{"id":293,"date":"2010-03-21T05:55:35","date_gmt":"2010-03-21T05:55:35","guid":{"rendered":"http:\/\/www.apnaplan.com\/?p=293"},"modified":"2012-02-16T13:33:10","modified_gmt":"2012-02-16T13:33:10","slug":"bajaj-allianz-shield-plus-review-who-is-laughing-on-whom","status":"publish","type":"post","link":"https:\/\/www.apnaplan.com\/bajaj-allianz-shield-plus-review-who-is-laughing-on-whom\/","title":{"rendered":"Bajaj Allianz Shield Plus &#8211; Review &#8211; Who is laughing on whom!"},"content":{"rendered":"<p style=\"text-align: justify;\"><a href=\"http:\/\/www.apnaplan.com\/wp-content\/uploads\/2011\/09\/bajaj-shield-plus-review.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignleft size-medium wp-image-294\" title=\"bajaj shield plus review\" src=\"http:\/\/www.apnaplan.com\/wp-content\/uploads\/2011\/09\/bajaj-shield-plus-review-300x216.jpg\" alt=\"bajaj shield plus review\" width=\"300\" height=\"216\" srcset=\"https:\/\/www.apnaplan.com\/wp-content\/uploads\/2011\/09\/bajaj-shield-plus-review-300x216.jpg 300w, https:\/\/www.apnaplan.com\/wp-content\/uploads\/2011\/09\/bajaj-shield-plus-review-170x122.jpg 170w, https:\/\/www.apnaplan.com\/wp-content\/uploads\/2011\/09\/bajaj-shield-plus-review-284x205.jpg 284w, https:\/\/www.apnaplan.com\/wp-content\/uploads\/2011\/09\/bajaj-shield-plus-review.jpg 360w\" sizes=\"(max-width: 300px) 100vw, 300px\" \/><\/a>Have you the advertisement of Bajaj Shield Plus? It shows people in a bus making fun of a person investing his money in fixed deposits and then telling him advantages for Bajaj Shield above fixed deposits:<\/p>\n<ul>\n<li>It gives a guaranteed return of 170%<\/li>\n<li>It gives insurance<\/li>\n<li>It gives tax benefit<\/li>\n<li>And so it\u2019s better than any fixed deposit<\/li>\n<\/ul>\n<p style=\"text-align: justify;\">I just wonder who\u2019s laughing on whom!<\/p>\n<h2 style=\"text-align: justify;\">Now let\u2019s do some myth busting<!--more--><\/h2>\n<p style=\"text-align: justify;\"><strong>Tax benefit:<\/strong> You can get tax benefit in fixed deposits too and it has a locking period of 5 years. With present rate of 7.25% &#8211; 8% you would get a post tax return of 5.1% &#8211; 5.6% (in highest tax bracket) to 6.5% &#8211; 7.2% (10% tax bracket) depending on the tax slab you fall.<\/p>\n<p style=\"text-align: justify;\"><strong>Insurance benefit:<\/strong> It has two multipliers for insurance. You can either get insurance of 1.1 times your premium or 5 times your premium. 1.1 times insurance cannot be considered an insurance cover and it\u2019s totally an investment product. For 5 times insurance \u2013 I need not repeat myself that term insurance is far cheaper and 5X would hardly cover total life risk for anyone. Check out the term insurance rates <a href=\"http:\/\/www.apnaplan.com\/comparison-of-term-life-insurance-plans-premiums-in-india\/\">here<\/a>.<\/p>\n<p style=\"text-align: justify;\"><strong>Guaranteed return of 170%:<\/strong> And this is the major selling point for this plan. But probably they forgot to convey (in the advertisement) that it was in 10 years. <strong>So it\u2019s essentially is an annualized return of 5.45% (not great by any comparison).<\/strong><\/p>\n<p style=\"text-align: justify;\">But wait there is more to it. You forgot to <strong>account for the expenses that you would incur in the policy.<\/strong>With policy allocation charge (1%), fund management charge (1.35%) and mortality charge, the annualized return comes in the range of 3.5%.<\/p>\n<p class=\"tip\">So your guaranteed return on your total policy premium has effectively reduced to 141% from 170%.<\/p>\n<p style=\"text-align: justify;\">Your investment of Rs 50,000 in Bajaj Shield Plus would guarantee you Rs 70,000 (141%) at the end of ten years and not Rs 85,000 (170%) that you initially thought.<\/p>\n<p style=\"text-align: justify;\">But this is the minimum returns guaranteed by Bajaj Allianz and with equity funds performing well the returns could be much more.<\/p>\n<h2 style=\"text-align: justify;\">So the question now is if Shield plus is better than Fixed deposits?<\/h2>\n<p style=\"text-align: justify;\">If you do Fixed deposit today for Rs 50,000 @ 8% interest rate in HDFC Bank you would end up anywhere between Rs. 86,220 to Rs. 107,946 , depending on the tax bracket you belong to. This is around 23% to 54% more than the guaranteed return of Rs 70,000 in Bajaj Shield Plus. But then for Shield Plus with 0-50% allocation to Equity the return would hopefully be more than guaranteed sum. But how much is anyones guess!<\/p>\n<p style=\"text-align: justify;\"><strong>Is there a better way to outperform the above fixed deposit returns?<\/strong><\/p>\n<p style=\"text-align: justify;\">You want to lock your money for 10 years. <strong>Generally for 10 years you can expect a much better return if you invest in equities. An expectation of 12% &#8211; 15% return per year would be a reasonable estimate.<\/strong> And then it would also be tax free (as per the present tax structure). But having said that it\u2019s for aggressive investors and may not suit the conservative types.<\/p>\n<p style=\"text-align: justify;\"><strong>Is there a plan for Conservative Investors then?<\/strong><\/p>\n<p style=\"text-align: justify;\">If you want to stay away from equities completely then you have two options.<\/p>\n<p style=\"text-align: justify;\"><strong>Invest in PPF (Public Provident Fund)<\/strong> \u2013 this has interest rate of 8% and is tax free and also eligible for tax saving 80C investment. The caveat the max per year you can invest is Rs 70,000 only.<\/p>\n<p style=\"text-align: justify;\"><strong>EPF (Employee Provident Fund)<\/strong> \u2013 This has going interest rate of 8.5% but can only be availed by salaried employees. So you can increase your contribution and get a risk free return of 8.5%.<\/p>\n<p style=\"text-align: justify;\"><strong>Both PPF &amp; EPF are guaranteed by Indian Government and so is risk free.<\/strong> The rates for both are determined by the government and notified every year in advance. Since this is politically sensitive; the rates are among the best you can get for risk free debt instruments.<\/p>\n<p style=\"text-align: justify;\"><strong>I am moderate risk taker; can you suggest something for me?<\/strong><\/p>\n<p style=\"text-align: justify;\">Yes, you can have a mix of debt &amp; equity. This is how the math would work for you. I assume that you want guaranteed returns at par with Bajaj shield plus. So for investment of Rs 50,000 you want at least Rs 70,000 at the end of ten years.<\/p>\n<p style=\"text-align: justify;\">Invest in PPF<\/p>\n<p style=\"text-align: justify;\">For getting Rs. 70,000 at the end of 10 years @ 8% per annum you need to invest Rs 32,500 today. So after investment in PPF you are left with Rs. 17,500.<\/p>\n<p style=\"text-align: justify;\">Invest the remaining amount in ETF \/ Diversified Mutual Fund:<\/p>\n<p style=\"text-align: justify;\">Now you can invest the Rs 17,500 in any Mutual Fund and can expect an annual return in the range of 12 \u2013 15% per annum for 10 years.<\/p>\n<p style=\"text-align: justify;\"><strong>Total Returns:<\/strong><\/p>\n<p style=\"text-align: justify;\"><strong>So taking both PPF + MF returns you would get returns anywhere in the range of 9.5% to 11% per annum.<\/strong><\/p>\n<h2 style=\"text-align: justify;\">To conclude:<\/h2>\n<p style=\"text-align: justify;\">For an investment of Rs 50,000 here is the return you can expect from different alternatives above:<\/p>\n<table>\n<tbody>\n<tr align=\"center\" valign=\"middle\">\n<td><strong>Instrument<\/strong><\/td>\n<td><strong>Guaranteed Return<\/strong><\/td>\n<td><strong>Extra Return<\/strong><\/td>\n<\/tr>\n<tr align=\"center\" valign=\"middle\">\n<td><strong>Bajaj Shield Plus<\/strong><\/td>\n<td>70,000<\/td>\n<td>0-50% in equities<\/td>\n<\/tr>\n<tr align=\"center\" valign=\"middle\">\n<td><strong>Fixed Deposit<\/strong><\/td>\n<td>86,220 &#8211; 107,946<\/td>\n<td>&#8211;<\/td>\n<\/tr>\n<tr align=\"center\" valign=\"middle\">\n<td><strong>PPF<\/strong><\/td>\n<td>107,946<\/td>\n<td>&#8211;<\/td>\n<\/tr>\n<tr align=\"center\" valign=\"middle\">\n<td><strong>EPF<\/strong><\/td>\n<td>113,049<\/td>\n<td>&#8211;<\/td>\n<\/tr>\n<tr align=\"center\" valign=\"middle\">\n<td><strong>PPF + Equities<\/strong><\/td>\n<td>70,000<\/td>\n<td>35 &#8211; 50% in equities<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p style=\"text-align: justify;\">Higher equities exposure has greater chances of better returns. So with my PPF + Equities strategy I expect to outperform Bajaj Shield Plus with a good margin.<\/p>\n<p style=\"text-align: justify;\"><strong>Depending on your risk profile and your understanding you can decide what suits you best<\/strong>. But if I were to choose I would choose PPF + Equities for someone who wanted to invest in Bajaj Shield Plus but after reading this has changed his mind!<\/p>\n<p style=\"text-align: justify;\">And by not opting for Bajaj Shield Plus probably its you who would have the last laugh!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Have you the advertisement of Bajaj Shield Plus? It shows people in a bus making fun of a person investing his money in fixed deposits and then telling him advantages for Bajaj Shield above fixed deposits: It gives a guaranteed return of 170% It gives insurance It gives tax benefit And so it\u2019s better than [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":294,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[5,16,103],"tags":[105,104,2807,50,2822],"uagb_featured_image_src":{"full":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2011\/09\/bajaj-shield-plus-review.jpg",360,260,false],"thumbnail":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2011\/09\/bajaj-shield-plus-review-150x150.jpg",150,150,true],"medium":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2011\/09\/bajaj-shield-plus-review-300x216.jpg",300,216,true],"medium_large":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2011\/09\/bajaj-shield-plus-review.jpg",360,260,false],"large":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2011\/09\/bajaj-shield-plus-review.jpg",360,260,false],"1536x1536":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2011\/09\/bajaj-shield-plus-review.jpg",360,260,false],"2048x2048":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2011\/09\/bajaj-shield-plus-review.jpg",360,260,false],"yarpp-thumbnail":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2011\/09\/bajaj-shield-plus-review.jpg",120,87,false]},"uagb_author_info":{"display_name":"Amit","author_link":"https:\/\/www.apnaplan.com\/author\/admin\/"},"uagb_comment_info":0,"uagb_excerpt":"Have you the advertisement of Bajaj Shield Plus? It shows people in a bus making fun of a person investing his money in fixed deposits and then telling him advantages for Bajaj Shield above fixed deposits: It gives a guaranteed return of 170% It gives insurance It gives tax benefit And so it\u2019s better than&hellip;","_links":{"self":[{"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/posts\/293"}],"collection":[{"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/comments?post=293"}],"version-history":[{"count":0,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/posts\/293\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/media\/294"}],"wp:attachment":[{"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/media?parent=293"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/categories?post=293"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/tags?post=293"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}