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Ramalingam Kalirajan |9696 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jun 21, 2025

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Question by Manish on Jun 15, 2025Hindi

Mera age ha 30... Ma ekk ulip karna caha ta hu ... Me saal me 30000 sa 40000 tak de sakta hu ... Me 5 saal tak invest karunga. Plz suggest me the best fund

Ans: Your Objective and Investment Duration

You are 30 years old now.

You want to invest for five years only.

Your annual investment budget is Rs 30,000 to Rs 40,000.

You are planning to choose a ULIP (unit linked insurance plan).

It is good you are thinking about investment early.

Let us explore this in more detail now.

How ULIP Works

ULIP gives insurance plus market investment in one product.

Premium is divided between insurance and fund management.

Lock-in period is five years minimum in ULIP.

Returns depend on fund type chosen (equity or debt).

ULIP charges are high in early years.

It includes policy admin charge, fund charge, and mortality cost.

Net return gets affected due to these deductions.

ULIP Product Disadvantages You Must Understand

You don’t get pure insurance from ULIP.

Sum assured is usually 10x of premium only.

For Rs 30,000 premium, life cover is just Rs 3 lakh.

This is not enough for family protection.

ULIP has high charges in first 3 years.

You cannot stop ULIP in middle without penalty.

If market falls in year 4 or 5, you lose.

ULIP gives very low flexibility and exit control.

Tracking fund performance is also not easy.

Switching funds inside ULIP is confusing for many.

Returns are not transparent like mutual funds.

ULIP maturity is tax-free only under specific conditions.

You Need Insurance and Investment Separately

First get pure term insurance of at least Rs 50 lakh.

Term plan gives high cover at very low cost.

Premium is around Rs 5,000 per year for Rs 50 lakh.

Then invest the rest Rs 25,000 to Rs 35,000.

Keep insurance and investments separate for better control.

Don’t mix both in one product like ULIP.

Better Investment Strategy Instead of ULIP

Start SIP in mutual funds instead of ULIP.

Choose regular plan through Certified Financial Planner’s MFD channel.

Regular plan gives guidance and review support.

Direct plan gives no help when market falls.

You need hand?holding during bad market years.

MFD gives tax advice, rebalancing, and goal tracking.

Regular plan cost is small for the support given.

Your SIP will grow faster than ULIP in 5 years.

All charges in mutual funds are visible and lower.

Why Not to Choose Index Funds Now

Index funds just copy the index, no smart moves.

They don’t exit weak sectors or risky companies.

Actively managed mutual funds adjust to changing markets.

They protect during fall and grow better in good times.

Fund manager works actively to improve performance.

You need this advantage when investing for short term.

Index funds give average returns, not smart ones.

Flexibility and Control in Mutual Funds

You can stop SIP anytime without penalty.

You can redeem part or full money easily.

No lock-in if you choose open-ended funds.

You can start with just Rs 1,000 monthly.

You can increase SIP anytime when income grows.

Fund value is visible every day online.

Taxation Difference You Must Know

ULIP maturity is tax-free only if premium

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