Capitalmind
Capitalmind
Actionable insights on equities, fixed-income, macros and personal finance Start 14-Days Free Trial
Actionable investing insights Get Free Trial
Foundations

Video: Pension Plans vs. Do It Yourself

My latest Deepak Shenoy Talks Video on the Max New York Life Insurance Plan I was sent recently. Thought I’d do a video format and demonstrate exactly how much you lose when you go with a pension plan, compared with doing it yourself.

 

In this plan comparison, just investing in a Nifty ETF and getting 1/10th lower returns than thei pension plan’s advertised 10% gives you a 37% higher “pension” than the pension plan.

Outperformance by sitting around and working three formulas on an excel sheet. In fact, if you take real world investments, you would outperform by about 70%.

What I didn’t mention: the flexibility of doing it yourself is that you can also increase investments when you have money, and stop it when you need money.

Update: P V Subramanyam on Subramoney said I missed out on something important. And guess what: He found out: What happens if the person dies after 5 years of retiring? The remaining money goes to Max New York Life! Meaning – they offer this as a pension for life WITHOUT return of principal, which makes the plan EVEN more bad, in comparison with the g-sec investment. (where, if you die, your next-of-kin inherits the bonds, the cash flow and can do what they want with it).

Links:

Like our content? Join Capitalmind Premium.

  • Equity, fixed income, macro and personal finance research
  • Model equity and fixed-income portfolios
  • Exclusive apps, tutorials, and member community
Subscribe Now Or start with a free-trial