If you look at one’s hierarchy of needs from a psychological perspective, shelter is one of the basic and most important needs. As you continue to meet your primary needs, you continue to feel fulfilled in life. This is why so many people are not content with just renting out houses and dream of having one of their own.
However, the simple matter of wanting something is rarely enough to guarantee that we get it. Working towards our dreams to turn them into a reality requires careful planning, proper execution, and even some flexibility to accommodate changing or growing needs. For instance, as a younger person, you may have imagined yourself in a bohemian loft, open, airy, and filled with light. But once you are married and have children, the idea of the same loft may seem ludicrous and you may find yourself favouring a more traditional 3 BHK.
Whether you want to live in an independent bungalow or a spacious flat, you can’t really escape the fact that both cannot be bought on a whim. Investing in a ULIP policy is one of the best ways you can begin planning this milestone purchase. Here are some reasons why:
4 Ways a ULIP can help you buy that dream home better than any other investment
1. ULIPs are long term investments
One of the key features that separate ULIPs from other investment options is that these policies offer longer terms. Therefore, they are ideal for planning future purchases or setting money aside for a goal. It is generally advisable to go in for a ULIP policy with a minimum term of 10 years. That’s more than enough time to not only build on that investment but also plan the actual purchase of a home. As you get closer to your maturity date, you can begin to review your funds as well as the real estate options available to you so you can make informed decisions when the time comes. If you compare ULIPs with home loans, the former is a much better option as the interest rates for home loans are generally quite high. With a ULIP, you can buy your dream home without compromising too much on your monthly expense.
2. ULIPs are ideal for building that down payment
With the option to take out home loans, many people find it easier to consider purchasing a home. However, the part that usually poses a problem is the down payment. With real estate prices soaring through the roof, down payments that are typically around 10-15% of the total cost of the property can often be as high as 10-15 lakhs, if you are looking at homes in tier 1 cities. Most people don’t have that kind of money just lying around unless they have been saving towards that goal for a while. A ULIP can help you accumulate enough money for a down payment and that brings you a step closer towards buying your dream home.
3. ULIPs have lower risks
Another great benefit of investing in a ULIP is that this investment option has lower risks when compared to other investment options like mutual funds and ELSS. So if you are planning to invest in an option that lets your money grow enough to help you buy a house down the line, without exposing yourself excessive risk, ULIPs are the way to go.
4. ULIPs are transparent
With any investment, there is a certain amount of market risk involved. These market risks determine how much money we actually end up with by the time the policy matures. When you invest in a policy that is not transparent, sometimes you can get a rude shock once the maturity period arrives and you can finally see how much money you have. However, with ULIPs, the policy is completely transparent. You can monitor your funds and the rate at which they are growing as often as you like and can therefore plan out your expenses in a more informed manner. This goes a long way when it comes to planning large investments such as buying a house.