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POSTED BY ON March 1, 2012 7:08 am COMMENTS (21)
Hello,
I am working for an MNC for last one year. I am looking for some traditional plan with good returns in 5-7 years. Double the amount in this period would make me as happy as peacock. Can you suggest few?
I am 23 yr old, single and I don’t have much responsibilities towards my family. My Father is a Govt.employee and he can take care of himself and mom with his earnings. I do have elder sisters who are married and well settled. There is a health care policy on every member of my family, so I don’t require health insurance too!
I was inclined towards Birla Vision as I heard that its returns are good but wasn’t too sure after reading the broucher as the guaranteed survival amount would sum up to less than what I have invested but returns what people have got in last few years is making me think.
I am looking at investing 50000-1 lakh per year. So I was thinking of going for multiple plans viz..one traditional and other linked to market. It would be appreciated from my end if you can educate me regarding the same.
Thanks and Regards,
Faisal.
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@sha faisal
You are looking for a product which does not involve risk and give you good returns.
The best product i can think of is PPF.Which gives 8.5% now with tax advantage but the problem is its a 15 year product.
Second Debt or Bond Mutual Funds which is less risk and might give return in 8% range but the return is taxable.
Only product that comes close to your need is a FD or RD for 5 years. Or a Postal RD which in current market will give around 8-9% but again the interest is taxable.
In simple terms we don’t have a guaranteed product in indian market which will make you money double within 5-7 years(ie 12%).
Dear Sha Faisal, please define your good return first. May I ask, why are you looking for such short term for traditional insurance products as mainly an investment vehicle? Can you clarify it?
Thanks
Ashal
@Ashal:
Good returns as in double the amount or something less than that. And the main reason for looking for traditional plan is the security which I get and also the risk of market would be minimum or negligible.
How do you rate Birla vision, LIC vrridhi, ICICI I Assure single plan, Birla sun life Rainbow fund. As some have advised to explore the option of SIP’s as well, what according to you would be the best way to do if I can invest Rs. 10000 per month?(not looking for tax exemption)
Regards,
Faisal.
Dear Sha Faisal, I checked some data randomly for you in Birla vision plan. Please have a look in the following link & update me with your views –
http://insurance.birlasunlife.com/BSLIVisionPlanIllustration/tabid/432/Default.aspx
Thanks
Ashal
@Ashal:
I have already seen the illustration, But at that time Guaranteed Survival Benefit Term started from 5 yrs, but now it shows as 10 yrs as starting point. So I guess the company might have made some changes in the policy terms.
And its nothing that I am looking for Birla Vision in specific. As I mentioned earlier, I am looking for 2 times the amount in 5-7 yrs. So it would be very helpful if you can educate me regarding such kind of plans if any!
It would also be highly appreciated if you throw some light on pros and cons of LIC vrridhi, ICICI I Assure single plan, Birla sun life Rainbow.
Many Thanks,
Faisal.
Dear Sha Faisal, all the 3 plans are neither good for insurance nor good for investments. This is the direct answer for your query for these 3 plans. I’m still unable to understand your affection for thinking only insurance plans & that too traditional ones for such short term of 5Y.
Please purchase a good term cover for yourself & invest your money meant for investment in pure investment products.
Thanks
Ashal
@ Ashal:
My intention is to only go for good returns without risk. But of late understood that traditional ones can’t offer more than 7-8% of returns.
What according to you are good investment plans? SIP’s?
HDFC top 200/ Franklin Blue Chip? Are these the ones you are talking about?
Please specify few if any!
Thanks n Regards,
Faisal.
Dear Sha Faisal, please quote your possible holding period. Is it going to be 5Y or 10Y or even more?
Thanks
Ashal
@ ashal,
I would like to go for 5-7 yrs and I can invest 6-7k per month.
Thanks,
Faisal.
Dear Sha Faisal, keeping your original query in mind & the later discussions that you want to put money in near zero or @ minimum risk, my take ‘ll be to opt for MIP plans like HDFC MIP Long Term plan or Reliance MIP or Canara Robeco MIP.
Please check the below link.
http://www.valueresearchonline.com/funds/h2_fund_compare.asp?mode=performance&objective=compare&select1=1930&select1=1990&select1=976
Thanks
Ashal
@ Ashal:
Many thanks for the reply.
Do I get same returns in MIP’s as we get in SIP’s?
I have seen this illustration which gave me an impression that SIP’s give good returns.
http://www.tflguide.com/2011/02/systematic-investment-plan-mutual-fund-sip-best.html
If you can explain regarding the above statement?
And I have a surplus of 60-75k with me now. How do you think I should invest this amount?
Many Thanks,
Faisal.
Dear Sha Faisal, I think you are confusing yourself between MIP & SIP.
MIP – Monthly Income Plan
SIP – Systematic Investment Plan
MIP is a mutual fund product where the Eq. component in the over all portfolio of a fund is limited say 15% or 20% or 35%.
SIP is not a mutual fund product in itself, but it’s a mode to invest your money systematically over the period of time in the choice of your fund.
First decide yourself what do you want to do with those 65-70K money in next 5-7 years & accordingly decide your choice of products. Please do not see the returns generated by the SIPs in isolation, please check & understand the risk involved also.
Thanks
Ashal
@ Ashal
Will it be correct if I say in MIP’s risk is less when compared to SIP’s. And supposing if I invest around 10k per month do you think it would be wise to go for both MIP and SIP?
And regarding my 50-75k I don’t want to touch it for next 5-7 years. But just want that amount to grow. What would be the best thing to do other than FD’s in banks?
Regards,
Faisal.
Dear Sha Faisal, I’m sorry to say but you are still confusing between MIP & SIP.
FYI please – You may SIP even in a MIP.
Please try to understand, MIP is one type of MF where as SIP is a mode to invest in any type of MFs.
It’s not necessary that SIP ‘ll always go in to a Eq. MF. You may start a SIP for a balanced fund, Hybrid fund, Income fund, Gilt Fund.
I’m not commenting on your proposed investments as I think at this stage your understanding is not correct & before investing your hard earned money, first your basics should be right.
Thanks
Ashal
@ justgrowmymoney:
Thanks for your inputs. If you can throw some more light why taking Birla Vision would be risky though its a traditional plan?
And in SIP’s I heard that HDFC’s top 200 and Franklin Blue Chip are doing well in the market. Some of my colleagues suggested to invest in Gold also.
Supposing if I can invest Rs.10000 per month will it be wise to opt for saving 2000 in RD(bank), 4000 in gold and the other 4000 in Top 200/ blue chip?
@ Sha Faisal. Birla Sunlife Vision is an excellent product for a longer horizon. Its not a product where you can double up your returns in 5-7 year time frame but if you are looking at a descent return for a 20 year horizon its definitely a good product
Lets us understand the rule of 72 first. This shows roughly how long it will take to double your money.
Rate of return = 18% : Money doubles in 4 years
Rate of return = 12% : Money doubles in 6 years
Rate of return = 9% : Money doubles in 8 years
Thus if you are looking to double your money in 5-7 years you are looking at a rate if return of 10.2% to 14.4%.
Traditional plans give at the most 5% returns (Check Enodwment/Money back plan returns here – http://justgrowmymoney.wordpress.com/downloads/). Stay away from Birla Vision. All Market linked ULIPS are front loaded and you are also hit with excessive expenses.
Since you are looking at 10-14% returns and looking at a time frame of 5-7 years I recommend investing this amount in Mutual Funds in a SIP mode. You can reasonably expect a return of 12% over periods like 5-7 years. THe returns, per today’s tax laws, are tax free.
Aternately you can also look at Long duration FD in the 9.5-10% range but the final returns are FULLY taxable at your tax slab.
It is for you to make the call now. Come back and update us!
@Ashal:
Good returns as in double the amount or something less than that. And the main reason for looking for traditional plan is the security which I get and also the risk of market would be minimum or negligible.
How do you rate Birla vision, LIC vrridhi, ICICI I Assure single plan, Birla sun life Rainbow fund. As some have advised to explore the option of SIP’s as well, what according to you would be the best way to do if I can invest Rs. 10000 per month?(not looking for tax exemption)
@ justgrowmymoney:
Thanks for your inputs. If you can throw some more light why taking Birla Vision would be risky though its a traditional plan?
And in SIP’s I heard that HDFC’s top 200 and Franklin Blue Chip are doing well in the market. Some of my colleagues suggested to invest in Gold also.
Supposing if I can invest Rs.10000 per month will it be wise to opt for saving 2000 in RD(bank), 4000 in gold and the other 4000 in Top 200/ blue chip?
Regards,
Faisal.
@jagoInvestor.Was Just reading your comment on Birla Vision.Wanted to understand why would you give an advice to stay away from this plan.I have checkout that this plan can deliver returns in excess of 8%(depending on age) for a longer horizon . As well in India we do not have any any other product which can deliver this kind of return over longer horizons say 20 years.
@justgrowmymoney