A viral LinkedIn post by a wealth management CEO reveals the meager returns of an insurance policy after 15 years, sparking a debate on investment mistakes.
Kirtan A. Shah, Founder and CEO of Credence Wealth, recently ignited a fierce online debate with a LinkedIn post detailing what he called "The most common investing mistake." He shared a real-world example of an insurance policy that, after 15 years, matured with such low returns it "felt like a scam," prompting a discussion on smarter financial strategies.
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In the post, Shah outlined an investment where an individual paid an annual premium of ₹3,187 for 15 years, totaling ₹47,805. Upon maturity, the policyholder received just ₹69,530, which Shah calculated to be a meager 4.55% return. This example was used to highlight the poor performance of insurance products that are often mis-marketed to the public as high-yield investment vehicles.
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Instead of combining insurance with investments, Shah advocates for separating them. He proposed a more effective strategy: purchase a standalone term insurance policy and invest the remaining amount in a higher-yield instrument like a Public Provident Fund (PPF) or mutual funds. This approach, he explained, could offer the same insurance coverage and tax benefits but with significantly better returns, such as 7% or more.
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Shah also delivered a blunt assessment of who profits from these combined products. He explained that while the policyholder settles for low returns, the insurance agent often makes a "killer" income, with commissions as high as 40% in the first year. "If you invest in insurance hoping to receive some returns on your investments, the joke is on you," Shah emphasized in his post.
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The post resonated widely, with most users in the comments agreeing with Shah's analysis. Many shared their own experiences and reinforced the advice. One user commented, "Insurance and investment are two different aspects. People normally make mistake buying this combined (traditional) product." The consensus from the online debate is clear: for better financial health, consumers should treat insurance as protection and seek separate, dedicated vehicles for investment growth.
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