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Black Holes

Evaluating endowment plans is difficult because they have no transparency about the invested money…

I have been investing in Reliance Growth and HDFC Equity for the past 3 years. Which fund is better? I have an endowment policy from LIC, in which I have been paying the premium for the past 10 years. Should I continue with it?

Reliance Growth has been a mediocre fund for the past few years. It did very well 5 to 6 years back, but it has been an average performer since 2007-08. In comparison, HDFC Equity has been far more consistent and better at avoiding big mistakes. We would advise you to go for HDFC Equity.

Regarding your LIC endowment plan, we believe that such plans are worse than ULIPs because the former are at least more transparent as far as the breakup of your invested money is concerned. Endowment plans are a black hole, and evaluating them objectively is very difficult. Investors should avoid them.

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