Please help to evaluate Kotak Capital Multiplier plan

POSTED BY Amol Kulkarni ON February 10, 2011 10:31 pm COMMENTS (3)

I was presented the Kotak Capital Multiplier plan which is an endowment plan investing in government bonds & money market instruments. They are claiming 9 – 10% returns plus bonus by the company. But I’m unable to calculate the returns from the illustration given by them. Kindly help in calculating returns. I checked the IRR and XIRR on your site but it did not seem to fit in those 2. Here is the illustration :

Invest 1 lac rs for 5 years only.

From 6th to 20th year you will get 72000 Rs per year

In the 21st year you will get 11 lac Rs. 

So total return is 21 lac Rs for investing 5lac Rs.

But it seems too good to be true.

Kindly help.

 

3 replies on this article “Please help to evaluate Kotak Capital Multiplier plan”

  1. amol

    whatever was told to u seems to be just an illustration only , there is no was bonds can give this much returns guaranteed .

    Unless its writtwn clearly in brochure that its giving so muvh returns , dont beleive anyone .

    Manish

  2. Ajay says:

    Amol –
    You kind of made me greedy for a moment 🙂
    Like you said it is too good to be true…

    There is nothing mentioned in the product brochure that tells about the guaranteed returns expect a small fine print (probably font size zero :))that says that the illustrations (the 6% and 10%) also include a 3% guaranteed return

    The brochure says for an premium of 13200 p.a the returns are 538,000 (@6%) and 853,000 (@10%) for a period of 25 years

    From Jagoinvestor calculators using the constant SIP calculator
    for an investment of 1125 p/m (13200 p.a) for 25 years at 6% gives 783,516 and at 10% gives 15,05,127

    Not appealing… at-least for me….

    You can find the brochure here
    http://insurance.kotak.com/individual/pdf/KotakCapitalMultiplierPlan.pdf

    There is also a fine print that says
    “^The actual growth rate assumed is 5.09% and 8.18% corresponding to gross investment returns of 6% and 10% respectively.”

    Can someone explain this….

  3. dina says:

    it appears to give 11.44% return. This is after all expenses, premium deduction which is very good. I suspect you have not shared some information here. here is link to spreadsheet calculation.

    https://spreadsheets.google.com/ccc?key=0Ar-BKteYQShkdFFOOE5oYTdnMkNzMHRZZ2JtYU5ZYnc&hl=en_GB&authkey=CL2Dxv0E

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