Insurance is not an investment, despite the misconceptions of many people. Simply put, insurance is a risk management strategy. A pure term insurance plan offers the policyholder no benefits whatsoever, both during the life of the policy and after it expires. However, in the event of an untimely death, the candidates receive the death benefit. Insurance is not meant to make you wealthy while you are still living, but rather to protect your loved ones from poverty after your passing. Simply said, investing in financial products is done with the hope of making money after taking into account the investor’s financial objectives, risk tolerance, and expected return. As with various fixed income investments, one can keep onto the investment and take advantage of periodic returns, if applicable.

Insurance vs. Investment

Let’s clarify a common misconception: insurance isn’t an investment. It’s a tool for risk management. Specifically, a pure term insurance plan provides no benefits during its term or after it ends, except in the event of an untimely death, where beneficiaries receive a death benefit. The purpose of insurance isn’t to make you wealthy during your lifetime, but to shield your loved ones from financial hardship after your passing.

Investing in financial products, on the other hand, is about growing your wealth. It involves considering your financial goals, risk tolerance, and expected returns. You may hold onto investments, benefiting from periodic returns, depending on the investment type.

Understanding this distinction is crucial. Insurance offers protection, while investments aim to increase your financial well-being.

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The rule states that an investor should aim for 10% return on investment on equity or mutual funds, 5% on debts, and 3% on savings bank account. Benefits of this rule: -diversify their portfolio -minimize risk -potentially achieve high return over long-term. When it comes to investing strategy, one should analyses the goals, risk tolerance and financial circumstances.
The equation says that if you invest Rs. 15,000 per month in an investment instrument that gives 15% returns, you can accumulation Rs 1 Crore in a span of 15 Years. Benefits of this rule: -Spreads investment across multiple asset classes -Good starting point for investors -Maintains desired balance of assets -Suits investor’s changing financial objectives When it comes to mutual fund investments, you should not only invest money but also your time, because here time is also money!
Investment Risks? Who isn’t apprehensive about investing in financial assets because of the “risk” involved?
It’s excellent to have the intention to invest, but if the objective, the duration of the investment, and the financial tool are unclear, it serves no useful purpose. Decide why you are investing, how long you plan to invest, what your risk tolerance is, etc. before you ever begin to invest. You can easily accomplish your investment goals by following these methods.
It takes constant effort to ensure family financial stability. You can ensure that your family can survive poor health, a death in the family, or the handicap of the primary provider. Financial stability, though, must extend to all facets of life and not simply be for emergencies. Financial security during the regular course of life is equally crucial and will, possibly, absorb the majority of your time and effort. While a life insurance plan is one of the best methods to assure long-term plans of security, it is also one of the finest ways to do so.
Here’s is an important myth vs fact for you. Investing some proportion of your money is a smart decision that can provide financial stability and peace of mind.
The phrase “Beware of Little Expenses, A Small Leak will sink a Great Ship” by Benjamin Franklin holds a crucial lesson for investors. It reminds us that even small expenses or losses can add up overtime and erode your investment gains. Every small financial decision can have a significant impact on long-term growth of your portfolios. Therefore, it is important for investors to remain vigilant and keep an eye on all expenses, fees and returns.
Risk & Insurance
To save yourself from making initial investing mistakes
On Siblings Day 2023, it is important to recognize the relationship between Investment and Returns. Just like siblings, these two are interconnected and often work together to achieve common goals. Investing is like having a sibling, where one requires patience, and a long-term commitment. By understanding the relationship between Investment and Returns, one can make decisions about where to invest their money, how to maximize their returns, resulting to their goals being achieved, and future being secured.

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