Friday, April 21, 2023

My Pitiful Returns from my Investment Linked Policy after 17 Years

So I recently terminated my Investment Linked Policy (ILP), in order to provide $$$ during my upcoming sabbatical. 

This ILP was started 17 years ago when I was still a young man.

From time to time I recorded the surrender value and how much I paid thus far, in order to figure out the returns. The returns here are calculated using the fv() function in Google Sheet and is equivalent to CAGR or time-weighted rate of return. 

ILP returns

The maximum return was only 4% in 2018!!

What is more, during the Covid-19 recession of 2020 the returns were 0%.

The returns were disappointing, to say the least. Hence I decided to terminate the policy while the returns were still positive at 1.9%.

This is also taking into account that there is more and more talk of an upcoming recession in 2023, such as those below:

I will also share something which I believe is a totally inadequate effort on Income's part. In the portal, they only shared the simple returns but not the time-weighted returns. This is totally inadequate. Folks not versed in finance will believe their returns are great from the below, which shows 20.98%. They will think: Oh! Better than bank returns! That is wonderful!

In actual fact, after taking into account compounding effects, the returns are merely 1.9%...

Also, I looked at the performance of the fund versus its benchmark:

It says 10-year returns are 7.21% since inception returns are 5.96%. Incredulous! No idea where these numbers come from. Likely it is before fees are deducted. I certainly didn't get these returns with my hard-earned money, I only got 1.9% after 17 years.

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