Harsh Facts of Endowment and MoneyBack Policies: Part-1 !!

“Harsh Facts!! Wait what?? What is Endowment and Money Back Policies, I am not getting. I have taken only LIC Policies” asked curious Ravi (a software engineer) to his friend Sunil (a financial analyst)

Sunil (smiled and asked) “May I know Where you have you done your Investments??

Ravi: I told you na I have taken Lots of LIC Policies.

Sunil: There you go, you have taken the Endowment and/or Money Back Policies.

Ravi: How?? I am not able not understand.

Sunil: As you said you have done Investments in LIC which comes with Pre-en build Insurance so you have mixed the Features of Both Pure Insurance and Pure Investment. You are not getting benefited both the side and will end up with very less amount.

Ravi: But, that is the Plus Point na, I took Insurance and Investments within the same Premium.

Sunil: Actually, that is the most painful thing in the whole story

If you want to grow your money to it’s utmost potential invest your money in such a product or Investment Instrument where you can truly grow your money.

In other case, If you want to Insure and Secure your family from Future unforeseen. Buy Pure Insurance Product that is Term Plan. The Benefit is that the Premium is the Lowest and the Cover is highest (Ideally Buy the Cover of at least 10 times of your Annual Income).

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Ravi: If I buy both the Products separately, It will be more costly as I will have to pay the Premium for Insurance and Monthly Amount for Investment also the fees will be charged by the Financial Planner!!

Sunil: Well, actually the Case is exact opposite of it

After Paying for your Insurance Premium and Keeping aside Investment Amount along with the fees, you will be in much more better position as your Investment returns will generate to it’s potential return over a period of time that all the expenses will be very smaller in front of that.

Ravi: Sounds Nice yar!! Could you give one example taking my Policy into consideration??

Sunil: Yeah sure, Let’s take an example of An Endowment Plan

Case 1: Suppose, Mr. A takes an Endowment Plan with Sum Assured of 25 Lakhs for 25 years. The Maturity Amount after 25 years will be around 50 Lakhs. The Annual Premium will be around Rs. 1 Lakh (Monthly Premium Rs. 8,500) So, if anything happens Mr. A during the Policy Term, he will get Rs. 25 Lakhs and if nothing happens to him then he will get Rs. 50 Lakhs after 25 years.

Ravi: (with Happy Face) See, Mr. A’s money gets doubled if nothing happens to him.

Sunil: Yeah sure, Now Let’s see the another case.

Ravi: Yes, go ahead

Sunil: Let’s see Another Example

Case 2: Suppose, Mr. B decides to go for Pure Investment and Pure Insurance both separately.

He takes Term Plan as Pure Insurance with Rs. 500 monthly premium and invest the remaining amount Rs. 8, 000 in a good SIP. Mr. B also continues the same for 25 years just like Mr. A…

Ravi: (Interrupting Sunil) So, what Mr. B gets in return??

Sunil: I was coming to that only.

As Mr. B has taken the Term Plan, it has cover of Rs. 50 Lakhs and invested the remaining amount which can potentially generate around Rs. 1.7 Crores, taking 12% average rate of return into consideration.

Ravi: Sunil, Don’t tell that you are kidding. I just got my goosebumps.

Sunil: No Ravi, I am not kidding at all.

Ravi: Mr. B is in Win-Win Situation. He not only got “Double Life Cover” but at the same time he could also Accumulate the Corpus more than “7 times” in the same span of time.

You have opened my eyes Sunil. I am lucky that I have a friend like you who guided me on correct time.

Today, I learned that We should Keep Insurance and Investments separate to Enjoy the benefits of both.

Sunil: I am Happy to share knowledge with you Ravi. See you.

(The Communication stops for the day and Both goes back to their Offices)


If you find difficulties in above, hire someone who can guide in your interest.

We look forward to your feedback and comments on the above article.

The Author Laxman Agrawal (BMS Finance) is AVP with Nidhi Investments, Mumbai. He may be contacted on Laxman.nidhiinvestments@gmail.com if you have any questions.

(The views mentioned in the article are personal opinion of the author)







Smart Ways of Saving Tax Under 80C


There are certain smart ways through which We can save Tax Outgo. The Section 80C gives us the highest exemption on Investments of up to Rs. 1.5 Lakhs.

Following are the Options available which can save our Taxes:

1. PPF (Public Provident Fund)

Pros: a. Fixed Interest at 8% p.a. (Keeps changing according to the G-Sec Yield)

b. Interest Earned is Tax Free

c. Loan Facility is Available

d. Min Subscription Amount is Rs. 100 for Opening the Account and Rs. 500 per annum compulsorily in a Financial Year.


a. 15 Years Lock-In-Period

b. Pre-mature Withdrawals are allowed only after 7 years

c. If the Interest rates are dropped then the Earlier Investments are also paid at lower Interest rates.

d. HUF and Non- Residents can not open PPF Account

2. Tax- Saving FD (Fixed Deposit):


a. Fixed Interest 6-7% differs from Bank to Bank

b. 5 Years Lock-in-Period

c. Individuals and HUFs can invest in FD.

d. Min amount is Rs. 100 and Rs. 1.5 Lakhs can be invested in a Financial Year.


a. Only 1 time i.e. Lumpsum Investment are allowed.

b. Interest is Taxable either in TDS form or Applicable Tax Slab rate.

c. Loan against Tax Saving FD is not allowed

d. Post Inflation and Post tax returns could be Zero to Negative.

3. Sukanya Samriddhi Yojana


a. Account can be opened by Natural or Legal Guardian in the Name of the Girl Child.

b. Min Investments Amount is Rs. 250 ( Reduced from Rs. 1000)

c. Currently the Interest rate is 8.5% p.a.

d. 50% Withdrawals are allowed after the Girl Child attains 18 years of age.


a. Available only for Girl Child who have not attended the age of 10 Years.

b. Lock in Period or the Account will be operative for 21 years or till the Girl attains her Marriage.

c. Interest is not Fixed. The Government declares from time to time.

4. Payment of Tuition Fees:


a. No Additional Investment Required

b. Helpful for those Parents whose Children go either to School or College

b. 2 Children are applicable to avail the benefit (4 in case if both the parents are tax payers)


a. No returns as it is not an Investment.

b. Deductions includes specifically for tuition fees only

c. The school, college or university in which a child studies should have necessary affiliations (Only Recognized Indian School/Universities)

d. Parents can avail benefits for their own children only

e. HUF and Corporates are not Eligible.

5. Term Plan


a. Pure Insurance

b. Policy Period Min 5 Years and Max 25-45 Years

c. Low Premiums with High Coverage Amount


a. No returns if Insured Survives

b. No return as it is not an Investment

c. No Loan Facility available

6. Principal Repayment of Home Loan


a. No Additional Investment other than the Payment of Regular EMI for Home Loan

b. No Return, Hence No Tax


a. The Tax Benefit will not be applicable, If the Assessee sells the Property before the Expiry of 5 years.

b. Tax benefit of Home Loan under this section for repayment of principle part of the home loan is allowed only after the construction is complete and the completion certificate has been awarded.

c. The Tax benefits are available only on the Principle amount and not on the Interest Amount. (Can be availed for ‘Repayment Schedule’ from your Bank to know the Every month Proportion of Principle Amount)

d. Tax Deductions are allowed to Individual and HUF only.

7. National Saving Certificates (NSC)


a. Fixed Interest 8% p.a. Compounded Annually

b. Min. Rs. 100 and in multiplies of Rs. 100 and there is no Maximum Limit for investment.

c. Certificates can be kept as collateral security to get loan from banks.


a. 5 Years Lock-in-Period

b. Taxable and No Tax deduction at Source upto Rs. 10,000

c. NRI, Trust and HUF cannot invest.

8. SCSS (Senior Citizen Saving Schemes)


a. Fixed Interest 8.7% (Compounded Quarterly)

b. Min Investment is Rs.1000 and Max not exceeding Rs. 15 Lakhs.


a. 5 years Lock-In-Period

b. Min age required is 60 years (55 or above in case of Retirement on Superannuation or VRS)

c. Taxable and TDS will be deducted if the Interest Amount is above Rs.10,000.

9. ULIPS (Unit Linked Insurance Premium)


a. Returns are Market Linked

b. Top up Facility available


a. 5 Years of Lock-in-Period

b. Higher Charges (5 Types of Charges)

c. Mixing of Investments and Insurance

10. ELSS Mutual Funds (Equity Linked Saving Schemes MF):


a. 3 Years Lock-in-Period

b. Professional Management

c. Diversification and Investor’s Need basis

d. Liquidity

e. Market Linked Returns


a. Good Return potential in Medium and Long Term only (Atleast More than 5 years)

b. Volatility


d. Fund Selection could be a Challenge.


If you find difficulties in above, hire someone who can guide in your interest.

We look forward to your feedback and comments on the above article.

The Author Laxman Agrawal (BMS Finance) is AVP with Nidhi Investments, Mumbai. He may be contacted on Laxman.nidhiinvestments@gmail.com if you have any questions.

(The views mentioned in the article are personal opinion of the author)






Mutual Fund Wali Train!!

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Just like Every Single day, Amit (Jewellery Designer) and Dhananjay (Salaried Guy) took train from Thane and was Waiting for Pankaj (Owner of Medical Shop) and Rajesh (Children Garments Owner) to join them from Mulund.

Meanwhile only, Amit met Kailash (Marketing Head) who used to take the train from Dombivali, and He introduced Dhananjay to him.

As soon as the Train reaches Mulund, Pankaj and Rajesh joins them. The Journey for each one’s offices Starts.

Pankaj starts telling Whatsapp jokes and everyone laughs.

Kailash and Dhananjay were talking with each other about their Professions and Kailash says “Mutual Funds main toh Risk hota hai na”!!

The Communication between both Started in this way:

Dhananjay: The Train in which you travel daily is also risky.

Kailash: Bro, I am not Standing at the door and waiving my hand outside of the train.

Dhananjay: Yes, definitely. Neither you should be doing all these Life risky things.

This is how the Mutual Funds also work If you sit inside the train as in Make Investment habit and don’t Buy and Sell hearing Market News then you will reach your Destination as You Achieve Goals within Stipulated Time Period.

Kailash : One More Genuine Doubt Dhananjay

Dhananjay: Yeah, go ahead

Kailash: (Smiling) In Between If I want Money before my time Period then…

Dhananjay: This is Like saying You want to get down from the train just because You want to try some Chilly Snacks which are available at the Platform.

Kailash: Oooh Acha !! And If I want Money in Urgency then

Dhananjay: Hmm Good Question. For that you will have to define the Urgency for you that Which Extreme Situations you will call Urgency like It Could Be Serious Admit of Family Member in Hospital or Sending Urgent Money to Your Parents like that.

Kailash: Ohk, I will define my Special Situations.

Dhananjay: See Ultimately, The Money is Yours right!! So the Final Decision Maker goes with you.

You have the full right to take call on your Money but at the same time, You have to decide Whether You will be consistent to make Small Small savings for You and Your Family or You want to get down at Every Station as Playing with your Money blindly without any knowledge.

This way, You will never reach any destination. And when you realize the same that will be too late.

If you find difficulties in above, hire someone who can guide in your interest.

Kailash: Thank you so much for Removing all the Myths from my mind Dhananjay. Now I could imagine a bright Future waiting for me and my family.

Everyone Gets down at the CST Station for their Offices.

(The Article is based on True Story where the Name of the Characters has been Changed)

We Look Forward for your Feedback.


The Author Laxman Agrawal (BMS Finance) is AVP with Nidhi Investments, Mumbai. He may be contacted on Laxman.nidhiinvestments@gmail.com if you have any questions.

(The Views mentioned in the article are personal opinion of the author)







21 SIP Questions Answered

  1. What is SIP? How it works!! IMG-20180924-WA0042.jpg


a. SIP is Systematic Investment Plan. The Full form itself suggests that it is the Systematic way of Investing.

b. In summary, A Fixed Amount of Money gets Invested every month in the Pre-decided dates. (Generally after Salary day or Income Day)

2. What is the Most Important feature of SIP??

Answer: Every month a Fixed Amount is invested irrespective of Market Going up or down so we continuously buy when value increases as well as when the markets are cheap to buy, benefiting Cost Averaging.

3. Is there only Monthly SIP??

Answer: SIP can be of Daily, Weekly, Half-monthly, Monthly, as well as Quarterly but ideally Monthly SIPs are more ideal way to Invest.

4. Does SIP consider Compounding Effect??

Answer: Yes, It considers Compounding effect that means it generates Growth on Investment value over a period of time.

5. Are Mutual Funds and SIP same??

Answer: The Mutual Funds are very broader concept and the SIP is a way of Investing in Mutual Funds.

6. How SIP Invests Investors’s Money??

Answer: The SIP comes with pre in-built Diversification Feature (Companies as well as Sector Wise) so with as small as 7000 SIP or 10,000 SIP it invests in more than 40-45 Companies.

7.  Does SIP carry risks??

Answer: Yes, In the short term say for 3-6 months or a year it’s value fluctuates with volatility in the Market but in the long term say atleast 10 to 12 years SIPs are the True Wealth Creators.

8. Do SIPs can be Stopped on event of Stopping of Income??

Answer: The Investor can choose to Stop SIP with immediate effect and again can restart as the Income Starts.

9. What happens when investor dies during his SIP Investments??

Answer: The Accumulated amount can be transferred to his/her Nominees.

10. Do we require any Documents for Investments??

Answer: PAN Card, Address Proof and Bank Account is Mandatory for Investments.

11. Does all SIPs same??

Answer: There are many types of SIPs which generally depends on Investor Time Horizon, Underlying Portfolio, Fund Manager, Investor Goals, Risk Tolerance, Monthly Installment Amount.

12. Do SIP offer some Tax Deduction also??

Answer: Tax Saving SIPs invests in ELSS (Equity Linked Savings Scheme) with 3 Years Lock-in-Period offer Tax Deduction under Section 80c.

Please note that Every Installment should complete atleast 3 years of Lock-in-Period

13. Should SIP be redeemed in mid-way??

Answer; Generally, SIP Investments are done to create Wealth and to achieve some goals (Like Accumulating Retirement Corpus, Buying a House, Son and daughter Education Fees which will require after 15-18 Years) in Long Term. So, Ideally, we should not try to Redeem our money unless it is very much necessary and we don’t have any other sources available.

14. Do SIP offer Liquidity??

Answer: For Liquidity Purpose invest in Liquid Fund SIPs.

15. Can I close my SIP during I am alive??

Answer: Yes, you can close your SIP anytime.

16.  Which are the Best SIPs??

Answer: There is no Best SIP as such. There is something called as suitable SIP which are evaluated on several Parameters like Underlying Portfolio, Investor Profile, Required Money in the Distribution Stage and it differs from Investor to Investor.

17. Can I check my SIP Investment Value??

Answer: The Investor gets Monthly Statement  after every Investment he has made via Email and Message Link.

18. Who are Eligible for Starting their SIPs??

Answer: Individuals, Partnership Firms, HUFs, NRIs and Corporates are Eligible for Investment.

Parents can also Invest for Minors in the name of their own.

19. How frequent do I need to review my SIP??

Answer: At least once in a Year but not more than twice in a year.

20. What is the best time to invest in SIPs

Answer: Everytime is best time for Saving Our Hard Earned Money. SIPs are considered an ideal way of investment in the sense as When the Markets are in high we buy less amount of Investment and when the Markets are low then We buy large amount of units leading Total Cost Averaging.

21. What should be my First step before starting to Invest in SIP

Answer: Follow these Steps:

  1. Understand your Financial Situations first. (Where are you today)
  2. Do some calculations and Prepare a Budget
  3. Define and set realistic and relevant Goals
  4. Start SIPs for your Goals.

If you find difficulties in above, hire someone who can guide in your interest.

(Mutual fund investments are subject to market risks read all schemes related documents before investing)

The Author Laxman Agrawal (BMS Finance) is AVP with Nidhi Investments, Mumbai. He may be contacted on Laxman.nidhiinvestments@gmail.com if you have any questions.

(The views mentioned in the article are personal opinion of the author)







First blog post

My dear Friends,

This is my Blog where you will see a List of Articles on Personal Finance which will be coming slowly-slowly.

You can get in touch with me on Laxman.nidhiinvestments@gmail.com for your Queries on Personal Finance.

Your Suggestions and Feedback are always Welcome.

Thanks My Friends.