Are ULIPs really bad? A detailed analysis

[Lobogris]

Bro has been yapping for more than a here about ULIP on TF. His argument are childish everytime. I said it before it’s fine you have taken Infinia against ULIP but don’t go and preach about how much you love ULIP and calling it as a diversification 🤣
His justifications are ridiculous.

How is it childish? I have presented concrete figures whereas you are just making statements without any facts or figures.

 

[Lobogris]

Bro would likely to preach investing in regular MF soon after taking Infinia Reserve, calling it another diversification.

Once again, people can and do have multiple investments. It's like picking 4 properties, four different stocks and 4 mutual funds to invest in. Some gold, bonds and overseas added to the mix. Now, all are not going to perform the same. Some will give higher returns, some lower and a few could even be loss making. This is what diversification means. You don't blindly see which single investment has done the best and put all the eggs in the same basket. If a bank offered me something I wanted in exchange for some investment and I had the means to invest, then there is nothing wrong in it. It's a give and take. Money isn't there just to be accumulated. It's meant to be used to make things easier and better.

 

[m4b]

How is it childish? I have presented concrete figures whereas you are just making statements without any facts or figures.

Yes, been there already before. I am not playing games anymore.

 

[Lobogris]

I wasn't prepared for someone defending ULIP on technofino which are notorious for mis-selling and poor returns. Even laziest FDs have more returns. Either he deliberately advising ULIP or an agent. There are thousands of videos on YouTube against ULIPs.

Please don't make baseless allegations. Show me a single post where I have ever tried to sell anything to anyone. This is an open forum and different people will have different views. Why should it be limited to only one sort of view that is aligned with your thinking? You are free to invest wherever you like and I am free to do the same. All I have done is presented an analysis of my ULIP along with pros and cons. I have never encouraged anyone to invest in it.

 

[Lobogris]

Yes, been there already before. I am not playing games anymore.

Ok, then refrain from baseless attacks.

 

[m4b]

Once again, people can and do have multiple investments. It's like picking 4 properties, four different stocks and 4 mutual funds to invest in. Some gold, bonds and overseas added to the mix. Now, all are not going to perform the same. Some will give higher returns, some lower and a few could even be loss making. This is what diversification means. You don't blindly see which single investment has done the best and put all the eggs in the same basket. If a bank offered me something I wanted in exchange for some investment and I had the means to invest, then there is nothing wrong in it. It's a give and take. Money isn't there just to be accumulated. It's meant to be used to make things easier and better.

that, I say you should stop at that line only. Not go and tell everyone to buy this shit.

 

[m4b]

Ok, then refrain from baseless attacks.

Bro you have been so baseless till now. Not even saying dark truths of ULIP. Watched the video and blamed zerodha. You didn’t even acknowledge the dark pattern that was said in the video 🤣🤣

 

[diptarkaroy]

Bro you have been so baseless till now. Not even saying dark truths of ULIP. Watched the video and blamed zerodha. You didn’t even acknowledge the dark pattern that was said in the video 🤣🤣

Please don't fight among ourselves, we are here to learn from each other.
If ULIP suits him, let it be. If you can't support, that's fine.

However, I'm with the same opinion as you, ULIP is never a good investment. I did a lot of comparison study 1 year back when I was approached by my HDFC RM for ULIP against Infinia. I rejected that idea after detailed analysis. But may be he is earning more returns (including Infinia rewards) as per his spending pattern.

 

[HumorSimpson]

Please don't fight among ourselves, we are here to learn from each other.
If ULIP suits him, let it be. If you can't support, that's fine.

However, I'm with the same opinion as you, ULIP is never a good investment. I did a lot of comparison study 1 year back when I was approached by my HDFC RM for ULIP against Infinia. I rejected that idea after detailed analysis. But may be he is earning more returns (including Infinia rewards) as per his spending pattern.

Atleast for this sane comment you deserve Nobel prize Mr. POTUS

 

[m4b]

I won’t be su

Please don't fight among ourselves, we are here to learn from each other.
If ULIP suits him, let it be. If you can't support, that's fine.

However, I'm with the same opinion as you, ULIP is never a good investment. I did a lot of comparison study 1 year back when I was approached by my HDFC RM for ULIP against Infinia. I rejected that idea after detailed analysis. But may be he is earning more returns (including Infinia rewards) as per his spending pattern.

It’s chill. We fight for 2-3 days once a year 🤣

 

[HumorSimpson]

We fight for 2-3 days once a year 🤣

change year to a week and you are practically in matrimony.

 

[diptarkaroy]

Atleast for this sane comment you deserve Nobel prize Mr. POTUS

Thanks for your attention into this matter
I will reduce your tariff by 50% soon

 

[Lobogris]

that, I say you should stop at that line only. Not go and tell everyone to buy this shit.

Please show me a single post where I have told anyone to buy anything.

 

[m4b]

Please show me a single post where I have told anyone to buy anything.

Cool, now add this disclaimer.

 

[shashank08]

Excellent analysis. Thank you so much for making this sheet. You are correct in general but have neglected the tax benefit.
Take the MF value of 16344780 and deduct 12.5% tax and it becomes 14301683. Now, we are much closer to the ULIP. In addition, the tax rate is very likely to rise to 15 or even 20%. So, your calculation underscores my initial analysis. A MF is slightly better than a ULIP but the ULIP, if held to maturity, isn't as bad as most people make it seem.

in general MFs returns are higher than the ULIP returns..
What I have observed in long term, ULIPs funds returns dont beat after tax returns of the MFs.
ULIPs returns don't have very high alpha.
One midcap example I have already given earlier.

This is another example of Bluechip fund which is specifically largecap fund:

Here is snapshot of HDFC ULIP provided fund:



Whereas some of the good consistent performers in largecap space has given 10 years returns around 14%. If i remove 12.5% tax as well then return comes as 12.25% which is higher than ULIP return of 11.8%.

You can refer to my earlier analysis where we both agreed that MFs post tax returns are going to be equivalent to the ULIP return but I havent seen MFs post tax returns are less than any comparable ULIP fund.

Also while calculating tax you forgot to deduct initial investment of 20L as tax is on capital gain not on whole corpus.

So overall is :

• I have included all the goodness of ULIP like return of mortality/insurance/fund management charges etc. while calculated the return of ULIP.
• I haven't included 1.25L tax harvesting which you can do using MFs in MFs returns. 3rd Year onwards you will be able to save tax on 1.25L every year which also I haven't considered positive for MFs returns. This result into around 22L without tax gain.
• I haven't included higher returns which smallcap can provide if MFs portfolio is properly created whereas HDFC ULIP doesnt provide any fund for Smallcap exposure.

So even after giving all the advantages to ULIP like equal return as post-tax return of MFs (which is not usually the case as in long term MFs post tax returns beat the ULIP returns easily), not counting tax harvesting, etc, ULIP return can't beat MFs return.

And the case of increasing capital gain tax thats in future and you never know govt may start imposing the tax on ULIPs as well.
So we should do analysis as per current scenario not as per future speculations. 😉 😉

So again choosing ULIP or not choosing is personal preference but overall analysis certainly denotes that ULIPs are always inferior than an average return MFs portfolio.

Your further inputs will certainly help me refine my understanding further. So always open to learn more about investment options like ULIPs, etc. You never know you will find a gem in these discussions.

 

[BhaiyaJi]

 

[ashwinikumar900]

THUMB RULE - never plan your finances on the basis of credit card cashback or benefits.

MANN KE GATI SE BHI TEJ PALATE HAIN WO.

 

[BhaiyaJi]

THUMB RULE - never plan your finances on the basis of credit card cashback or benefits.

MANN KE GATI SE BHI TEJ PALATE HAIN WO.

100%
Kya pata rewards kal ho na ho.

 

[desiviru]

Better buy agri land and grow Tulip and it will give you Rs.1.1 crore return on sub 25L investment every year.

Say Yes to T-ULIPs and no to ULIPS.

Tulips Zindabad.

P.S: I will soon have a Tulip Garden. Let the fall season arrive. By spring they will grow and sold. #WinterProfits

 

[ashwinikumar900]

Better buy agri land and grow Tulip and it will give you Rs.1.1 crore return on sub 25L investment every year.

Say Yes to T-ULIPs and no to ULIPS.

Tulips Zindabad.

P.S: I will soon have a Tulip Garden. Let the fall season arrive. By spring they will grow and sold. #WinterProfits

😄 I have planted SAGWAN trees on my land.