The difference between Mutual Fund and ULIPs
ULIP is also popular like mutual funds among investors as it offers twin benefits to them.
Many people attracted to ULIP because of its twin benefits, returns as well as insurance cover.
People search for various ways to invest their hard-earned money to grow quickly to fulfill their different financial objectives. But in reality, there is no such option that offers quick gains. In India, there are plenty of investment options available like mutual funds, National Savings certificates, Fixed Deposit, and Life Insurance Policy. Mutual funds are always a preferred investment choice for the people in India. Like Mutual funds, Unit Linked Insurance Plans (ULIP) also gaining popularity among people in the country these days. Since both the mutual fund and ULIP are market-linked products, investors often confused about which one is better to invest. Read this article to get a better understanding of the difference between the Mutual Fund and ULIPs.
Mutual funds are the most popular and most common investment choice in India because of its potential to offer higher returns in the long run. In this option, resources accumulate from different investors and invest that money again in various assets for higher returns. A professional fund manager manages the money that you invested in a mutual fund, and he or she charges a fee for that service.
Unit-Linked Insurance Plans
ULIP is also popular like mutual funds among investors as it offers twin benefits to them. This investment choice is a combination of both life insurance and investment. A part of the money invested in ULIP uses for the insurance coverage of investors, and the rest invests in different assets like stocks and bonds. It also has a similar structure and function as that of mutual funds. Like mutual funds, a professional fund manager takes care of your investment on your behalf in collaboration with a life insurance company. If you choose ULIP to invest your money, you are eligible for both life risk cover and capital appreciation.
Difference between mutual fund and ULIP
Why mutual funds are better investment option than ULIPs
By explaining the merits of both these investment options, it may be difficult for an investor to choose the best one that is more advantageous. But mutual funds are the best investment option for many reasons. Many people attracted to ULIP because of its twin benefits, returns as well as insurance cover. However, an investor does not get sufficient insurance coverage by investing in ULIP, and most of them end up underinsured. Unlike mutual funds, many hidden charges also involved with ULIP that ultimately leads to lower returns. If you look for insurance coverage and high returns, invest in mutual funds and buy a term insurance policy separately rather than opting for ULIP. You can also keep monitoring the performance of your mutual fund scheme, and if it does not perform well, you can switch it to another plan.
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