MFs Vs ULIPs

[Vivek]

The advantages of investing in a Mutual Fund are:

1. Professional Management
2. Diversification
3. Convenient Administration
4. Return Potential
5. Low Costs
6. Liquidity
7. Transparency
8. Flexibility
9. Choice of schemes
10. Tax benefits
11. Well regulated

[Expert]

In case of MFs there are only 3 types of charges applicable -

1. Entry Load - It can be avoided if u invest directly to ur MF bypassing ur MF agent.
2. Exit Load - It can also be avoided by remaining invested for certain time period in that particular plan.
3. Fund Management Charge - It`s charged as a %age of total assets under the plan. Normally it varies from 0.25% to 2.5% depending upon type of funds (Debt to Eq.) as well as expertise of fund co. for a same set of MF plans, lower FMC Plan is always advisable for investment.

In case of ULIP following 4 types of charges are applicable.
1. Prem. allocation Charge - It may vary from as low as 1% to as high as 65-70% of your first year prem. & reduced year after year or may remain same at a constant level say 4% or 5%.
2. Mortality Charges - It`s the basic cost of insurance & again it varies among Insurance Cos.
3. Policy admin charges - Some ULIPs charge as low as 20 Rs. per month where as some charge as high as 200-300 Rs. per month. Again not constant among Insurance Cos.
4. Fund Management charges - From 0.5% to 2.5% depending upon the type of Fund (debt to Equity).

[BlackCaps]

ULIP Policies have lot of dissadvantages -
1- Very high charges
2- Policy is not explained fully that is why so many are unhappy with it afterwards
3- It is not really insurance as only insured sum or policy value is paid in case of death and not both.

[shivkumar]

ULIP plans -
1. Invest for 12 - 15 yrs .
2. Go for monthly paying mode in maximum equity exposer
3. If ur motive is life insurance(1st), investment & tax benefit.
4. Can't take out before 3 yrs.
5. Expert agent / advisor needed for proper switching to gain 58% p.a.

Mutual fund-
1. Term for 3+ yrs.
2. Motive is investment and tax saving.
3. SIP is best way to invest / else when market is down 1500 points .
4. Can redeem after 3 year (without any exit load)
5. Proper market watch required to buy right MF


Happy Investing
Shiv Kumar

[Sanjay]

Go for mutual fund and term policy.

[Absar]

Please see this differentiation -

[PolicyWala]

Absar - Please put the source, If you are putting any info from other sites or source. Please take care of this next time otherwise I would ban you.

This is a good info for all, thanks for this.

[CONFUSED]

Good Info on SIP -

[BlackCaps]

ULIP's... No..

Go for a 'Diversified Mutual Fund', and 'Term Policy by LIC'.

[Expert]

Why ULIPs are not good over MFs?
1- Higher Agent Commissions
2- Costlier exit options
3- No Track record
4- Larger Commitments


Good article read here - ET.com