Hi i have invested 2 lacs per year in HDFC Sanchay Retirement Combo plan. I lac is for capital guaranteed plan where i will get 20 lacs in in 2042. And 1 lac is invested in market linked plan where i was promised that i will receive 1 lacs per month after 18 years. Is this plan good ? Or a scam ?? I'm 28 years old and want to retire by 45 years

Ans: Current Investment Overview
Investment Vehicle: HDFC Sanchay Retirement Combo Plan
Annual Investment: Rs 2 lakhs (Rs 1 lakh in a capital guaranteed plan and Rs 1 lakh in a market-linked plan)
Capital Guaranteed Plan: Promised Rs 20 lakhs in 2042
Market-Linked Plan: Promised Rs 1 lakh per month after 18 years
Age: 28 years
Retirement Goal: Retire by 45 years
Analysis of the HDFC Sanchay Retirement Combo Plan
Capital Guaranteed Plan
Promise: Rs 20 lakhs in 2042

Duration: 18 years

Annual Contribution: Rs 1 lakh

Evaluation:

Return Rate: Calculate the compound annual growth rate (CAGR) to evaluate returns.
Inflation: Rs 20 lakhs in 2042 may have lower purchasing power due to inflation.
Flexibility: Check the plan’s liquidity and penalties for early withdrawal.
Market-Linked Plan
Promise: Rs 1 lakh per month after 18 years

Duration: 18 years

Annual Contribution: Rs 1 lakh

Evaluation:

Performance: Market-linked plans depend on the performance of the underlying assets.
Risk: Higher risk compared to guaranteed plans.
Transparency: Understand the underlying investments and associated fees.
Concerns and Considerations
Capital Guaranteed Plan
Low Returns: Such plans often offer lower returns compared to mutual funds or other investment vehicles.
Inflation Impact: Fixed returns may not keep pace with inflation, reducing real value.
Lock-In Period: Long lock-in period may restrict financial flexibility.
Market-Linked Plan
Uncertain Returns: Returns are not guaranteed and depend on market performance.
Promises: Be cautious of promises of high returns. Verify with documented terms and conditions.
High Fees: Market-linked plans can have higher management fees and charges.
Better Alternatives
Diversified Mutual Funds
Equity Mutual Funds: Higher potential returns with long-term growth prospects.
Debt Mutual Funds: Stable returns with lower risk, ideal for capital preservation.
Balanced Funds: Combination of equity and debt for balanced growth and stability.
Systematic Investment Plan (SIP)
Monthly Investments: Invest smaller amounts monthly for rupee cost averaging.
Flexibility: Easily adjustable contributions based on financial situation.
Public Provident Fund (PPF)
Tax Benefits: Tax-free returns and principal under Section 80C.
Safety: Government-backed and secure.
Advantages of Actively Managed Funds
Professional Management: Expert fund managers aim for higher returns.
Dynamic Allocation: Adjusts to market conditions for optimal performance.
Diversification: Spreads risk across various sectors and assets.
Final Insights
Reevaluate Current Plan: The HDFC Sanchay Retirement Combo Plan may not be the best fit given the low returns and long lock-in period.
Explore Alternatives: Consider diversified mutual funds, SIPs, and PPF for better returns and flexibility.
Consult a CFP: A Certified Financial Planner can provide tailored advice and help optimize your investment strategy.
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in