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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).


  • Sachin says:

    >thank you deepak… very useful info

  • Anonymous says:

    >Great post! Can you tell me who can I buy a Govt bond?

  • kamath says:

    >Hi Deepak,
    Thank you . it was really very good.Think the same analysis would hold good for NPS too. Do you think for a person , who saves/Invests regularly. must not consider NPS . Please do let know your views


  • Raja Panda says:

    >Hi Deepak,

    Excellent presentation! Kudos to you for keeping us all educated.

    I was just wondering if you can you refer me to a CFP in Bangalore, whom you might know?

    I am 32 years old and have been earning since last 8 years and haven't done much for planning my financial future. I have been too busy fulfilling my obligations as a son/brother which is typical of a person coming from lower middle income family. I think now is the time (from my perspective) to look after my financial future well. So, if you can refer me someone who can guide me with his services it will be great.


  • Kunal Kothari says:

    >Wow what an eye opener post ! Never knew that we can do what the big fund managers do all the time i.e. make money for one's self ! 🙂

  • Sheetal Arya says:

    >Nice attempt but calculations i think needs to be done again. You have propbaly assumed no recuring charge of 1 % in etf while the figures from insurer would have that charge. even .5 % brings a big chnage overall.

  • Deepak Shenoy says:

    >Sheetal – Consider the 9%is already 1% lower than the insurer's return expectations – in fact Nifty Bees only chargs 0.5%. Plus they charge Rs. 400 p.a for the insurance, I've assumed Rs. 2,400 per year. Even then we're speaking of a 37% better return!

  • mjain says:

    >Nice job! Way to keep these guys on their toes. Keep it up.

  • Muralisk says:

    >This is very informative and very useful for people trying to buy fancy ULIPS and Pension products. Thanks Deepak.

  • G_talk says:

    >Hi, I am keen to make a 5k contribution per month towards a disciplined investment. Thank GOD I saw this post or I was a gonner. Can you pls advise the best few funds to invest into and how do I do it direct..?

  • Vini says:

    >That's very informative. Only one thing, where do I buy government bonds?