Here’s How Risk-Averse Investors Should Invest in Kotak e-Invest Plan

Invest Plan


The market linked component of the ULIP plans is widely misunderstood by many people. It gives them the impression that ULIPs are not meant for risk-averse investors. However, the truth is that ULIPs are perfect if you want to mitigate your risks and earn a handsome amount. You just need to know the right way to handle your funds. On that note, here’s showing you the way.

Understand your current risk appetite

ULIPs let you allocate part of your investment in different money markets, debt, and equity instruments. Choosing wisely is the key to getting higher returns. The risk appetite of an individual changes with age and life situations. So, when youinvest in Kotak e-Invest Plan, you need to be constantly aware of your current risk appetite and choose funds accordingly.

Let’s explain this further with an example. Mr. Sharma invested in a ULIP fund for thirty years when he was thirty. During this time, he had no major financial responsibilities, which made him maintain all of his investments in equity funds. After five years, he now has his wife and kids to support. So, at this point, he reduced his equity investment by 20 percent and chose debt funds. He keeps reducing the equity investments every five years and opts for more debt funds. In the final five years, he has only 20 percent in equities, and the rest are in debt funds.

Of course, this is an idealized situation, and you don’t need to follow this pattern completely. But it should give you a general idea of how to switch funds as per your risk appetite.

Invest in Kotak e-Invest for long-term

ULIPs are the most profitable when you stay invested in them for the long term. As you know, these plans have a five-year lock-in period during which you cannot withdraw any money. You can make partial withdrawals after that, though that reduces the sum you receive on maturity.

So, try to avoid making withdrawals from your ULIP fund. The plan options that you can choose to invest in for the long term include:

1. Maximizer:

This option focuses on maximizing your returns by giving you exposure to a greater percentage of equities.

2. Rising Star:

This is a good option for parents who want to secure their children’s future. The money which you invest will help maximize your earnings.

3. Retire Rich:

This is an excellent choice for individuals who want to build a retirement corpus. It gives you the stability of income that you need while still providing some returns from equities.

Make the most of even a volatile market

Even a risk-averse investor can protect his investment in a volatile market situation. Keep in mind that there is always an option of fund switching and you simply need to make the most of it. For example, when the stock market might be about to dip, switch most of the investment to the debt funds. As the market picks up once more, switch those funds to equity to make the most of that upswing. The simple fact is that you need to keep an eye on the market situation as a risk-averse investor.

Similarly, when you are nearing the maturity date, keep the most of your investments in debt funds to secure the returns. It is best not to risk it with equity funds when the fund is about to mature. In most cases, you are allowed to switch for free a couple of times in a year.

As you can see, being risk-averse should not make you give up on ULIPs for life. You simply need to switch your funds the right way to earn the maximum returns from the plan.

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