I am having 70 Share of PayTM (Allotment) want to switch which share to buy to recover Loss...

Ans: Your intention to optimise returns while preserving your LIC policy is thoughtful. Let’s analyse your proposed approach comprehensively.

Challenges with Continuing the Policy
Low Returns: LIC Jeevan Anand traditionally delivers returns between 4%-6%. This does not match inflation-adjusted returns needed for long-term growth.

Opportunity Cost: Continuing the policy locks capital in a low-performing investment, missing higher returns elsewhere.

Surrendering the Policy
Immediate Loss: Surrendering early often results in a financial loss due to penalties and lower surrender value.

Lost Insurance Cover: Surrendering ends your life insurance, which might impact your family's financial safety.

Loan Against the Policy
Taking a loan against the policy can be a balanced approach. Let’s break it down:

Advantages of Policy Loan
Preserves Policy Benefits: The policy remains active, and you avoid surrendering it.

Low-Interest Rate: Policy loans have lower rates (around 9.5%-10%) compared to personal loans or unsecured loans.

Flexible Repayment: You can repay on your terms. If unpaid, it adjusts against the maturity or surrender value.

Access to Capital: You can reinvest the loan amount in higher-return investments, offsetting the policy’s poor performance.

Challenges with Policy Loan
Interest Burden: The interest rate of 9.5%-10% is higher than some secured investment returns, especially if the market underperforms.

Risk of Non-Repayment: Unpaid loans reduce the maturity or surrender value. This might impact the total financial benefit.

Investment Discipline Needed: Returns depend on reinvesting prudently. Poor decisions or market volatility can lead to losses.

Investment Options for Loan Amount
If you proceed with this plan, careful reinvestment is essential.

Equity Mutual Funds for Growth
Allocate a majority to actively managed equity mutual funds. These outperform inflation and generate higher long-term returns.

Avoid index funds. Actively managed funds provide better protection during market downturns.

Balanced Portfolio
Allocate 70%-80% to equity mutual funds (large-cap, mid-cap, and small-cap).

Invest 20%-30% in debt mutual funds or hybrid funds for stability.

Focus on Your Goals
Align investments with specific financial goals like retirement, children’s education, or wealth creation.
Steps for Implementation
Assess the Loan Amount Needed: Borrow only what you plan to invest. Avoid over-leveraging.

Consult a Certified Financial Planner: They will guide investment choices based on your risk tolerance and goals.

Track Performance: Regularly review the performance of your investments and adjust when needed.

Plan Loan Repayment: Even if repayment is flexible, try to clear the loan systematically to reduce the interest burden.

Final Insights
Your idea of leveraging a loan against LIC Jeevan Anand is a middle ground. It allows you to continue the policy while investing for better returns. However, it requires financial discipline, monitoring, and strategic reinvestment.

Consult with a Certified Financial Planner to design a customised plan aligned with your long-term financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment