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Incremental investment options for the novice investors

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Incremental investment options for the novice investors
April 01, 2024

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Introduction:

When it comes to investing, the old adage ‘Little drops make the mighty ocean’ stands true. Incremental investments, where you steadily grow your money bit by bit, can profoundly impact your overall financial portfolio. If you are on the fence about investing, wondering where to start or how to proceed, you are not alone.

Here are some options for incremental investments tailored for individuals like you who are looking to take small steps towards financial growth and security.

Incremental investments options

Systematic Investment Plans (SIPs) in mutual funds

SIPs are an increasingly popular investment avenue in India. This is particularly true for individuals who want to start investing but may not have much money to invest upfront. SIPs allow you to invest small, fixed amounts regularly (usually monthly) in mutual funds.

SIPs are a convenient way for you to gradually build your investment portfolio and benefit from rupee cost averaging. When you invest a certain amount, you get higher units of the mutual fund when prices are low and fewer units when prices are high. This helps to reduce the overall average cost of investment and mitigates the impact of market volatility on your portfolio.  

With SIPs, you can start with a modest amount, often as low as ₹500, and increase your investments as your financial situation allows. Plus, SIPs offer the advantage of compounding returns, where your returns are reinvested, leading to exponential growth in your wealth over the long term.

Unit-Linked Insurance Plans (ULIPs)

ULIPs are versatile financial instruments that offer you dual benefits. With ULIPs, you get the best of both worlds - a guaranteed life cover along with the opportunity to invest in market-linked funds.

ULIPs offer you the flexibility to choose the premium payment option that best suits your financial situation. You can opt for either regular premium payments or limited premium payments. You can also use top-ups to incrementally increase your ULIP investments according to your evolving preferences and financial goals.

A novice investor can consider a ULIP like HDFC Life Smart Protect Plan.  A ULIP fund like this allows you to choose your core objective for the insurance cover before you invest. It provides you with 4 options with various benefits including Level Cover, Level Cover with Capital Guarantee, Decreasing Cover, and Decreasing Cover with Capital Guarantee.  Also, you get to choose from a range of 6 funds1 to optimise returns. It also gives you the flexibility to choose your premium payments. There are also loyalty additions2 you can choose from to boost fund value.

Annuity Plans

Annuity plans are tailored retirement solutions designed to provide you with guaranteed3 income for life. These plans are characterised by their low-risk nature, making them ideal for building a reliable retirement fund. With annuity plans, you have the flexibility to pay premiums for a single or limited payment term and customise your investment strategy according to your financial situation.

Consider the HDFC Life Pension Guaranteed Plan, which allows you to choose the purchase price you are comfortable with and decide on the annuity amount you wish to receive. Moreover, the plan offers a choice to increase your annuity payouts through a top-up option. This allows you to enhance your annuity income as your financial requirements evolve over time. You also have the flexibility to receive your annuity payments on a monthly, quarterly, half-yearly, or yearly basis, depending on your financial needs and preferences.

Direct equity 

While direct equity investments are generally considered riskier, investing in them can gradually build wealth over time. You can start with a small amount to begin investing in stocks. With direct equity, you have the flexibility to start with small investments and gradually increase your holdings as you become more comfortable and confident in your investment decisions.

Direct equity investments offer the potential for significant long-term growth. However, conducting thorough research or seeking professional advice is essential before venturing into direct equity investments.

Investing begins with taking that first step, no matter how small. If you are still on the fence, it is best to consult a financial planner who can explain the pros and cons of various investment tools. Only as you gain experience and confidence will you be able to adjust your investments to align with your evolving financial needs and goals. Remember, it is about starting small and gradually increasing your investments as you progress.

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ARN: ED/03/24/9759

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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HDFC LIFE IS A TRUSTED LIFE INSURANCE PARTNER

We at HDFC Life are committed to offer innovative products and services that enable individuals live a ‘Life of Pride’. For over two decades we have been providing life insurance plans - protection, pension, savings, investment, annuity and health.

Disclaimer

1. With unlimited free Switching. Available under Level Cover and Decreasing Cover.

2. Loyalty Additions available under this plan –

a) Return of 2X to 3X Mortality Charge from 11th policy year, b) Return of 2X Premium Allocation Charge from policy year 10 to 13, c) Return of Fund Management Charge (FMC) on Maturity, d) Return of 2X of Investment Guarantee Charge on Maturity

3. The word “Guaranteed” and “Guarantee” mean that annuity payout is fixed at the inception of the policy.

HDFC Life Smart Protect Plan (UIN: 101L175V01) is a Non-Participating, Individual Life Unit-Linked Insurance Plan.

The Unit Linked Insurance Products do not offer any liquidity during the first five years of the contract. The policyholder will not be able to surrender or withdraw the monies invested in Unit Linked Insurance Products completely or partially till the end of the fifth year. In this policy, the investment risk in investment portfolio is borne by the policyholder. Life Insurance Coverage is available in this product. Unit Linked Insurance products are different from the traditional insurance products and are subject to the risk factors. The premium paid in Unit Linked Insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. HDFC Life Insurance Company Limited is only the name of the Life Insurance Company and HDFC Life Smart Protect Plan (UIN:101L175V02) is only the name of the unit linked insurance contract and does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company. The various funds offered under this contact are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns.

HDFC Life Pension Guaranteed Plan (UIN:101N118V11) is a single premium non-linked, non-participating annuity plan. 

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