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ULIP vs Mutual fund

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Hello Team,

When individuals are in the 30% tax bracket and are considering investing in mutual funds, it might be beneficial to consider Unit Linked Insurance Plans (ULIPs). This is because investments up to 2.5 lakh INR in ULIPs are tax-free, and the returns are also tax-free.

On the other hand, in the case of mutual funds, especially equity funds, there is a 10% Long-Term Capital Gains (LTCG) tax on gains exceeding 1 lakh INR per annum.

Therefore, considering the tax benefits, ULIPs could be a more tax-efficient investment option compared to mutual funds for individuals in the 30% tax bracket.

Let me know if you know thoughts ?
 
Hello Team,

When individuals are in the 30% tax bracket and are considering investing in mutual funds, it might be beneficial to consider Unit Linked Insurance Plans (ULIPs). This is because investments up to 2.5 lakh INR in ULIPs are tax-free, and the returns are also tax-free.

On the other hand, in the case of mutual funds, especially equity funds, there is a 10% Long-Term Capital Gains (LTCG) tax on gains exceeding 1 lakh INR per annum.

Therefore, considering the tax benefits, ULIPs could be a more tax-efficient investment option compared to mutual funds for individuals in the 30% tax bracket.

Let me know if you know thoughts ?
Hello HDFC Sales Team
 
why are your comparing it based on the amount of taxes paid
look at the net returns post taxes of both the instruments
Not taxis paid, the returns on both the products seems to approximately same around 15%, for 10-15 year period, so thinking for investment period of 10 years considering 2.5L per year, total investment is 25L, return would be 2.2C, gains would be 2 cr and tax would be 20L, I'm looking for options if we can save this?
 
Not taxis paid, the returns on both the products seems to approximately same around 15%, for 10-15 year period, so thinking for investment period of 10 years considering 2.5L per year, total investment is 25L, return would be 2.2C, gains would be 2 cr and tax would be 20L, I'm looking for options if we can save this?

15% return what? absolute? CAGR?

You mean ULIP is giving XIRR of ~15% for a period of 15 years? Can you please share details of that ULIP?

I have not known ULIPs giving >7% in the long run.
 
Hello Team,

When individuals are in the 30% tax bracket and are considering investing in mutual funds, it might be beneficial to consider Unit Linked Insurance Plans (ULIPs). This is because investments up to 2.5 lakh INR in ULIPs are tax-free, and the returns are also tax-free.

On the other hand, in the case of mutual funds, especially equity funds, there is a 10% Long-Term Capital Gains (LTCG) tax on gains exceeding 1 lakh INR per annum.

Therefore, considering the tax benefits, ULIPs could be a more tax-efficient investment option compared to mutual funds for individuals in the 30% tax bracket.

Let me know if you know thoughts ?
this has been answered and discussed to death... kuch naya discussion karo yaar
 
Hello Team,

When individuals are in the 30% tax bracket and are considering investing in mutual funds, it might be beneficial to consider Unit Linked Insurance Plans (ULIPs). This is because investments up to 2.5 lakh INR in ULIPs are tax-free, and the returns are also tax-free.

On the other hand, in the case of mutual funds, especially equity funds, there is a 10% Long-Term Capital Gains (LTCG) tax on gains exceeding 1 lakh INR per annum.

Therefore, considering the tax benefits, ULIPs could be a more tax-efficient investment option compared to mutual funds for individuals in the 30% tax bracket.

Let me know if you know thoughts ?
You need to consider all factors to get the correct answer. Instead of looking at tax you need to look at final returns, where mutual fund beats ulip by a large margin in every possible scenario.

And tax are of many kind. Ulip have many charges which are technically tax: gst, The allocation charge, surrender charge etc.

The biggest difference is in one case you are giving tax on profit, whereas in other case you 1st pay tax, so your return on that part is 0. You pay it without any guarantee of any profit. You also don't have access to your own money in case of emergency or even for pleasure.

Someone might say he got 10% in ulip, if he had used the exact same tactics in mf, he wouldhave gotten 25- 30%. And this is for best ulip policies, a lot of ulip policy would hardly beat fd. And no endowment plan will ever beat fd, they won't even beat govt bonds that too with those horrible lock in periods.
 
Not taxis paid, the returns on both the products seems to approximately same around 15%, for 10-15 year period, so thinking for investment period of 10 years considering 2.5L per year, total investment is 25L, return would be 2.2C, gains would be 2 cr and tax would be 20L, I'm looking for options if we can save this?
if your research has led to this go ahead with it
 
just checked ULIP in policybazzar, 5 year returns 15%- 20%...
There is a reason why taking 1.5-2Lpa investment in ulip/endowment gets people infinnia without income doc. This is for a bank which makes so many excuse to give people millenia even after they are eligible for dcb.

Contact any bank, ask them to send tnc of their best ulip policy. Please read tnc.

Also go deeper into the calculations. Is that 15-20% is on total amount policy holder invested or total allocated fund?
 
just checked ULIP in policybazzar, 5 year returns 15%- 20%...
Ulip shows return on invested amount not on your total capital.
Example: If you invest 1L on ulip and they deduct 5k as blah blah charges. And they invested rest 95k on market .And
After one year, you got 10k return on your 95K.

So, they will show 10/95*100=10.52% approx return.
But the real return will be 10/100*100=10%.
For upcoming many years, you will lose a lot of return on compound interest.
But they will keep showing this kind of higher return you will not get in real life .
 
Ulip shows return on invested amount not on your total capital.
Example: If you invest 1L on ulip and they deduct 5k as blah blah charges. And they invested rest 95k on market .And
After one year, you got 10k return on your 95K.

So, they will show 10/95*100=10.52% approx return.
But the real return will be 10/100*100=10%.
For upcoming many years, you will lose a lot of return on compound interest.
But they will keep showing this kind of higher return you will not get in real life .
Well said. Those hidden charges eat up all the gains.
Once i have taken a 50K tax saver (one time payment), on papers the NAV was double at the time of maturity ie. 12% gain. BUT the charges ate it and brought it to some 6% worse than an FD.
 
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