Please compare Mutual fund & ULIP return?



I am planning to invest in Reliance Tax saver (providing SIP+Insure). I want to compare its return with ULIP. I am assuming that NAV of both ULIP & Mutual fund will grow at 15% per annum over a period of 10 years.

Please advice how much I will get if I am investing Rs 5000 per month.

2 Replies to “Please compare Mutual fund & ULIP return?”

  1. You are investing in a tax saving scheme(Reliance Tax saver SIP+Insure) , which is providing free insurance & if you invest directly by going to Reliance office, you save the entry load of 2.25%. Exit load of 2% is also saved if you do not withdraw till maturity. Also there is no mortality charge as insurance is free. Then AMC charges are already included in NAV so I can safely assume that you will get true 15% return in hand if NAV grow with 15%. With your 5000 PM investment(total 6L in 10 Years), you will get 13,93,286.36 on maturity.

    Now in case of ULIP, I will have to deduct various charges like premium allocation, policy administration & mortality charge(One should not mind paying this charge as it is going towards cost of insurance. but in your case, I am considering it as insurance is free in SIP+insure). I can safely assume that these charges will eat your 4% of return in long run.
    Considering this your return will be 11% & you will get 10,97,516.47.

    Even you can apply the normal logic that one product is full of charges(ULIP) & other is having no charges after NAV (Mutual Fund), how can ULIP give higher return if NAV growth is same.

    I have verified it for last 3 & 5 years that growth/decline in NAV of both Mutual Fund & ULIP is same. Even if you do not invest in any scheme providing free insurance you should buy term insurance & invest in mutual fund (for risky investment ) & PPF (for assured return)






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