If you’re seeking for an investment avenue to put your hard-earned money, you’ve probably heard of the ULIP plans. It is one of India’s most popular investment plans, with excellent returns and tax benefits. However, calculating the returns on your ULIP account might be difficult.
Here is when a ULIP calculator comes in handy. It’s an online application that allows you to exactly calculate your returns and better organise your budget. Let’s look at how this calculator works and why it’s a useful tool for financial planning.
Points on how the ULIP calculator works and why you need it:
- Accurate interest calculation
ULIP is market linked and you can earn a high return by investing in the same. Investing in equity via ULIP will provide you with high growth potential returns for the long term basis market returns. You can also opt for debt investment which will offer you higher protection to your wealth against the market fluctuations. Doing this calculation on your head, especially when it is compounded, is something that might take a lot of time to accomplish. Using the calculator, there is no possibility of making mistakes.
- Helps you plan your investment
The ULIP calculator also allows the user to calculate the total corpus that would be at the time of maturity. Save for college, wedding, or retirement, the calculator illustrates how constant savings will affect the final result. For instance, if you are investing ₹1 lakh per year, you can know, how much amount will be there in your investment account after 10-15 years, which would be useful for future planning.
- Simple to use
Most online ULIP calculators are basic, incorporating fields where you input values such as annual contribution, time period for the calculation, and the expected return rate. Once one inputs these values, the calculator immediately gives an estimate of the returns, making this tool very friendly even to the novice user.
- Helps choose the best ULIP plan
As with debt investment, you get lower returns but high security of the funds invested; however, if you wish to invest in equity instead, you can compare the returns using a ULIP calculator. This comparison will help you evaluate the best ULIP plans available in the market and invest in one basis your financial needs. Not only this, it will help you build a balanced portfolio with safe investment and optional market-linked benefits.
- Saves time
When it comes to computing for compound interest for 10 years or more, it becomes very tedious and cumbersome. The convenience is that the ULIP calculator displays the results immediately, which will save your time. This is especially useful when you wish to alter input or years of contribution to realise the impact on your returns.
- Compound interest magic
ULIP has another advantage in that it earns compound interest, in other words, interest on interest. This is reflected in the ULIP calculator, which also demonstrates how your money is compounding. The longer you keep your money in ULIP, the more you get an added advantage of compounding of interest especially when you are a regular investor.
- Customisable input
The ULIP calculator is an interactive tool which lets you adjust the contribution levels. Regardless of whether one contributes ₹500 or ₹1,50,000 the calculator gives a detailed insight into how the investment will mature. This flexibility allows you to contribute a certain amount of money to meet certain financial objectives.
- Tax-free returns
ULIP enables you to earn significant tax as per the Section 80C of the Income Tax Act, 1961. Following are the tax exemption benefits under a ULIP plan:
- Tax savings on the ULIP premium payment under Section 80C of the Income Tax Act, 1961
- Maturity/ death benefits of a ULIP policy are exempt under Section 10 (10D) of the Income Tax Act, 1961
- Flexible tenure calculations
Using the ULIP calculator, you are able to determine how the tenure affects your savings. The longer you invest in ULIP, the more interest you get and save tax as well on the premiums paid against ULIP investment.
- Goal-based planning
If you’re saving for specific goals like a child’s education, buying a house, or retirement, the ULIP calculator can help determine if your projected contributions are sufficient and help you select the best ULIP plan available. If you’re unsure about a ULIP plan, adjusting parameters like investment amount, expected return rate and tenure helps ensure your plan aligns with your financial goals.
- Encourages consistent investment
One of the most significant advantages of the ULIP calculator is that it visibly depicts the benefits of regular, consistent contributions. Seeing how much more you can make through compounding drives disciplined savings, resulting in consistent growth over time.
Ending note
The ULIP calculator is an indispensable tool for anybody wishing to enhance their ULIP investment. It simplifies difficult computations, saves time, and gives you a clear picture of your financial progress. This application allows you to successfully plan your money and reach your financial objectives. Furthermore, comparing ULIP returns to other investments, such as PPF, FD etc. aids in the development of a balanced portfolio that combines the stability of other investment and opportunity for growth in market-linked funds. Whether you’re a seasoned investor or just starting out, having a ULIP calculator in your financial toolset is essential for making sound decisions.
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