Mutual funds and Insurance plans

Why people prefer investing in mutual funds rather than putting their money in different insurance plans

Always prefer Multiple mutual funds and single Term/Whole life insurance plan along with Health Insurance plan


In today’s world, people know how to earn money, but most of them do not know how to invest it properly to fulfill their financial goals. Everybody needs to set some financial goals and save some money for their future. If you set a 10-year financial challenge and invest your money properly, it could make a great difference to your future. However, most of us do not know where to invest our hard-earned money to get good returns out of that. One of the great advantages of Indian investors is that they can find many good investment options to choose from. Mutual Funds are the most popular option among them, which help you to create a solid financial plan to fulfill all your financial goals. In this article, let’s check how mutual funds work for the investors.

Numerous investment choices

Selection of the right investment plan shall be a tough affair for an individual as the market is filled with numerous choices. You can find many investment avenues in the market to meet your financial goals such as insurance, mutual fund, bank fixed deposit, public provident fund, National Pension system, gold, and real estate. With a wide range of financial products, you may find it difficult to choose the right one for investment. The decision of where to invest your money is certainly your personal choice. The most important thing that you consider before investing is your financial goals. If you are looking for a great investment option to build your wealth, then mutual funds can be a great suggestion for you.

Key benefits and advantages of Mutual funds

As a beginner, you may be interested to know how mutual funds can be a good choice to fulfill your investment goals. The most important feature of mutual funds is its simplicity. The concept of the mutual fund is easy to understand. It is an investment plan that pools the money of various investors and invests the pooled money in bonds, stocks, etc. Another great advantage of this investment option is that mutual funds are easy to buy. Besides, these investment plans come in different types and categories. Affordability is another great attraction of mutual fund investment. Since it has professionals to manage the funds, investors can save their time and energy for doing research and analysis to find suitable investments to include in their portfolio. For many reasons, mutual funds are a smart investment option for people who aim to increase their wealth and achieve their financial goals.

Mutual fund Vs. Insurance

For many people, insurance is more appealing than other investment options. The main reason is that investing in life insurance helps them to avail a lump sum either upon death or maturity. It is considered as one of the most secured investment options in India. The products offered by mutual fund and insurance companies are entirely different. Insurance companies offer insurance coverage and some growth in capital, whereas mutual fund companies offer investment-based products. However, people tend to compare both the investment choices as many insurance companies advertise and claim that their products can earn high returns. In reality, the insurance companies that offer both insurance coverage and high return on capital usually charge huge management fees and heavy commissions. In direct mutual funds, there is no need to pay any commission, and the investors need to pay only a nominal fee for fund management.
A notable disadvantage of insurance is that if you stop paying a premium or your policy lapses, the benefits of your policy may get reduced. You need to pay the penalty if you do not pay the insurance premium on time. However, there are no such complications in mutual funds. You will not be penalized, or your account does not become inactive if you miss out a SIP installment or two. Your SIP becomes inactive only if you skip out three consecutive SIP installments. People prefer to invest in Mutual Funds as it does not impose any penalty for stopping SIPs. The fund companies do not charge any penalty for the redemption, and you can withdraw funds from SIP anytime without paying a single penny as a penalty.

Market-linked investments ideal to maximize your returns

Both mutual funds and insurance fulfill different financial needs of investors. Mutual funds are market-linked investments and an ideal tool to increase your wealth. As a protection scheme, life insurance can secure your family financially, even in your absence. If you are looking for a rewarding investment choice to meet your long-term financial goals like buying a property, education of children, etc., then you must consider mutual funds. Life insurance plan cannot promise the same return as a mutual fund scheme. You can maximize your return by investing in mutual funds as it provides the option of diversification of funds. For people who are keen to get their life insured can go for a term life insurance. They can also consider buying health insurance in addition to the term life insurance to get coverage against medical expenses. For investing purposes, you can consider other options like fixed deposits, mutual funds, etc.

The advantage of Systematic Withdrawal Plan

Mutual Fund investment can be a benefit for many retirees because it allows them to customize the cash flow of their investment as they desired. The Systematic Withdrawal Plan (SWP) of mutual fund investment allows an investor to get a fixed amount on a preset date on every month, quarterly, semi-annually, or annually based on his or her needs. This helps an investor to get a regular income on the money he invested in this scheme. An investor in a mutual fund scheme can activate the SWP option whenever he has the requirement for regular cash flows with a few simple steps. Even he can activate it while making his first investment. For that, what all he needs to do is to fill out an instruction form with the AMC that contains his folio number, withdrawal frequency, bank account details, and the date for the withdrawal.

Know the conditions before activate SWP

Systematic Withdrawal Plan is a great choice for retirees who look for a regular income. It enables investors to withdraw their money in installments. You can either withdraw a fixed amount or the capital gains on your investment. With this facility, an investor can access regular income, and at the same time, his money is still invested in the scheme. Even if SWP is a useful option to get a regular income, it does not guarantee a return. An investor is selling his mutual fund units through this method to generate income. So, if you activate the SWP in your mutual fund scheme, you must be careful as it can eat your capital. Most of the investors focus only on regular income and overlook this part.
The personal financial choices of people have changed considerably with the change in the global economy. They realized the importance of investing smartly to build their wealth instead of just saving. Proper investment helps a person to grow his money while beating inflation. For people who look for a trusted investment option can choose mutual funds. Before investing in a mutual fund plan, you must have a clear financial goal in your mind. With different types of mutual funds, this investment scheme has the flexibility to fulfill the financial goals of its investors to achieve financial freedom. Smart investment is the first step to become financially independent. So, start your mutual fund investments today and achieve the financial freedom that you always dream.

That’s why Comparte Investment team asks do you have “Nivesh Ki Aadat”.

With this one can say “Mutual Fund Sahi hai”, so let me do Nivesh