New Delhi: Dhanteras is considered to be an auspicious day for buying gold, silver and other valuables. The auspicious festival is a much-awaited one where people make large investments –be it buying a new vehicle, purchasing a house, buying a piece of land or even precious metals such as gold and silver, etc.
“In recent years, people have however started looking beyond just these traditional investments and started investing smartly in propositions that can give them guaranteed and tax-free returns over years. It is often said that diversification is the key to success in one’s investment journey,”.
Hence, he says, this Dhanteras, people can look beyond gold and real estate and consider choosing guaranteed return plans instead.
“Why, you ask? There are several reasons. First, these plans are completely risk-free investments. Second, they offer fixed returns that beat inflation. Third, they come with significant tax benefits,” Jain added.
Here’s decoding guaranteed return plans and why they make a great investment option this festive season.
What are Guaranteed Return Plans
These are long-term investment plans that offer a guaranteed return on investments over a period of time and are not affected by short-term market volatility. As the name suggests, the returns in these plans are fully-guaranteed, tax-free and higher than other traditional instruments like FD, PPF, NSCs, etc.
Moreover, the new-age plans now offer returns as high as 7-7.2% that help create long-term wealth. Since these plans come with a life insurance cover, the maturity value as well as the returns are completely tax-free. Besides, the policyholder can also claim tax benefits. The plans also come with a life insurance cover which provides the policyholder with tax benefits. Overall, from a perspective of wealth preservation and steady growth, the offering of guaranteed, tax-free maturity with returns of more than 7% solves the investment objectives of many customers.
The features make it a perfect festive season gift which not only helps with wealth creation but also protects against an unfortunate event.
Guaranteed Return Plans Versus Gold/Real Estate
Investment in gold and real estate is traditionally preferred during Dhanteras because these are considered to be “safe assets” that grow over time without much risk. However, even these assets are not completely immune to risk. Gold prices have come down over the last one year. Property prices also fell drastically after the banking crisis of the mid-2010s and have remained subdued since then. However, people still see these two assets as less risky compared to, say, equity and mutual funds.
Now, when it comes to guaranteed return plans, both these rules apply to them, albeit better. Unlike gold and real estate, guaranteed return plans are immune to market conditions and provide fixed returns no matter the kind of market upheavals we go through. Moreover, these plans provide higher returns than bank deposits. There are certain plans in the market, like the Max Smart Fixed Return Digital plan that offer returns as high as 7.2 per cent per annum. This compares to 5.7 per cent CAGR (in rupee terms) over the past 10 years for gold. The plan also comes with an array of benefits like – up to 0.5% extra maturity benefit for women investors. So, one can even purchase this plan for their spouse or even their child and enjoy a higher maturity value. This also makes for a perfect festive season gift this Diwali.
That’s not all. The cherry on the cake is that unlike gold or real estate, the returns are not subject to depreciation or market fluctuation, which further increases your actual realised returns. Also, as mentioned, the investment-insurance combination makes sure that while you have sound financial backing while you live, it also creates a robust safety net for your loved ones to protect them from life’s uncertainties.
Another reason why you should choose guaranteed return plans this Dhanteras is the flexibility of payments and tenure that these plans offer compared to a real estate investment, or even buying gold, where you have to pay a huge sum upfront. On one hand, you can choose a guaranteed return plan that locks the interest rate for as long as 45 years, on the other, you can choose plans that have a tenure of just five years. In terms of the amount that you can invest, you can either choose to go for the “single-pay” option – where you pay only one premium in your lifetime and get covered for five to ten years – or you can pay a smaller amount every year, half year, or even every month instead of a big lump sum payment upfront.
With a such wide array of benefits, guaranteed return plans are “guaranteed” to make a better choice this Dhanteras as compared to gold or real estate. With the flexibility they offer, they make sense for those who want to invest a huge sum, as well as those who want to make a token investment on the auspicious occasion. You end up not only with higher, tax-free returns but that too without any market risk.
