For most first-time investors, starting a wealth creation journey can be both thrilling and a daunting task. As a result, wealth managers suggest to begin investing in mutual fund schemes, particularly Hybrid Funds. These funds offer a balanced approach to wealth creation by making use of the potential of various asset classes such as equity, debt, and gold. But what if there was a master strategy that enabled you to get the benefits of both debt and equity assets while remaining flexible? The answer to that lies in the HDFC Life Smart Protect Plan.
A Hybrid Fund, also known as a balanced fund is a popular investment option for its ability to blend different asset classes – Equity allocation offers growth potential, while a debt portfolio provides stability and income. As a hybrid fund investor, your money is spread across assets to reap the benefits of both. The essential message for first-time investors is that diversification reduces risk by ensuring that all eggs are not in one basket.
HDFCLife Smart Protect Plan aims to achieve exactly this. To enable investors to move between equities and debt funds effortlessly, in response to market conditions and personal preferences, the HDFCLife Smart Protect Plan is a game changer. After the deduction of applicable charges, you can diversify your premium across various fund options in HDFCLife Smart Protect Plan.
One of the fund options in HDFCLife Smart Protect Plan that closely correlate to a hybrid fund is the Diversified Equity Fund with an allocation mandate of 60% to 100% in equity-related instruments while 0% to 40% can be in debt assets. The objective of the fund is to generate long-term capital appreciation by investing in high-potential companies across the market cap spectrum while maintaining adequate safety through exposure to debt assets.
In addition, there is a Bond Fund with no exposure to equities but 100% in debt assets including Money market instruments, Cash & Deposits, Liquid mutual funds, Government securities, fixed-income instruments, and bonds.
The switches between equity and bond funds allow investors to capitalize on market opportunities or adjust their risk exposure without the hassles and complexities typically associated with fund-switching.
The HDFCLife Smart Protect Plan is such a comprehensive life insurance coverage that offers protection to your loved ones and the potential to exploit fully the features of a hybrid mutual fund. It also allows you to customize the policy to fit your specific needs and budget, making it a flexible and affordable option.
The hybrid funds also offer tax benefits, but their allocation needs a close look. Long-term capital gains in hybrid funds are taxed similarly to equities if the equity allocation is at least 65% of the total fund corpus. For gains exceeding Rs 1 lakh, after holding for more than 12 months, long-term capital gains (LTCG) face a tax rate of 10%. However, in the case of HDFCLife Smart Protect Plan being a non-participating, individual life unit-linked insurance plan, there is no implication of tax during switches between assets or on capital gains.
The premium you pay for your HDFCLife Smart Protect Plan is tax deductible under Section 80C of the Income Tax Act of 1961 up to a maximum deduction of Rs. 1.5 lakh per year. In addition, tax exemption on maturity proceeds is available if the premium paid in any of the years does not exceed Rs.2. 5 lakh.
Conclusion
The HDFCLife Smart Protect Plan emerges as a master plan that matches the benefits of hybrid funds properly. The flexibility to seamlessly move between equities and debt funds, as well as the plan’s personalized strategy and life insurance coverage, distinguishes it as a comprehensive option for investors seeking development, protection, and adaptability.
Investors can rest assured that their investments are being managed by seasoned professionals who understand market dynamics and are committed to achieving optimal results thanks to HDFCLife’s competence in the financial industry.
For beginners as well as seasoned investors, the HDFCLife Smart Protect Plan is a smart investment option, offering wealth managers’ expertise, hybrid fund attractiveness, and adaptability to the volatile financial market, making it an ideal choice for creating wealth over the long term.
