Good ULIPs, Facebook’s IPO and Risk

by Manshu on May 5, 2012

in Links

I was unable to write a post this week due to some unplanned work that came up and took up all my time. This is likely to go on for this month, but I think I will be able to write during the month, though probably not the 6 posts in the week.

That said, I was able to read a little bit and here are 7 good links for your weekend reading. First, RRK does a cost comparison between ULIPs and mutual funds and finds that in some cases mutual fund costs can be higher than ULIPs.

I’ve spent some time going through this but haven’t even fully understood the ULIP costs. Even then, at this point I think it’s fair for me to concede that my notion that all ULIPs are terribly expensive is not true and while I still don’t see any value in owning them, after looking at this post I won’t be dismissing all of them with a shrug like I used to. Please read the comparison and tell me if I’m missing anything.

The big story in the coming weeks is going to be the Facebook IPO and here’s a good article on it in the WSJ.

Prof. Jayanth Varma writes about disclosing risks, and wonders if it wouldn’t be better to have this simple fact disclosed in all IPO documents.

Numerous studies covering many different countries have shown that over the long term, initial public offerings tend to underperform the rest of the stock market. Subscribing to these offerings can therefore be injurious to your wealth.

Digital Inspiration has an interesting post on how you really have 3 Facebook passwords and how Facebook allows 3 variations of your passwords to be accepted.

An unexpected story about rich Americans giving up their citizenship to avoid the taxman.

Berkshire Hathaway’s first quarter profits double.

Finally, the reviews of this men’s hair removal cream are the funniest thing I’ve read in quite some time!

Enjoy your weekend!

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{ 3 comments… read them below or add one }

wealthucreate May 6, 2012 at 9:16 pm

Out of all the above link, Comparison between Ulip and Mutual Fund did take away some of my time. It is age old debate, It was nice to revisit it. Ulip has left bad taste for many. I was victim myself as i could not say No to One of my relative. Well i am out of it after he got his commission :).

Regarding Facebook IPO – No comments. I dont get to understand if the the price of IPO is reasonable.

Reply

RRK May 15, 2012 at 9:02 pm

Manshu,

As always I respect your views and comments.

The objective of the comparison article is to show how “so called low cost mutual funds” end up costing as much as “ULIP plans”. This is not to prove ULIP plans are better than mutual funds, but to show when it comes to costs, in long term, mutual funds also end up costing the same, if not higher.

This is written out of frustration where even learned people assume a 6% premium allocation charge is expensive compared to 2.5% FMC for any year. With more assets invested FMC cost even more.

It does not mean every one should jump to buy ULIP plans and avoid mutual funds. That is why even after showing the mutual fund costs are not cheaper, I concluded mutual funds are better than ULIP in long run for other reasons.

A word of caution to readers: I dont want my message to be taken in wrong spirit and cause more misselling of insurance plans. I am concerned because I received few appreciation emails from insurance agents !!

Thanks for your comments and time once again.

Reply

Manshu May 17, 2012 at 4:40 am

I appreciate your thoughts, and hard work to put together this data as well – thanks!

Reply

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