Considering the current economic condition, with the rise in the rate of inflation, the purchasing power of money is going down. Higher returns can help you counter inflation and create enough wealth to fulfil your financial goals. This highlights the importance of investing which helps you increase the value of your money over time. Read on to understand why investing should be a crucial part of your financial planning, and how you can pick the right tools for investments.
4 reasons why investing is important
- Grow your money - Investment products can help you grow your wealth through dividends, interest, or bonuses. By growing your wealth, you can achieve your financial goals like buying a house, securing you child’s education and similar important goals.
- Secure your retirement - After your employment income stops, you need enough financial resources to meet your living costs during your retirement. Investing in different money-making instruments throughout your work life gives your money long enough to grow. The returns can provide a steady source of income during your retired life.
- Tackle inflation - Because of inflation, the price of items that cost ₹ 100 in 1979 became more than ₹ 2,192 by 2020. This loss in the purchasing power of money highlights the importance of investing. If you don't invest your money today, inflation will gradually reduce its value. You can insure your savings against factors like inflation by investing in unit-linked life insurance plans (ULIPs) like ICICI Pru Signature*. This not only provides returns by tackling inflation, it also safeguards your family against financial challenges in case of an unfortunate event.
How should you plan your investments?
Choose investments according to your risk appetite
Before investing, importance must be given to your capacity to bear market fluctuations. ULIPs allow you to choose between various funds. This enables you to spread your investments across equities and debt funds as per your risk appetite.
Review your investments regularly
The capital market changes constantly, and it may suffer temporary slowdowns. Hence, you should review your investments regularly to modify the same accordingly. ICICI Pru Signature gives you the flexibility to switch your funds between different fund types free of charge. Using this feature, you can switch to less-risky debt instruments when the market is volatile. Once the market stabilises, you can switch again to equity based funds and maximize your gains.
Check for investments offering tax-free returns
While the money you put into your investment plans may help you save tax, sometimes the returns on these plans may be taxable. Select financial instruments like ULIPs that offer tax-free returns under Section 10(10D) to ensure your investments are cost-effective.
In order to grow you wealth while protecting it from inflation, you should invest in financial instruments like ULIPs that offer opportunities for attractive returns. Consider investing in ICICI Pru Signature, and generate the funds for your life goals, while enjoying a large insurance cover1 to financially secure your family’s future.
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* ICICI Pru Signature is a Unit-Linked Insurance Policy (ULIP) and is different from traditional products. Investments in ULIPs are subject to investment risks. The past performance of other funds of the Company is not necessarily indicative of the future performance of these funds.
1. Life cover is the benefit payable on death of the life assured. Life cover for 99 years is available under the ‘Whole Life Benefit’ option.