Criticise This Fund.

[jljh888]

Recently has been approach by some agents to get this plan - US Dividend Wealth Fund.

From the appointment, my understanding is that I would have to place x amount , let say $50,000 yearly.

So from Year 0 - Year 10, I would invest $500,000 and for this 10 years, if I re-invest back the returns in this 10 years.

From the 11th year onwards, I would get a dividend of $4,000 monthly for lifetime.

Even so, the next generation of mine could also continue the payout.

It sounds too good to be true, is there any thing that I've missed out ?

 

[reddevil0728]

is it via ILP?

 

[Mephist0pheLes]

Recently has been approach by some agents to get this plan - US Dividend Wealth Fund.

From the appointment, my understanding is that I would have to place x amount , let say $50,000 yearly.

So from Year 0 - Year 10, I would invest $500,000 and for this 10 years, if I re-invest back the returns in this 10 years.

From the 11th year onwards, I would get a dividend of $4,000 monthly for lifetime.

Even so, the next generation of mine could also continue the payout.

It sounds too good to be true, is there any thing that I've missed out ?

prulink? underlying fund is Allianz Income and Growth Fund?

sh!t fund. but if u okay with buying sh!t for some reason, jus buy from Endowus, no stupid initial sales charge, expensive commission and lower recurring fees.

 

[limster]

Recently has been approach by some agents to get this plan - US Dividend Wealth Fund.

From the appointment, my understanding is that I would have to place x amount , let say $50,000 yearly.

So from Year 0 - Year 10, I would invest $500,000 and for this 10 years, if I re-invest back the returns in this 10 years.

From the 11th year onwards, I would get a dividend of $4,000 monthly for lifetime.

Even so, the next generation of mine could also continue the payout.

It sounds too good to be true, is there any thing that I've missed out ?

This is the underlying fund (Allianz Income) performance for Prudential's US Dividend Wealth Fund

The main fund has a management fee of 1.25%. Pru says the total charges are1.5% which means they makan 0.25% for doing nothing. Not to mention you get hit by the full sales charge (which goes to your agents car loan instalments)

Lets imagine you put $500k lump sum into the fund at 4.5% p.a. in year 1. I use 4.5% because Pru makan 0.25% a year. You will end up with $776,484 after 10 years. And this is a single lump sum.

If you bought IWDA instead with the same $500k lump sum, you would have ended up with $1,043,045.

You have zero chance you are going to create a $4k/month lifetime income portfolio that you can hand over to next generation from $776k. On the other hand, if you invested in IWDA, you would have crossed $1m already.

However, if you still go ahead and buy it, you have my thanks. I am a Prudential Shareholder and my dividends depend on customers who buy such products

 

[jljh888]

prulink? underlying fund is Allianz Income and Growth Fund?

sh!t fund. but if u okay with buying sh!t for some reason, jus buy from Endowus, no stupid initial sales charge, expensive commission and lower recurring fees.

Yes. From pru .

 

[duhduhduh]

Didnt they say the Allianz income fund in a way actually provides out the dividend by taking the principal you invest back to you?

 

[sglandscape]

Lack of details, we are not your financial advisor, and you have not articulated clear objective of investing in it, it's difficult to comment.

What is your risk appetite? Do you have lump sum or prefer to make periodic payments? What's your financial goal?

 

[jljh888]

Didnt they say the Allianz income fund in a way actually provides out the dividend by taking the principal you invest back to you?

Something along this line, but the principal is also guaranteed.

 

[jljh888]

Lack of details, we are not your financial advisor, and you have not articulated clear objective of investing in it, it's difficult to comment.

What is your risk appetite? Do you have lump sum or prefer to make periodic payments? What's your financial goal?

What detail u need? This is how the advisor pitch, and I am posting here to understand further how this policy works and isit as good as what the advisor mention

 

[limster]

Something along this line, but the principal is also guaranteed.

Ask your advisor to put in writing that Prulink US Dividend Wealth Fund is principal guaranteed.

Then pls go ahead and mortage your home to buy as much of it as possible, because Pru doesn't normally guaranteed the principal of the US Dividend Wealth Fund.

Look at what the Wealth fund holds - Alphabet, MS, Apple Amazon, Tesla, Mastercard. Pru is willing to guarantee your principal meaning that they are guaranteeing that the price of all these stocks in the fund will not go down below your purchase price.

its a good deal!

 

[wira]

Recently has been approach by some agents to get this plan - US Dividend Wealth Fund.

From the appointment, my understanding is that I would have to place x amount , let say $50,000 yearly.

So from Year 0 - Year 10, I would invest $500,000 and for this 10 years, if I re-invest back the returns in this 10 years.

From the 11th year onwards, I would get a dividend of $4,000 monthly for lifetime.

Even so, the next generation of mine could also continue the payout.

It sounds too good to be true, is there any thing that I've missed out ?

Interesting. sounds better than CPF life. CPF life even if you hit ERS of $300K+ you monthly payout is at most $2K-$3K and thats till you die. this one will continue paying to next generation ? and capital guaranteed ?

how does it work that the payout will continue to next generation ? till when will the payout stop then ?

 

[sglandscape]

Ask your advisor to put in writing that Prulink US Dividend Wealth Fund is principal guaranteed.

Then pls go ahead and mortage your home to buy as much of it as possible, because Pru doesn't normally guaranteed the principal of the US Dividend Wealth Fund.

Look at what the Wealth fund holds - Alphabet, MS, Apple Amazon, Tesla, Mastercard. Pru is willing to guarantee your principal meaning that they are guaranteeing that the price of all these stocks in the fund will not go down below your purchase price.

its a good deal!

If it's principal guaranteed, I'll take an equity loan on my house and max it out.

Pay 50k yearly for 10y, get back 48k yearly for life. The math don't work out unless you're in your 60s. In fact I'll do that for my kids now so can lock it in early.

If someone does this from age 1, the insurer would be severely out of money unless interest rates double from here on and make your 48k guaranteed payout rather worthless.

 

[jljh888]

Sorry. I bring this up to my advisor. He means upon death, the initial investment is guaranteed and will payout.

meaning, if my investment is 500,000 , and I die when the stocks market is down, I will still get 500,000 . If the investment goes up to 700,000 , I will get 700,000 . But even if I buy through endowus and I die, I can still get 700,000.

the only upside is if the investment is lower than 500,000 , the payout will still be 500k

 

[wira]

can ask your advisor also to confirm :
1. pay $50K yearly for 10 years. is the $4K monthly guaranteed or depending on the performance of the investment and could be much lower ?
2. is it really $4K payout till death ?
3. How does the payout to next generation works ?\
4. If i collect the dividend till i die at say age 80 ( buy from age 40 so collect 40 years), is there still a death benefit payout of $500K ?

Even if doesnt payout to next gen, the $4Kmthly payout lifetime still very good leh ..comparable to CPF life if not better. which is a bit unbelievable.

 

[Mephist0pheLes]

Sorry. I bring this up to my advisor. He means upon death, the initial investment is guaranteed and will payout.

meaning, if my investment is 500,000 , and I die when the stocks market is down, I will still get 500,000 . If the investment goes up to 700,000 , I will get 700,000 . But even if I buy through endowus and I die, I can still get 700,000.

the only upside is if the investment is lower than 500,000 , the payout will still be 500k

that's not guarantee on your investment lah, that's jus a death benefit.

u use the commission and sale charges u saved from not buying the ilp and buy term life instead, u will probably get more coverage

e.g. if u die before 65 (when u may still have dependents), it may be enough to get a 1mil death coverage + whatever amount u have in endowus.

anyway, all ILP are terrible products. u can think of it as paying someone $50 to buy chicken rice for u from a coffeeshop near ur hse that cost $5. then they throw in one extra egg and makes u think ur $50 is well spent.

and the chicken rice in this case (i.e. the underlying allianz income fund) dosnt even taste good.

 

[Mephist0pheLes]

can ask your advisor also to confirm :
1. pay $50K yearly for 10 years. is the $4K monthly guaranteed or depending on the performance of the investment and could be much lower ?
2. is it really $4K payout till death ?
3. How does the payout to next generation works ?\
4. If i collect the dividend till i die at say age 80 ( buy from age 40 so collect 40 years), is there still a death benefit payout of $500K ?

Even if doesnt payout to next gen, the $4Kmthly payout lifetime still very good leh ..comparable to CPF life if not better. which is a bit unbelievable.

it wont pay 4k for life. the underlying fund sells your captial to pay the 'dividend' to maintain certain level of 'dividend yield'. as the fund value goes down, they will keep cutting the absolute amount that is being paid out as they have done so in the past.

 

[tangent314]

This is a PruLink fund that wraps Allianz Income and Growth, and invested using an Insurance Linked Plan. That's three big red flags there.

The important thing to note is that none of the figures are guaranteed (except maybe for the principle guarantee upon death). Your fund will have a value. Say for example you put in $50k per year, and generously speaking $49k goes into your funds after fees (assuming 2%, I'm not sure the exact fees for the plan). Let's say the fund continues to perform at ~5.38% that it has since the H2-SGD class was incepted back in 2013. This comes round to a fund value of ~$627.4k after 10 years.

So after 10 years you start withdrawing from your fund. The first thing to note is that $4000/month means you are annually withdrawing 7.65% of the value of your fund. This is more than the past performance of the fund itself, means that every year, your fund will not be able to sustain itself and will continue to decrease in value until 0 and then stop paying you. By my calculations, this will happen in slightly more than 23 years.

Of course, this assumes that the fund continues to perform at 5.38%, and the payout is fixed at $4k/month and is not varied depending on the performance of the fund.

 

[jljh888]

can ask your advisor also to confirm :
1. pay $50K yearly for 10 years. is the $4K monthly guaranteed or depending on the performance of the investment and could be much lower ?
2. is it really $4K payout till death ?
3. How does the payout to next generation works ?\
4. If i collect the dividend till i die at say age 80 ( buy from age 40 so collect 40 years), is there still a death benefit payout of $500K ?

Even if doesnt payout to next gen, the $4Kmthly payout lifetime still very good leh ..comparable to CPF life if not better. which is a bit unbelievable

he say can passed down. But the numbers not right if you look at the above comments , how can pru or Allianz continue the payout ? I don’t think they will do it from their own pocket

 

[jljh888]

I use this calculation.

let say 1 year 50k @ 10% yearly

10 years later will be 926622

on the 11th year, the 926622 will still have a 10% interest = ~92k

if one withdraw 4K monthly, yearly is 48k , so there is still balance to compound for the years going forward.

 

[tangent314]

How confident are you of 10%?
The fund factsheet clearly states 5.38% since H2-SGD was incepted in July 2013.
Want to know what's scary? 5 years annualized returns is 4.71%, 3 years is... 1.48%.
Again, how confident are you of 10% for the next 10 years?

Now, H2-SGD has been paying annualized dividends of ~7.87% per year, which is very close to the 7.65% I calculated earlier to provide $4000/month for the first payout. However this ~7.87% will be calculated against the value of the fund when the dividend is being paid out. If the value of the fund continually goes down because it pays out more dividends than it makes from the investment, then the monthly payout will just gradually go down over time.