Is The Indian Middle Class Considering Other Investment Options?

May 07, 2018 | 6 months ago | Read Time: 2 minutes | By iKnowledge Team

Our current generation, like the ones before us, have grown up with the notion that fixed deposits (FDs) offer the safest returns. However, with rising costs, and tumbling fixed deposits rates, FDs are no longer enough to cover present and future expenses. Therefore, most investors, who would only invest in fixed deposits, are now looking to move to other investment options. Read on to find out more:

  1. Equity and bond investments

Most families are considering equity and bond investments as they have a better yield. Mutual fund investments, if held for a time horizon of at least 7-10 years can yield excellent returns. The net inflow for equity funds was Rs. 1,78,878 crores and Rs. 1,00,138 in 2017. This shows that middle-class households are moving towards mutual fund investments. In 2017, the SIP book went up to Rs. 5,000 crore a month. This shows that they are most comfortable with SIP investments. They are also increasingly hiring financial planners to plan their portfolios and equity investments.

  1. ULIPs

A shift to ULIPs is anticipated in the next year or so, after the Long-Term Capital Gains (LTCG tax) introduction on equities. At the time of withdrawal, income from ULIPs is completely tax-free. Other than that, the flexibility to switch funds, transparency, choice of diversification has made ULIPs an attractive investment option for the Indian middle class. It offers the dual benefit of market-linked return and a minimum sum assured for investors. You can choose your own funds, be it equity, growth, income or balanced funds as per your risk appetite or goal. If you’re planning to invest in ULIPs, iMaximise from Aegon Life insurance is your best fit.

  1. Real estate

Real estate as an investment is protected against inflation. With the investment potential of the middle-class rising, middle-class households are considering low-end real estate for a second home. The vacation-homes segment primarily has shown attractive growth thanks to the aspirational middle class. The weekend homes market is growing at 10-12 % per annum. This only means that the middle class is looking at real estate as a viable investment option. Moreover, they are investing in suburban residential properties where prices are still economical.

Conclusion

Are you considering other investment options due to a slump FD interest rates and high-interest savings accounts? Look to mutual fund investments over a long term that offer the better yield. You can also invest in options like bond investments, ULIPs or real estate for your retirement needs.

Advt no.: IA/May 2018/3914


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