3

I’ve recently became a member of HDFC LIFE PROGROWTH PLUS plan. The person from my savings holding bank told me about this plan. He asked me to invest 25000/- per year for 10 years, you will get good earn after 10 yrs. I said I wouldn’t like to go for 10 years instead I invest for 5 years. He said if you invest for 25000/- for 5 years you will get more than 3LACS. Is it worth to invest in this plan?

Below snapshot taken from money control website.
HDFC LIFE PROGROWTH-MONEY CONTROL
Let us consider that this is my 5th year and invested 25000/- for this year. So total investment is 125000/-. Here will I get Absolute(%) or annualised(%)?

For absolute(%) Total amount=(125000*142.6)/100+125000=303250/-

For annualised(%) Total amount=(125000*19.4)/100+125000=149250/-

Which one I get? Absolute(%) or annualised(%)?

Dilip Sarwate
  • 31,788
  • 4
  • 56
  • 124
user6161
  • 133
  • 3

1 Answers1

3

Both are incorrect.

What it says is if your fund value is 25,000 in first year; then this will earn 19.4% compound for 5 years. This is same as 142.5 absolute.

The money invested in second year, will only earn for 4 years, compound interest of 19.4%. so on ... The 25000 invested last year only 19.4 for a year.

The other aspect you are missing is when you pay 25,000; 4% goes towards charges. So you are only investing 24,000. Plus there is an amount towards life cover. Depending on age, around 1000 for one lacs. This means the investment is only 23000 or 23500.

Generally it is not advised to buy ULIP. It is cheaper to buy term insurance plus mutual fund.

Dheer
  • 57,348
  • 18
  • 89
  • 170