Benefits of Early Investing in ULIP from Your 20s and 30s

‘The early bird catches the worm’ is a popular adage. It means that the person can have an advantage if they start something early. And, in the world of investments, it means the earlier you start investing, the better your chances of getting higher returns and building a larger corpus. Let us look at the benefits of investing in ULIPs in your 20s and 30s. 

Grow your capital with the power of compounding

Compounding refers to re-investing the profits and getting higher returns over time. The longer you stay invested, the higher will be your corpus. Hence, by investing early, you can allow your capital to grow faster with the power of compounding and accomplish your long-term goals. 

Also, by investing early in ULIP, while you are young and healthy in your 20s and 30s, you can easily get over the five-year lock-in period without worrying about bearing the financial responsibilities of your dependent family members. 

Get life insurance protection to secure your family’s future

All financial experts recommend people buy a life insurance policy at a young age, preferably as soon as they get their first salary. By investing in ULIP in your 20s and 30s, you can ensure that you safeguard your family’s financial future. If something happens to you, the insurance company will pay the sum assured to the family. They can use the amount to take care of their everyday needs. Also, if you have acquired any debt like a home or personal loan, they can use the money to repay it. 

Also, when you buy ULIP at a young age, you can get coverage at a lesser premium. You can use the ULIP calculator to compute the premium payable based on the coverage amount and tenure you choose. It is an easy-to-use tool that allows you to calculate the premium with just a click of a button. 

Higher tax savings

Regardless of your age, you can get valuable tax benefits from your investments in ULIP. You can get a tax benefit up to ₹1.5 lakhs under Section 80C of the IT Act. When you start investing early, you can get more significant tax savings over a more extended period. 

Disciplined savings

Savings are an integral part of financial planning. However, it is a habit that can be difficult to develop. By investing in ULIP from a young age, you can develop the habit of savings, which will benefit you in more than one way in the future. Since ULIPs have a lock-in period of five years, you can develop financial discipline and build wealth for your future needs. 

You can afford to take higher risks

When you purchase ULIP, you get the opportunity to invest in the equity market. Equity funds are known to be high-risk funds, but they also have higher returns potential in the long run. So, when you start investing at a young age, you have the liberty to take higher risks and invest a large portion of your money in equity funds and stay invested for a more extended period to get valuable returns. 

As you grow older, you can use the switch funds option and move your fund from equities to debt funds and get stable returns with minimal risk. 

Final Word

With so many advantages of investing early in ULIPs, you can leverage the time benefit and make the most out of your investment. 

News Reporter