Market investing comes with its own risks. There is a risk that your investment returns may be affected by market volatility. Market volatility can be caused by a variety of factors, including localized government policies, public sentiment, and global economic events. These factors can all be unpredictable and therefore, market returns may vary. For More Updates Stay Tuned With Moneycompanion.us.
Market volatility can cause anxiety if you’re a risk-averse investor. This could make you rethink your investment decisions. With a bit of planning and foresight, you can lower your portfolio’s risk exposure and protect your investment money in volatile market periods. This is where guaranteed income plans, which are safer investment options, can be especially helpful.
How Can Guaranteed-Income Plans Protect You From Volatile Market Conditions?
For long-term goals, it is important to have equity exposure. To reduce volatility, one must diversify his portfolio, depending on age and other factors. If one has previously invested in equity markets using other instruments, guaranteed return plans can be a great option.
Diversifying with guaranteed income plans can provide many benefits, particularly for those who prefer to invest in lower-risk investments.
They guarantee returns
Guaranteed Income Plans are life insurance plans that provide a fixed amount of regular income for policyholders over a pre-determined time period. This plan offers life insurance. Some plans offer return-of-premium features, which are designed to pay all premiums until the policy matures. These plans pay income as a percentage or annualized premium. These returns can be guaranteed, which can provide policyholders with some income on a regular basis such as monthly or quarterly.
They Can Supplement Your Income Or Replace It As Necessary
These plans provide a steady stream of guaranteed income that can be used to supplement or replace your primary income when you retire. After a specific term, the income payouts begin. This can be any one of the following:
- Right away from the start of the policy
- In the case of a limited premium program, after the expiration of the premium payment term
- For a specific tenure at maturity
Depending on your guaranteed income plan’s terms and conditions, you may be able to use the regular payments as your primary or secondary source of income.
They Make Financial Planning Simpler
It is difficult to predict what kind of returns you will get on your investments due to market volatility. Guaranteed income plans, on the other hand, offer a fixed rate return for a specific period. This makes it easier to plan for financial goals and more tangible. You can plan for your life with greater certainty by knowing how much income you will get over a given tenure.
Guaranteed income plans offer more tax benefits than many other investment products, in addition to their guaranteed benefits. You can deduct up to Rs 1.5 lakh from your premiums under Section 80C. Additionally, the tax-free payouts are available. These benefits, combined with the certainty that you will receive returns, make guaranteed income plans a great support system for investors who are cautious and hesitant.