How Guaranteed Income Products Can Help You Build a Diversified Investment Portfolio

As the financial landscape evolves, investors are constantly searching for new ways to diversify their portfolios and generate reliable returns. One option that has gained traction in recent years is guaranteed income products. These investments can provide a steady stream of income while also offering life cover and stability. In this article, we will explore how guaranteed income products can help Indian investors build a diversified investment portfolio.

Guaranteed income products are a type of investment that provide a guaranteed return over a set period of time. They are typically offered by insurance companies and are designed to provide a stable source of income.

One of the primary benefits of guaranteed income products is that they offer a reliable stream of income. This can be especially important for investors who are approaching retirement or investing for a specified goal. By providing a steady income, these products can help investors meet their living expenses without relying solely on their savings or the performance of the stock market. This can help to reduce the risk of running out of money in retirement.

Another benefit of guaranteed income products is that they can help to diversify a portfolio. By adding these products to a portfolio that already includes stocks, bonds, and other investments, investors can reduce their exposure to market volatility. This can help to mitigate the risk of losses during market downturns and provide a more stable investment experience.

While these products are designed to provide a steady stream of income, they also offer the built in lie cover. However, It is also important for Indian investors to be aware of recent changes to taxation on income from life insurance policies with aggregate premiums above Rs. 5 lakhs. In the Union Budget, the finance minister announced that any income received from such policies would be subject to taxation at the individual's marginal tax rate. This means that if an individual's income tax rate is 30%, any income received from a life insurance policy with aggregate premium above Rs. 5 lakhs would be taxed at that rate.

While this change may impact the returns on guaranteed income products purchased after 1st April 2023, it is important to remember that these products can still offer significant benefits in terms of diversification and stability. Investors should work with a financial advisor to determine the best investment strategy for their unique needs and goals, taking into account any changes in taxation or other regulations.

In conclusion, guaranteed income products can be an effective way for Indian investors to build a diversified investment portfolio. By providing a steady stream of income, these products can help to reduce the risk of running out of money in retirement, while also offering the potential for growth and stability. While there are risks associated with these products, working with a trusted financial advisor can help investors to navigate the landscape and find the best options for their unique financial situation.