The latest buzz word in the financial world has to be “cryptocurrencies”. It is important to understand this cryptic word and all it constitutes before we join the bandwagon in creating investment plans specifically for these currencies.
Cryptocurrencies, also known as alternate currencies, are a way to exchange value (much like money) and have gained their values just like other currencies, by being pegged to another currency. For example, the value of the rupee is Rs. 68 to the dollar, and the value of a Bitcoin is 4,70,000 rupees. It is simply based on demand and supply and in reality there is no actual base of money.All of this is surely very confusing, and this confusion should be the first reason for your hesitation for having investment plans around the cryptocurrencies.
In the recent past, several banks like Citi Bank and SBI have disallowed cryptocurrency transactions. Similarly, the Bitcoin exchanges in India are halting investor trading this year because of governmental pressure. No legal backing, regulators or governmental support is, further deluding the legitimacy of such currencies and should be your second reason for not including cryptocurrencies in your financial planning.
Recently, the great volatility of the Bitcoin value has shaken even the firmest believers of this decentralized value exchange. One is not sure if it will last the market shocks and the ROI. Moreover, there are thousands of crypto-currencies and not all crypto-currencies are as highly valued as the Bitcoin. The issue is grave as with little information on most of them, one could be led down scam street easily. So if you do decide to invest in cryptocurrencies, research and tread your path carefully.
Investing in crypto-currencies can be seen as a huge gamble in financial planning. This scenario is much like the dotcom bubble and bust, where everyone joined the investing spree since they were afraid to be left out, or miss out on the monumental gains that were being casually promised. Instead, one should focus on investing in areas that promise benefits based on real-time data, complete transparency and promises return on investments.
Some of major areas that millenials are investing in are mutual funds, real estate, insurance, stock options and ULIPs. These are safe and wise decisions taken to safeguard their own interests and the financial security of their family. “Cryptocurrencies” might be a great conversation starter at an office party, but as a financial decision, it is not that rewarding or safe.
On the other hand, another financial tool known as ULIPs is slowly gaining popularity as a safe investment planning tool as it offers the dual benefit of life insurance as well as investments in the form of stocks, bonds, and mutual funds. It divides your investment money into two parts – one that is used as your term life insurance and the rest is, invested in stocks, bonds, and mutual funds. It is beneficial as a long term financial planning and guarantees risk coverage and returns.
Aegon Life offers a multitude of ULIPs plans that enable a person to selectively choose one that suits their own changing and growing needs. For example, the Rising Star Insurance Plan is designed for the future of one’s children by focusing on investment planning in equity markets to minimize the risks or iInvest Insurance Plan for those who enjoy owning a varied portfolio comprising of blue chip equity, accelerators and other funds with each pool catering to different risk levels.
Risk is a part of life, and it is inevitable and unavoidable. Financial planning not only safeguards your own interests, but affects the legacy you leave behind for your family, and one must work on minimizing the risk factor in financial plans. By investing in crypto-currency one risks the chance to lose money as there is little clarity on valuations, regulations or returns promised on these. Why gamble with your finances when you can easily ensure financial success through an Insurance plan, ULIPs plan or investments in real estate, stocks and bonds? Choose wisely today and live stress-free forever!