Vinay completed his engineering and landed a job in a Pune based IT company at the age of 22 years. The income that he earned in the first year mainly went in paying rent, food, sending money to his family etc. He realised that he is not saving much for his goals and aspirations. To begin with, Vinay wanted to save enough money for the down payment for an apartment in Pune. Since, his initial salary was not a lot and he did not want take big risks with his money, Vinay opted for an endowment plan that would give him guaranteed returns.
In the next 5 years Vinay comfortably saved for the down payment of his home and by taking a home loan, he could afford a 2BHK flat in the neighbourhood of his choice. He brought in his parents to live with him from their hometown and in another year, Vinay got married to Priya.
After his marriage, Vinay’s responsibilities began to increase. He was now responsible for the well-being of his wife along with his parents. He was aware that there would be big expenses in the future like buying a car, family vacations, children’s education etc. He also wanted to ensure that under all circumstances, his wife and their future family are always financially protected. This is what made Vinay invest in a Unit Linked Insurance Plan (ULIP) that gives you a life cover and helps you accumulate wealth.
With time, Vinay started to think about his retirement too. He and his family had a comfortable life due to his steady income but what would happen once he retired? Could he and his family continue to enjoy the lifestyle that they had now? The answer was yes. There were many ULIPs that allowed Vinay to stay invested for as long as 20 years. This meant that by the time he reached retirement age, he would have saved enough and would not have to worry about a financial crisis in his older years.
So basically, what kind of saving and investment plan you choose depends upon whether your needs are short term or long term.