Advice Needed: ILP or Regular Saving Plan

[bubuyu]

Hi

I am new to this forum I need your advice on the following.

I am 25years old and want to have a reasonable saving for my future. Yesterday, I met my friend's friend who is a financial advisor and she introduced me to this ILP.

My goal is to save for the age of 40/45yrs old which i feel is a milestone (where the children are growing up) and that is when i need some extra cash. Based on this , would it be advisable for me to take up ILP or stick to a regular savings plan (15/20yrs)?

Currently, I have a 300k TPD + 100k CI term, upgraded my hospitalization plan and some foundation policy from ntuc that my parents took up since i was young which is set to mature at about age 50.

I intend to put aside $250-350 monthly for this plan. Please advice. Thank you

 

[Darkzi0n]

do investment urself... the return u will get from ilp or saving plans does not justify the commissions and fees u pay them... if u dont have time or interest to monitor individual stocks urself, can try buying index fund or ETF.

 

[bubuyu]

do investment urself... the return u will get from ilp or saving plans does not justify the commissions and fees u pay them... if u dont have time or interest to monitor individual stocks urself, can try buying index fund or ETF.

thank you for your reply. What is the minimum amount for ETF and index fund?

 

[Darkzi0n]

check out posb interest saver
http://forums.hardwarezone.com.sg/stocks-shares-indices-92/posb-invest-saver-4309151.html

or OCBC's blue chip investment plan

 

[flyfox]

do investment urself... the return u will get from ilp or saving plans does not justify the commissions and fees u pay them... if u dont have time or interest to monitor individual stocks urself, can try buying index fund or ETF.

Well I don't believe there is a good plan or a bad plan. It really depends on one's suitability and affordability.

For ILP, you can use the units to provide some coverage. and some insurance have a waiver rider function that waives off your premiums should you get critical illness.
Also, fund switching is free too...

Of coz I wont list down all the features here but whether to buy ETF or ILP depends on one's suitability...There's nothing bad/good about plans and stuff.

If it suits you , it is good..if it doesnt, it is bad for you.
Something good for you may be bad for others..something bad for you may be good for others...

 

[anfielder]

If its for investment purposes, then definitely rsp over ilp. The charges for ilp are very high especially for the first few years.

And yes do consider the posb/ocbc/poems plans too.

 

[archcherub]

If its for investment purposes, then definitely rsp over ilp. The charges for ilp are very high especially for the first few years.

And yes do consider the posb/ocbc/poems plans too.

Just do stocks investing over the long term for a much better return, with not much risks over the long horizon

 

[Shiny Things]

Hi

I am new to this forum I need your advice on the following.

I am 25years old and want to have a reasonable saving for my future. Yesterday, I met my friend's friend who is a financial advisor and she introduced me to this ILP.

My goal is to save for the age of 40/45yrs old which i feel is a milestone (where the children are growing up) and that is when i need some extra cash. Based on this , would it be advisable for me to take up ILP or stick to a regular savings plan (15/20yrs)?

Currently, I have a 300k TPD + 100k CI term, upgraded my hospitalization plan and some foundation policy from ntuc that my parents took up since i was young which is set to mature at about age 50.

I intend to put aside $250-350 monthly for this plan. Please advice. Thank you

Don't do either. Take the advice you were given upthread and invest in ETFs. Here's why:

1) A "savings plan" insurance policy just takes your money and sticks it in bonds - it's the equivalent of buying a bond unit trust. Over 20 years, you can ride out any dips that might happen in the stockmarket - heck, you've just had a big dip right now, so it's a great time to buy.

2) An ILP is just the equivalent of investing in unit trusts or ETFs, but with extra fees which are a drag on your performance. An ILP will always, always, always be worse than just sticking the money into the equivalent unit trust. This is not "some plans good, some plans bad"; this is ALWAYS true. It's math.

3) You can buy the Nikko STI ETF (stock code G3B) in lots of about $300 - the lot size is only 100 shares instead of 1,000. It's like buying all the stocks in the STI at once, and the fees are tiny - which means more money in your pocket.

So here's what I'd do if I were in your shoes.

I'd open a brokerage account at Standard Chartered (for the cheaper brokerage - $18 or $28 a trade would destroy you). Each month, I'd transfer $300-$350 across and buy 100 shares of the Nikko STI ETF (G3B).

Once a year, just to mix things up a bit, I'd buy one lot of the ABF SG Bond ETF (A35). This'll set you back about $1100, so make it a Christmas special thing, but it'll give you some extra diversification and some income as well.

In 20 years time, you'll have $20,000 in bonds (which will pay you $500-$1000 a year interest) and stocks which originally cost you $60,000 but will probably be worth more like $150,000 (assuming about 7% a year growth).

 

[chopra]

buy term invest the rest.

listen to Shiny Things.

 

[flyfox]

Just do stocks investing over the long term for a much better return, with not much risks over the long horizon

stocks is good but you cant just conclude that buying stocks is better in long run.

It depends on individual risks appetite as well, whether they are able/comfortable to accept temp short term losses (which can be great) though they may go back up in long run.

 

[zzzzzz87]

Hi

I am new to this forum I need your advice on the following.

I am 25years old and want to have a reasonable saving for my future. Yesterday, I met my friend's friend who is a financial advisor and she introduced me to this ILP.

My goal is to save for the age of 40/45yrs old which i feel is a milestone (where the children are growing up) and that is when i need some extra cash. Based on this , would it be advisable for me to take up ILP or stick to a regular savings plan (15/20yrs)?

Currently, I have a 300k TPD + 100k CI term, upgraded my hospitalization plan and some foundation policy from ntuc that my parents took up since i was young which is set to mature at about age 50.

I intend to put aside $250-350 monthly for this plan. Please advice. Thank you

Understand that you intend to put aside monthly. Do you have an option of having a lump sum of money which allows you to invest in for example stocks or ETFs which are what others have suggested?

If you only have a monthly option, i still won't suggest getting a regular savings plan or ILP. Regular savings plan would allow you to guarantee your capital but you will lose out to inflation. Similarly for fixed deposits should you have a lump sum of money.

 

[SpinFire]

Don't do either. Take the advice you were given upthread and invest in ETFs. Here's why:

1) A "savings plan" insurance policy just takes your money and sticks it in bonds - it's the equivalent of buying a bond unit trust. Over 20 years, you can ride out any dips that might happen in the stockmarket - heck, you've just had a big dip right now, so it's a great time to buy.

2) An ILP is just the equivalent of investing in unit trusts or ETFs, but with extra fees which are a drag on your performance. An ILP will always, always, always be worse than just sticking the money into the equivalent unit trust. This is not "some plans good, some plans bad"; this is ALWAYS true. It's math.

3) You can buy the Nikko STI ETF (stock code G3B) in lots of about $300 - the lot size is only 100 shares instead of 1,000. It's like buying all the stocks in the STI at once, and the fees are tiny - which means more money in your pocket.

So here's what I'd do if I were in your shoes.

I'd open a brokerage account at Standard Chartered (for the cheaper brokerage - $18 or $28 a trade would destroy you). Each month, I'd transfer $300-$350 across and buy 100 shares of the Nikko STI ETF (G3B).

Once a year, just to mix things up a bit, I'd buy one lot of the ABF SG Bond ETF (A35). This'll set you back about $1100, so make it a Christmas special thing, but it'll give you some extra diversification and some income as well.

In 20 years time, you'll have $20,000 in bonds (which will pay you $500-$1000 a year interest) and stocks which originally cost you $60,000 but will probably be worth more like $150,000 (assuming about 7% a year growth).

Great plan!

 

[archcherub]

I'd open a brokerage account at Standard Chartered (for the cheaper brokerage - $18 or $28 a trade would destroy you). Each month, I'd transfer $300-$350 across and buy 100 shares of the Nikko STI ETF (G3B).

Once a year, just to mix things up a bit, I'd buy one lot of the ABF SG Bond ETF (A35). This'll set you back about $1100, so make it a Christmas special thing, but it'll give you some extra diversification and some income as well.

In 20 years time, you'll have $20,000 in bonds (which will pay you $500-$1000 a year interest) and stocks which originally cost you $60,000 but will probably be worth more like $150,000 (assuming about 7% a year growth).

Highlighting this for all long term savers to do. If we can spread these around, i think we can save many singaporeans on retirement heartaches...

 

[hwmook]

stocks is good but you cant just conclude that buying stocks is better in long run.

It depends on individual risks appetite as well, whether they are able/comfortable to accept temp short term losses (which can be great) though they may go back up in long run.

Are you telling me ILP are trading in a different market? No, there is only 1 market and we are all in it. You can buy your own stocks, funds etc at very low costs or you can pay high costs to get those insurance agents to do so. Its pretty clear which is the better method.

 

[archcherub]

Are you telling me ILP are trading in a different market? No, there is only 1 market and we are all in it. You can buy your own stocks, funds etc at very low costs or you can pay high costs to get those insurance agents to do so. Its pretty clear which is the better method.

No agents or salesmen likes people who informed the public that ILP is same as Unit Trust plus EXTRA fees.
feeder fees for insurance companies to earn

 

[chopra]

No agents or salesmen likes people who informed the public that ILP is same as Unit Trust plus EXTRA fees.
feeder fees for insurance companies to earn

granted. they can buy institutional bonds which require 250k tranches. that's all.

go for shiny recommended Bond etf or wait for sgs bonds to rise.... soon.

 

[bubuyu]

Don't do either. Take the advice you were given upthread and invest in ETFs. Here's why:

1) A "savings plan" insurance policy just takes your money and sticks it in bonds - it's the equivalent of buying a bond unit trust. Over 20 years, you can ride out any dips that might happen in the stockmarket - heck, you've just had a big dip right now, so it's a great time to buy.

2) An ILP is just the equivalent of investing in unit trusts or ETFs, but with extra fees which are a drag on your performance. An ILP will always, always, always be worse than just sticking the money into the equivalent unit trust. This is not "some plans good, some plans bad"; this is ALWAYS true. It's math.

3) You can buy the Nikko STI ETF (stock code G3B) in lots of about $300 - the lot size is only 100 shares instead of 1,000. It's like buying all the stocks in the STI at once, and the fees are tiny - which means more money in your pocket.

So here's what I'd do if I were in your shoes.

I'd open a brokerage account at Standard Chartered (for the cheaper brokerage - $18 or $28 a trade would destroy you). Each month, I'd transfer $300-$350 across and buy 100 shares of the Nikko STI ETF (G3B).

Once a year, just to mix things up a bit, I'd buy one lot of the ABF SG Bond ETF (A35). This'll set you back about $1100, so make it a Christmas special thing, but it'll give you some extra diversification and some income as well.

In 20 years time, you'll have $20,000 in bonds (which will pay you $500-$1000 a year interest) and stocks which originally cost you $60,000 but will probably be worth more like $150,000 (assuming about 7% a year growth).

thank you for the detailed write up. I will follow your plan and sign up for an account.

But may i know if there are any other charges for SCB besides 0.2% fee for buying/selling for Nikko AM ETF?

and for POSB invest savers only allowed to sell all lots at one go? Cant sell partial?

 

[Shiny Things]

thank you for the detailed write up. I will follow your plan and sign up for an account.

Ripper. Good stuff.

But may i know if there are any other charges for SCB besides 0.2% fee for buying/selling for Nikko AM ETF?

Not that I know of, but I don't think so.

and for POSB invest savers only allowed to sell all lots at one go? Cant sell partial?

Yep, that's correct (which seems a bit lame, but there you go).

 

[SpinFire]

thank you for the detailed write up. I will follow your plan and sign up for an account.

But may i know if there are any other charges for SCB besides 0.2% fee for buying/selling for Nikko AM ETF?

and for POSB invest savers only allowed to sell all lots at one go? Cant sell partial?

It may sound stupid, but the risk I see is having insufficient discipline to buy the shares every month with SCB, or to postpone the purchase thinking the markets will go down. And also to be scared into selling during market downturns.

Of course, these risks are all self-induced. If you can get over them, it's a great plan!

 

[VII]

Don't do either. Take the advice you were given upthread and invest in ETFs. Here's why:

1) A "savings plan" insurance policy just takes your money and sticks it in bonds - it's the equivalent of buying a bond unit trust. Over 20 years, you can ride out any dips that might happen in the stockmarket - heck, you've just had a big dip right now, so it's a great time to buy.

2) An ILP is just the equivalent of investing in unit trusts or ETFs, but with extra fees which are a drag on your performance. An ILP will always, always, always be worse than just sticking the money into the equivalent unit trust. This is not "some plans good, some plans bad"; this is ALWAYS true. It's math.

3) You can buy the Nikko STI ETF (stock code G3B) in lots of about $300 - the lot size is only 100 shares instead of 1,000. It's like buying all the stocks in the STI at once, and the fees are tiny - which means more money in your pocket.

So here's what I'd do if I were in your shoes.

I'd open a brokerage account at Standard Chartered (for the cheaper brokerage - $18 or $28 a trade would destroy you). Each month, I'd transfer $300-$350 across and buy 100 shares of the Nikko STI ETF (G3B).

Once a year, just to mix things up a bit, I'd buy one lot of the ABF SG Bond ETF (A35). This'll set you back about $1100, so make it a Christmas special thing, but it'll give you some extra diversification and some income as well.

In 20 years time, you'll have $20,000 in bonds (which will pay you $500-$1000 a year interest) and stocks which originally cost you $60,000 but will probably be worth more like $150,000 (assuming about 7% a year growth).

Sorry n00b question.

Let's say if I have $50k to invest is it advisable to spend $35k on Nikko STI ETF and the other $15k on the ABF SG Bond ETF in one go?

Or should I invest it elsewhere? Many thanks.