We are mention two different article that show the some difference between both. Before reading this article you must read.
Read What is ULIP
Read before buy ULIP
Read what is mutual fund
Read advantage of SIP
1) ULIP are not a mutual fund, even though in some ways their structure is quite similar. In the sense, they too invest in the equity and debt markets. The risk lies on the investor. ULIP issue units and reveal the net asset value of these units. That is where the similarity ends. ULIPs are a mix of investment and insurance.
Mutual fund investors have the option of either making lump sum investments or investing using the systematic investment plan (SIP) route which entails commitments over longer time horizons. The minimum investment amounts are laid out by the fund house.
2) ULIPs invest for the long term, as they expect investors to stay for the long term. And the purpose of a ULIP is also different build assets through a pension plan, retirement plan or child plan. All of which, need very long term investing, say 10-15 years or even more.
Mutual fund investment is also best for long term, but it show result after 3-5 years. In my opinion if you are not getting profit after 3-5 years in mutual fund then your invest plan is wrong.
3) The advantage a ULIP has is that it also blends insurance into the same plan. The insurance you buy could be a standard term cover or a critical illness rider is at the same rate as which you would buy it independently. But the advantage is that here it is embedded into the same policy, and that gives additional flexibility to increase the risk cover periodically as you grow older or earn more.
Before some times mutual fund companies also start insurance facility in SIP, but Selling such products was banned by Life Insurance Council, Amfi’s counterpart in the insurance industry.
4) ULIP investments qualify for deductions under Section 80C of the Income Tax Act. This holds good, irrespective of the nature of the plan chosen by the investor. On the other hand in the mutual funds domain, only investments in tax-saving funds (also referred to as equity-linked savings schemes) are eligible for Section 80C benefits.
In Mutual fund Section 80C benefits are available only on investments in tax-saving funds.
Read ULIP FAQ's
So it is not an issue, of whether a mutual fund is better or a ULIP. It is about your need. Both can co-exist in your basket of needs. So identify your needs with a financial planner and then pick the product suitable for you.
This are top 5 stock at this time you must buy.
Top 5 stock buy for 2-3 years
Read treading rules before investing.
Suggested reading
- How to save petrol
- Post Office FD v/s Mutual Fund
- Should you invest at this level
- Advantage of financial planing
- How to save enough money
- Tips make money through Internet
- Way to increase your income
- Stupid statement in stock market
- 25 Global Investor's Golden Rule
comments
9 Responses to "Mutual funds vs ULIP"which ulip will be better to purchase
In the recent times none of these funds are profitable to the investors .
But what is the best???
Nice post by you again keep it
Thank you for posting links to the articles I needed to read before reading this post .. it helped clear things up for me a lot.
i think ulip are more profitable than mutual funds as mtual funds also go into loss due to share market. Ulip i.e insurances are are best now i think
I have this question perpetually plaguing me. The only problem that I see with ULIP is the recurring nature of the deposits.
The points you have brought out are very helpful for a novice like me to understand and take educated decisions.
Nice article.
As far as my views are concerned all the present invstment instrument has their own advantages and disadvantages.
and it is the personal choice based on his condition that make one to opt for particular invstment be it ULIP or MF.
and above all ULIP are not that worse as many financial planner are picturizing them.
When we read about ULIP and when some agent gives us figures and calculations...this is the most attractive product for investments...but when we invest...we see the actual charges that we pay...we come to know that ULIP is nothing bt a game to loot the hard earned money of investors....so Mutual FUND is the best way to invest,...
Post a Comment