Car, Train or Aircraft, which is the best mode for travel?

I am sure, you will get different answers from different people for this question. Also, you will get different answers from the same person depending on the destination. Yes, Aircraft is probably the most efficient way of traveling, can one use it for going to meet his cousin two streets away!! no way.

The answer to this question on MF, Shares and ULIPs is no different. These are three different products to satisfy different needs of the investor. Depending on what your needs are, which only you know or you can get your financial planner to understand, you should choose your investments.

Each of these products have their features, including their strengths and shortcomings. Depending on your requirements, you should use these products.

Shares:

Has the best potential to give high returns which of course is coupled with high risk. You have to manage it yourselves. Hence, you need to have the time, efforts and basic knowledge to be effectively be able to go on your own. It is like driving your own car. You own, you drive, you manage and you maintain.

Mutual Funds & ULIPs:

Both these are ‘managed’ products, where you get a professional to manage your investments. The products come with the basic feature of ‘diversification’ and professional management, which is at a cost and of course does not have as much flexibility for you to construct a portfolio which you may be able to do while buying stocks directly. Hence, these products can be compared to a train or a aircraft. Where, you do not have the responsibility of driving / piloting. someone else is doing it. Based on where you want to go (your objectives) you will identify the right product that will suit you (investment objective of the scheme).

Being professionally managed adds to your costs. you should look at the net returns that you could make in a product.

A Mutual Fund scheme scores over ULIP when it comes to cost of management, performance, transparency and liquidity. On the other hand, ULIP forces a person to save as there is insurance linked with the investment and would suit a person who is not otherwise committed to financial discipline. This can act as a forced disciplining like a PF deduction.

So, choose as they say, the horses for the courses.

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