What makes you richer? ULIPs or Mutual Funds?
Both ULIPs and Mutual Funds help you maximize your monetary prospects. But we tell you which is better!
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ULIPs (Unit Linked Insurance Plans) and MFs (Mutual Funds) are some of the best financial instruments that help you earn well and maximize your wealth prospects within a stipulated time. When it comes to diversifying your wealth, you should considering investing in both.
However, if you have to choose between the two investment options, then you should refer to the following comparison in order to make the best choice.
- Longevity
- ULIP is a long-term investment product with a term of ten years and more than that.
- Mutual Fund is a relatively short-term product with a timeline of three to five years.
- Mutual Fund is a relatively short-term product with a timeline of three to five years.
- Expenses
- Expenses incurred in ULIPs are bigger and are decided by the respective insurance company.
- Expenses incurred in Mutual Funds are lesser as they are set in pre-established investment system.
- Expenses incurred in Mutual Funds are lesser as they are set in pre-established investment system.
- Tax Benefit - ULIPs give better advantages as tax benefits qualified under Section 80C of Indian Income Tax Act help saving tax worth Rs. 10,000.
- Under Mutual Funds, Equity linked tax saving scheme (ELSS) is the only investment option that provides the tax benefits.
- Return on Investment (ROI)
- In ULIP investments, charges get spread over a prolonged period of time and thus, the return on investment is good yet deferred.
- In case of a Mutual Fund, return on investment is quicker and higher than expected, depending on the skill of the fund manager.
- In case of a Mutual Fund, return on investment is quicker and higher than expected, depending on the skill of the fund manager.
- Net asset value (NAV)
- In ULIPs, the insurance company allots units to the ULIP investors and the NAV is calculated and declared on a daily basis.
- In Mutual Fund, the respective company allots units to the Mutual Fund investors and though the NAV, the current value of the investment is calculated on a daily basis.
- In Mutual Fund, the respective company allots units to the Mutual Fund investors and though the NAV, the current value of the investment is calculated on a daily basis.
Conclusion
Thus, from the investment point of view, Mutual Fund is definitely a better option. However, if you need insurance cover along with investments for a longer period of time, go for ULIPs.
Thus, from the investment point of view, Mutual Fund is definitely a better option. However, if you need insurance cover along with investments for a longer period of time, go for ULIPs.
2 comments:
I feel that mutual funds give better returns because of the following reasons:
1. In MF, investments can be kept for a longer period i.e.10 or 15 years and then it becomes comparable(& of course more profitable than)with ULIPs.
2.AMCs concentrate purely on wealth creation.So they definitely give more appreciation. Whereas insurance companies are also required to look after `Claims` against policies. As such wealth creation cannot be their only motive.
3. However the priority for any investor has to be `Insurance`First. But after providing for insurance cover, all further investments must be made in Mutual Funds and preferably through SIPs.
The other factors have already been covered in the article.
Hi Gaurav,
For life Insurance buy pure Term Insurance and for good returns invest in MFs and equity.
Do not mix insurance and investment.
ULIP is bad product and makes white collar guys more richer. Look at the charges, they rip you apart.
Cheers
Atul
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