Monthly Investment Plan: Should you consider it or not?

As expenses and inflation rates increase, there is a need for sustainable savings and investment plans. It’s reasonable to be confused with so many different savings and investing schemes available around us. As an investor, you must get the appropriate savings plan because it is critical for your long-term and short-term financial objectives. You can use an investment calculator to find out the amount to be saved now for future returns. 

However, there are several aspects to consider when determining the optimal savings and investing strategy to match your risk tolerance, and in this article, we will be exploring the same. 

What is a monthly investment plan?

A Monthly Investment Plan is a sort of investment that requires you to invest a set amount of money each month. This investment generates monthly returns that are interest or the dividend received. 

How Do Monthly Investment Plans Work?

In essence, a Monthly Investment Plan or Monthly Income Plan provides you with a consistent alternative source of income at a lower risk. Just like with any other life insurance policy, you are obliged to pay the premium on a regular basis for the duration of the duration of your chosen premium payment period. After you’ve paid all of your premiums, you’ll start receiving monthly returns.

Why to Consider a Monthly Investment Plan?

  1. It helps you achieve consistent returns: A monthly investing plan does not guarantee specific returns. However, the best monthly investing plan ensures that the returns are constant and not too variable. To know how much you would get from your investment, you can use an investment calculator and input the variable. 
  2. Suitable for the ‘Safe Investor’: Not everybody wants to take risks with their investment, and Monthly investment plans are meant for risk-averse investors. These plans offer relatively low yet guaranteed profits.
  3. Debt-focused: Monthly Investment Plans’ investments are heavily debt-financed. The best monthly investment plans allocate 70-80% of your funds to government-backed debt instruments.
  4. Flexibility in choosing the entry and exit option: There are no admission restrictions or exit ones. You can enter at any time. In addition, if you decide to cancel the plan, you will only be charged 1%.

Now, the following two scenarios may arise. Let’s look at them one by one.

  1. If you survive the policy term: If you survive until your plan matures, you will be paid the maturity value plus any earned bonuses. The policy will expire after the maturity benefits have been paid.
  2. If you die during the term: If you do not survive the term, the nominee will get the death benefit, as well as any collected bonuses up to the time of death.

What to Consider When Choosing a Monthly Investment Plan

Investing monthly in appropriate saving plans pays off in the long run. Doing so will provide you with a financial safety net in the future while also training you to be financially responsible. As previously said, there are numerous savings plans available, but your decision should be based on specific criteria. The following are some of the most significant elements to consider when choosing a monthly savings plan.

List down your aim: Before even considering your investment options and using an Investment calculator, you should compile a list of your short-term financial objectives. Keeping a list will help you define your goals more clearly, allowing you to make more informed decisions about your monthly savings and investment plans. Ask yourself these questions.

1) Why are you investing, and for what?

2) What kind of risks are you willing to take?

Take your time answering these questions to understand your financial goals, which will further help you select the best savings plan for your requirements.

  1. Strike a balance between risk and reward: For this, ask yourself what kinds of risks you are willing to accept. You must answer honestly, and your response should address all aspects of the rationale for your investment venture. When responding, make a point of outlining the risks and rewards, as well as the pros and negatives. Examine the results and assess the benefits and downsides. The investment will be unmanageable if the risks are too high. Select a life insurance policy that balances risks and rewards, and then invest in a savings plan that capitalizes on and maintains that balance.
  2. Liquidity: Liquidity refers to the ease with which an asset or security can be converted into immediate cash while maintaining its market price. Simply put, liquidity refers to how quickly an asset may be bought or sold in the market at a price that reflects its intrinsic value.

As we all know, cash is the most liquid asset because it can be easily transformed into other assets. That is why your savings plans should have enough liquidity to cover your needs. Consider your liquidity needs when selecting the optimal savings plan.

  1. Check the Performance of the Savings Plan: Review your investing portfolio as often as possible. Make sure you’re up to date on any changes that have affected your plan. Discuss the changes with your investor to determine whether they are helpful to you and your goals or not. 

So, we are saying,

Saving and investment programmes can be confusing since they involve a variety of terms and conditions. As a result, only buy the best savings plan if you are confident that it will match your needs and expectations. Before you invest your money, clear any doubts you may have. Ask all of the pertinent questions about the terms and conditions of your plan.Talk to your investor about the various types of monthly investment plans available to you. Also, research and review the life insurance firm to determine its legitimacy and dependability. Do your own research; question friends, family, and relatives about their preferred plans, and seek advice. You should also look into the history and reviews of each savings plan accessible.

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