the Discontinued Policy Fund to meet any future needs and let the remaining investment grow.

• Life cover`:

  Besides growing your wealth, ULIPs are useful in securing your family’s future in your absence. In the case of your sudden demise, your nominee will get a lump sum amount to secure their future.

• Simply visit the ICICI Prudential Life website
• Visit the ICICI Prudential SmartKid Plan page
• Click on Buy Now
• Click on Create Your Plan, enter the details, and click on submit

When to choose long-term investment above short-term investment?