POSTED BY July 17, 2013 12:59 am COMMENTS (12)

ONHello Manish & JI Expert team,

Today I came to know about a plan from AR – AEGON Religare Assured Returns Plan

I am sure you must be aware about all details of this plan so I am not describing it.

Please suggest me with your kind & valuable comments that should I go for it or not?

In my current scenario,I want to invest some 50-60K/annum in an Debt oriented Guaranteed return investment but I am not in for of FD/RD as the interest will be taxable.

Please advise.

Thanks in advance.

Ashis

You are welcome Ashis 🙂

Hi Mohit,

Thanks for your precious suggestion & information.

It concludes our discussion & I will go for PPF+some good MF with decent return in long term.

Thanks a ton.

Yes I have considered the stoppage of Premium after 7th year in both the examples.

I am not saying PPF or any other investment is good, what I am trying to say is the plan you mentioned in your question is waste.

For long term (more than 5 years) some MF have given more that 12% return’s. So if you consider 12% they loss is huge.

Re-writing the examples again:-

1. You invest 60000 every year (5000 every month).

2. So after 7th year your total accumulation using compound interest would be 596000/-. Stop investing after 7th year.

3. From 8th Year you will be getting 90000/- every year till 14th year.

4. Total You will get 90000 x 7 = 630000.

5. After 14th years you got 630000, effective return around 3%.

Now do other calculation

1. You invest 60000 every year (5000 every month).

2. So after 7th year your total accumulation using compound interest would be 596000/-. Stop investing after 7th year.

3. You start withdrawing 90000/- every year or 7500 every month. (Your remaining balance still getting 8.8% interest every year)

4. After 14 years your total withdraw 90000 x 7 = 630000/-.

5. Still you will have lump-sum 234000/-.

Hope this will clear your doubts.

Remember it’s your hard earn money, so invest wisely and do your own calculation so in future you will be able to explain to others also.

Ashis,

What is the confusion???

its pretty clear from the example that after 14 years your loss will be 2.34 lacks (plus or minus depend of return’s rate).

I have taken example of PPF interest for the example. I don’t have any excel with me.

I have used compounded interest calculator for calculation (you can find using google).

If you are interested only in guaranteed return’s then this whole discussion is useless.

Hi Mohit,

Have you considered the stoppage of Premium after 7th year in AR plan while in PPF I have to continue it after 7th year also.

I am in for of PPF but just to make myself clear about the product I started this discussion.

Hi Mohit,

Thanks.

I am confused on the calculation.

As after 7 year,I have to continue the PPF but in this plan the premium payment will be stopped.

I am already doing PPF for around 40K/year.

Kindly help to share the excel sheet for 60k premium for both?

Also PPF rate is not guaranteed as Govt is reducing the rate every 2-3years.

1st yr to 7th yr you pay Rs.100 and get Rs150 from 8th yr to 14th yr..simple XIRR on an excel sheet gives u ~6%

Sorry to say Ashis, your understanding is wrong. Let me explain you by example, we will consider PPF return (8.86% annualized ) for the calculation. The figures in the example is not exact but close to exact.

1. You invest 60000 every year (5000 every month).

2. So after 7th year your total accumulation should be 596000/-.

3. You will get 90000 x 7 = 630000.

4. After 14th years you got 630000, effective return around 3%.

Now do other calculation

1. You invest 60000 every year (5000 every month).

2. So after 7th year your total accumulation should be 596000/-.

3. You withdraw 90000/- every year or 7500 every month. (Your remaining balance still getting 8.8% interest every year)

4. After 14 years you withdraw 630000/-.

5. Still you will have lump-sum 234000/-.

So tell me which one is batter???

I am not saying do RD or FD, but do some real calculations.

Ashis, what is the benefit on tax free 2-3% return???

First you should think about the return then tax.

You tell me which is batter from the below option:-

1) 2-3% tax free return.

2) 10% return with 10% tax (effective return would be 9%).

Hi Mohit,

I can’t understand the 2-3% return point.

It says(Guarantees) that the return is 150% of the premium which I have paid.

Means If I am paying 60000 for 7yrs from 8th yr to 14th year the payout is 90K/annum.

If I will calculate in RD,its 83K per annum after 7year(I have divided the total maturity amount into 7).

Please advise

Stay away from these kind of plans because if you compare the actual return’s percentage you will come to know the real picture.

You can invest in PPF (15 year lock-in but interest to totally tax free).

You can also invest in debt Mutual Funds but return is not guaranteed so research before investing in mutual fund.

Hi Mohit,

Thanks for your suggestion.

But here also the Maturity amount is tax free under section 10(10)D.

I am already having PPF & I am looking for some plan with Guaranteed return in 6-7yrs duration.

I can go for RD but the interests will be taxable so please advise.

Thanks

Ashis