Myth of 9.1% assured return in Kotak Assured Annual Income Plan

If someone say that you can get 9.1% assured return on your investment for 20 years, will you not jump,,, That is what some “financial advisors” tell you about Kotak Assured Annual Income Plan. Tempted – do not be as there is catch. This return you get after investing for 10 years. So what is reality. Actually your investments earn only at 4% less than even saving banks rate.
Not convinced then please see attached calculations:
AssuredIncomePlan.xls - This is calculation for Kotak Assured Income Plan as per their site (http://insurance.kotak.com/individual/savings-invest/assured-income-plan.php)
DepositScheme-IS-02.xlsx - This is calculation for plain vanilla deposit after accounting for insurance premium for the required term plan, income tax on the interest income received, annuity and final payment guaranteed as above plan.
And without any surprise, the interest rate at which you need to invest is just 6% and not 9.1% to match the guaranteed return of the plan.
So beware of mixing investment with insurance…

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Update-01> Have taken 30% tax bracket instead of earlier 10% in order show worst case scenario.

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Second Innings

When we started way back in 2007, we used Wordpress to host our website since that time Blogger was not that mature and the functionality was limited. Over last 5 years Blogger has grown and lot of functionality got added. On other side we were concentrating on IPOs only that have dried up over last two years thus our website also got did not get much update. So now we want to revive our website and first logically thought was where do we host. After lot of deliberations, we decided to move to Blogger so to avoid vagaries of the hosting companies. So here we are on Blogger and with renewed mandate to expand beyond IPOs and start posting about different investment options. Thanks for all our patrons and we will ensure that we will be up to your expectations.

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