SMART Ulips

My investment agent approached me with the SMART Ulip products introduced by SBI, Tata AIG and Birla Sunlife. All these products have similar unique feature, i.e. they promise the highest NAV the funds touched during 10 years period at the time of redemption . The ppt is either 3 or 5 years and if you surrender before 5 years it attracts surrender charges. Although, you are very likely to get sold to the idea that you are guaranteed for the highest NAV, you must remember that the number of units you hold by the end of the tenure are the ones that you can cash on. For example, you have invested 50,000 for 3 years. The total amount you invested is 1,50,000. But this product also has administration charges and monthly recurring charges. On the days when the market is doing really bad, you will lose more number of units because the NAV is less. Lets say for first year the invested amount is 50,000 and SBI charges Rs 60 per month flat thoughout the policy term and additional Rs 5 for every 1000 of sum assured for the first 3 policy years. Incase of SBI Life Sum Assured = 5 times Allocated Premium. For a 3 year ppt, around 34,500 goes out in fixed charges, remaining charges go out in cancellation of units. Lets say the units started at initial NAV of 10 and when the NAV goes up you get less number of units and when it goes down you get more (remember when it goes down you also lose more units interms of monthly admin charges). So finally you ended up after 3 years total number of units accumulated are around 10,000 and by the time you surrender, this 10,000 units would have shrunk to 8800 or 9000 and for you to break-even at the time of surrender after 10 years, the NAV should have touched minimum 17 (17*9000 = 1,56,000) and to really reap good benefits of holding amount for 10 years, NAV of 35 would fetch you 3,15,000 and a NAV of 45 would be 4,05,000/- . 

We are talking about an MF that started with Rs 10 and touched 45 (an appreciation of 450%) atleast once in a period of 10 years. If you think this sounds logical, dont think twice to invest in these funds.

BBMP Property Tax - Finally paid it

When I was reading the ads by BBMP in ToI by Citizens who paid property tax about the ease of payment and help they received, I was thinking BBMP was exaggerating. But when I paid the tax by myself, I realized it was not really the case. I went to one of the make shift BBMP offices near my apartment and they had around 10 chairs to sit, one assistant to ensure people are sitting in the order they arrived, two tax collectors, one clerk to print the paid receipts (has got a computer, printer with UPS) and two ceiling fans in running condition. It took me not more than 30 minutes because they also helped me with filling of the form. I wrote a cheque favoring 'The Commissioner, BBMP' for the amount he specified and thats it. I collected the receipt and got it signed by the Tax Collector. One thing I still did not like is, despite of Times Of India's alarm against using '2007 Army Flag Day' stickers on the receipts and collecting money from Bangalore citizens, this practice is still continuing.