The youth can drive a majority of the population in India. According to a report, over 440 million millennials in India form 34% of our population and 46% of our workforce. Since the largest population can be millennials in India, our economy is driven by its products and services. To match the needs of every millennial, the investment sector has introduced various tools for them. Amongst several investment tools, such as Equity Linked Savings Scheme (ELSS), Mutual Fund (MF), and so on, a Unit Linked Insurance Plan (ULIP) has attracted many millennials.
Identify your goals
As a young adult, you might aim to fulfill your goals, such as starting a new business, traveling, buying a new car, and so on, before you grow older. Since your list of goals can be long, you should first identify your priority. For instance, if you aim to start a new business venture, you should keep it on the top and take action accordingly. Based on your financial goals, you should invest your money in a ULIP policy with long-term tenure.
Consider your risk appetite.
The risk appetite of an investor can be different. While many of you might have a high-risk appetite, the rest of you might prefer low risk. Typically, you might have a high-risk taking capacity at a young age due to fewer financial responsibilities. However, your risk tolerance level can significantly reduce as you grow old due to higher financial responsibilities. For instance, when you get married, you might have to bear your spouse and children’s financial duties.
Select the right fund
A ULIP policy is a flexible investment option that can allow you to choose between ULIP funds, such as equity funds and debt funds, based on your risk appetite and investment goals. The type of fund that you select can have a direct impact on your generated . For instance, if you pick between equity funds, you can receive relatively high returns based on market performance and vice versa. While equity funds should be selected at a young age, you should opt for debt funds when you near the crucial milestones, such as marriage, parenthood, and so on.
Switch between ULIP funds
Although a ULIP policy is a market-linked product, it can allow you to protect your invested capital from market fluctuations. When you invest in a ULIP policy, your insurer can allow you to choose the switching feature. With a switching feature, you can secure your money and move your assets from equity funds to debt funds based on the current market scenario. For instance, you should opt for debt funds today since the market is down due to the coronavirus outbreak. When the market rises, you can safely move your assets to to earn more returns.
Analyze the market scenario
The performance of your ULIP fund can depend on the market scenario. After a ULIP investment, you should analyze the market condition to understand which fund type works best for you. Moreover, it can help you to know the expected returns from the selected funds. If you stay updated with the market’s current trends and regularly review the ULIP fund performance, you can make the most of a ULIP investment.
To conclude, the millennial can make the best use of a ULIP policy due to their aggressive risk appetite. Since time can be one of the crucial factors in their hands, they can build a large corpus with a ULIP policy to let them meet their life goals with ease. Moreover, it would help if you used a to determine the premium and compare various ULIP options before parking your funds under a ULIP policy.