Everyone dreams of building wealth, but for many people daily life makes this financial goal less attainable. That is not to say; however, that it is an impossible feat for Bangladeshis. It requires small investments of your earnings into products that can create income later in life and generate wealth over the long term. While most Bangladeshis tend to focus on putting their earnings in bank accounts, lower interest rates on deposits are making other types of investment schemes look attractive. Investing intelligently can help you to generate income and build wealth to secure your financial future. Therefore, it is critical to pick the best investment plan based on your current life stage, long-term needs, and risk appetite. Compared to a pure savings plan, an investment product can stretch your money further and beat inflation over time. Read on to find out how you can invest money wisely and successfully fulfill your wealth and financial goals. 

What is an Investment Plan?

Before going into detail about the various types of investment plans, let’s first establish how investments differ from savings plans. Each type of investment plan represents different approaches to building wealth that accomplish distinct goals within an overall financial strategy. For the risk-averse, savings plans enable people to safely accumulate money over time. Typically it is money set aside for an emergency or future purchase.

In Bangladesh, savings certificates like the five-year Bangladesh Sanchayapatra or three-monthly profit-bearing Sanchayapatra offer interest payments periodically until the plan matures, according to the Department of National Savings. However, there is a limit to the amount that individuals can invest. Mutual funds are collective investments in which pools of money are invested in the stocks and bonds of various public companies and managed by a fund manager. Additionally, the Mudaraba Special Savings (Pension) Scheme, which is based on Shariah Principles, encourages middle and lower-middle class professionals and service holders to save for old age based on their ability. Account holders under this scheme receive a minimum of 65% of the income derived from the Mudaraba Fund during any accounting year, according to their contribution to the total investment.

Investors in Bangladesh can also consider purchasing insurance plans as an investment. In addition to protecting you and your family from risks, insurance policies like Savings and Investments can transfer the cash value of your policy and dividend into an Investment & Protection Account (IPA). This allows policyholders who are approaching partial or full maturity of their existing policy to use the net maturity values to enhance their current protection or transfer it to a tailor-made policy. If you want the peace of mind of securing your family’s financial future, a life insurance plan that generates good financial return can be a great option.

How to determine the best type of investment plans

While there is no one-size-fits-all approach to meeting your financial goals, it is important to balance your risk tolerance with your expectations for returns and liquidity needs throughout life. For this reason, it is advisable to identify various types of investment and savings plans.

Once you have established your motive for investing, choosing the product becomes rather easy. Consider the following when planning your investments

Choose investments carefully after conducting research

• Don’t fall for “quick-buck” schemes that promise high returns in a short time
• Review your stock and mutual fund investments periodically
• Consider the tax implications of the returns you earn on investments
• Keep things simple and avoid complicated investments that you do not understand
• How much you are earning and how many financial dependents you have

A young investor will have vastly different investment goals than an older individual. Therefore, investments should be chosen carefully, with the guidance of a financial advisor to get the most out of it.A young investor will have vastly different investment goals than an older individual. Therefore, investments should be chosen carefully, with the guidance of a financial advisor to get the most out of it.Find out the various types of Savings and Investment Plans and other life insurance policies available at MetLife Bangladesh.

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Frequently Asked Questions (FAQs)

1. What is an investment plan?

An investment plan is an approach to using money to build wealth and meet future financial needs. Different investment plans support different goals within an overall financial strategy.

2. What is the difference between saving and investing?

Savings plans generally help people accumulate money over time for emergencies or future purchases. Investment plans are intended to build wealth for future needs but may involve more risk than traditional savings options.

3. What savings certificates are available in Bangladesh?

The content identifies the following savings certificates:Five-year Bangladesh SanchayapatraThree-monthly profit-bearing SanchayapatraAccording to the content, these instruments provide periodic interest payments until maturity, although limits apply to how much an individual may invest.

4. How do mutual funds work?

Mutual funds pool money from multiple investors and invest it in the shares and bonds of different public companies. These investments are managed by a fund manager.

5. What is the Mudaraba Special Savings or Pension Scheme?

The Mudaraba Special Savings (Pension) Scheme is a Shariah-based arrangement intended to help middle- and lower-middle-class professionals and service holders save for old age according to their financial ability.According to the supplied content, account holders receive a minimum of 65% of the income earned by the Mudaraba Fund during an accounting year, based on their contribution to the total investment.

6. Can life insurance be part of an investment plan?

Yes. According to the content, investors in Bangladesh may consider certain life insurance plans as part of their financial planning. Alongside providing protection against risks, some policies may include savings or investment-related features.

7. What is an Investment & Protection Account or IPA?

According to the content, certain Savings and Investments policies may transfer the policy’s cash value and dividend into an Investment & Protection Account (IPA). Policyholders approaching partial or full maturity may be able to use the net maturity value of an existing policy to enhance current protection or transfer it to another suitable policy.

8. How can I choose a suitable investment plan?

First, determine why you want to invest. Then consider your expected returns, liquidity needs, risk tolerance, income, financial dependants, and stage of life. There is no single investment approach that suits everyone.

9. What should I consider before investing?

The content recommends that investors:

• Conduct proper research before choosing an investment
• Avoid quick-money schemes promising high returns within a short period
• Review share and mutual-fund investments regularly
• Consider taxes on investment income
• Avoid complicated investments they do not understand
• Consider their income and number of financial dependants

10. Should younger and older individuals follow the same investment strategy?

Not necessarily. A younger individual may have different financial goals and needs from an older individual. Investment decisions should therefore consider age, income, dependants, financial objectives, and risk tolerance.

11. Should I trust a scheme that promises high returns quickly?

The content advises investors not to fall for quick-money schemes that promise high returns within a short period. Investments should be selected carefully after conducting appropriate research.

12. Why should I consult a financial advisor before investing?

A financial advisor may help assess investment options based on an individual’s age, income, financial dependants, risk tolerance, and objectives. This may make it easier to choose an investment approach aligned with the individual’s financial goals.