Investment & Saving Plan

Key features of an Insurance Saving Plan:

• Death Benefit: If the policyholder passes away during the term of the policy, a lump sum payment (the death benefit) is provided to the designated beneficiary/beneficiaries.

• Savings or Investment Growth: The premiums paid, after deducting administrative charges and insurance costs, are invested in various financial instruments such as stocks, bonds, or mutual funds. The returns generated from these investments contribute to the cash value of the policy.

• Cash Value: Over time, the policy accumulates a cash value, which represents the savings portion of the plan. This cash value can be withdrawn or borrowed against, depending on the terms of the policy.

• Tax Benefits: Insurance Saving Plans offer tax advantages. The premiums paid may be tax-deductible, and the investment growth may be tax-deferred or tax-free under certain conditions.

• Maturity Benefit: At the end of the policy term, if the policyholder survives, they receive the maturity benefit, which includes the accumulated cash value and possibly additional bonuses or returns, depending on the performance of the investments and the terms of the policy.

Here's how it typically works:

Pooling of Funds: Investors contribute money to the unit trust, and these funds are pooled together into a large investment portfolio.

Investment Strategy: A professional fund manager or team manages the pooled funds. They decide how to invest the money based on the investment objectives and strategy of the unit trust. This strategy could include investing in stocks, bonds, money market instruments, real estate, or a combination of these assets.

Issuance of Units: In exchange for their investment, investors receive units in the unit trust. The value of each unit is determined by dividing the total value of the assets in the fund by the total number of units outstanding.

Diversification: Unit trusts typically invest in a diversified portfolio of assets to spread risk. This diversification helps reduce the impact of poor performance in any single investment on the overall value of the fund.

Profits and Losses: The performance of the unit trust is reflected in the value of its units. If the investments within the unit trust perform well, the value of the units increases, and investors may earn capital gains. Conversely, if the investments perform poorly, the value of the units may decrease, resulting in capital losses for investors.

Income Distribution: Unit trusts may generate income from dividends, interest, or rental income from the underlying investments. This income is distributed to unit holders either periodically or reinvested back into the fund to purchase additional units.

Liquidity: Unit trusts usually offer liquidity, allowing investors to buy or sell units on a daily basis at the prevailing net asset value (NAV) of the fund.

Here's how they work:

Investment in Short-Term Securities: Money market funds invest in short-term debt securities such as Treasury bills, certificates of deposit (CDs), commercial paper, and short-term government or corporate bonds. These securities typically have maturities of one year or less, which helps to minimize the risk of interest rate fluctuations.

Stability and Safety: Money market funds are known for their stability and safety because they invest in high-quality, low-risk instruments issued by governments, financial institutions, and corporations with strong credit ratings. While they offer higher returns compared to traditional savings accounts, they aim to preserve the capital invested.

Liquidity: One of the key features of money market funds is their high level of liquidity. Investors can typically buy or sell shares in the fund at any time, and the fund's net asset value (NAV) remains relatively stable at $1 per share. This makes money market funds an attractive option for investors who need quick access to their cash.

Yield: Money market funds generate income primarily from the interest earned on the underlying securities in the portfolio. The yield on these funds tends to be higher than that of traditional savings accounts or bank deposits, although it is generally lower than what can be earned from longer-term investments such as stocks or bonds.

Diversification: Money market funds typically hold a diversified portfolio of short-term securities to spread risk. This diversification helps to mitigate the impact of any defaults or credit events on the overall performance of the fund.

Regulation: Money market funds are subject to regulation by financial authorities to ensure investor protection and stability in the financial system.