Endowment/saving plan vs RSP in Bank

[vincent007]

Recently offered by an agent for a 15yr saving plan (PruFlexiCash) and after some research it looks like I'd be better with investing in Bank, say POSB Invest Saver.

I am comparing the last 5 yrs return of Prudential vs Nikko AM Singapore STI ETF, which is 3.98% (until 2015) vs 4.03% (until 2017).

Looking at it, the returns are quite similar. However, if looking at the cost, Prudential distribution cost is $8,115 out of $90,916 premium paid in 15 yrs, which is abt 8.9%.
Meanwhile, POSB invest saver only has 0.5% (or 1% for ETF) transaction fee.

Is my comparison correct or do I miss something?

Plus the flexibility of withdrawal 100% of the invested amount in POSB Invest Saver. It looks like a no brainer for me just to go with this instead of the endowment plan (not only Prudential, basically any endowment plans out there).

 

[akwl88]

you can sic the BI of the pruxi flex plan here

 

[anfielder]

Recently offered by an agent for a 15yr saving plan (PruFlexiCash) and after some research it looks like I'd be better with investing in Bank, say POSB Invest Saver.

I am comparing the last 5 yrs return of Prudential vs Nikko AM Singapore STI ETF, which is 3.98% (until 2015) vs 4.03% (until 2017).

Looking at it, the returns are quite similar. However, if looking at the cost, Prudential distribution cost is $8,115 out of $90,916 premium paid in 15 yrs, which is abt 8.9%.
Meanwhile, POST invest saver only has 0.5 transaction fee.

Is my comparison correct or do I miss something?

Plus the flexibility of withdrawal 100% of the invested amount in POST Invest Saver. It looks like a no brainer for me just to go with this instead of the endowment plan (not only Prudential, basically any endowment plans out there).

Returns to the policyholder are much lower than that of the par fund. Look at the benefit illustration, and you'll see that the returns are in the region of 2-3%.

Your agent will tell you it's higher than FD, but wouldn't you want better returns for locking away your money for 15 years?

 

[vincent007]

you can sic the BI of the pruxi flex plan here

Total premium: $90,916
Guaranteed: $69,000
Total Non-guaranteed: $100,006 (3.25%) or $110,185 (4.75%)

Returns to the policyholder are much lower than that of the par fund. Look at the benefit illustration, and you'll see that the returns are in the region of 2-3%.

Your agent will tell you it's higher than FD, but wouldn't you want better returns for locking away your money for 15 years?

Lower because of distribution cost?

 

[anfielder]

Total premium: $90,916
Guaranteed: $69,000
Total Non-guaranteed: $100,006 (3.25%) or $110,185 (4.75%)

Plug that into a financial calculator, and it works out to 1.18% (for 3.25% on par fund) or 2.37% (for 4.75% on par fund).

Lower because of distribution cost?

That's part of it. Also, not all your premium goes to par fund e.g. the insurance cover and any riders. And part of the par fund returns can be given to the insurance company's shareholders.

 

[akwl88]

Total premium: $90,916
Guaranteed: $69,000
Total Non-guaranteed: $100,006 (3.25%) or $110,185 (4.75%)



Lower because of distribution cost?

guaranteed so low???

ditch the plan ba

 

[vincent007]

Plug that into a financial calculator, and it works out to 1.18% (for 3.25% on par fund) or 2.37% (for 4.75% on par fund).



That's part of it. Also, not all your premium goes to par fund e.g. the insurance cover and any riders. And part of the par fund returns can be given to the insurance company's shareholders.

Thanks for this!

guaranteed so low???

ditch the plan ba

yea, just signed still can cancel. There's option to withdraw 2nd year onwards, that's why it's low?

 

[akwl88]

Thanks for this!



yea, just signed still can cancel. There's option to withdraw 2nd year onwards, that's why it's low?

cashback option issit?

the more complicated a plan is, the more it will only benefit the sellers

you, as a buyer, stand to lose out a lot

 

[anfielder]

yea, just signed still can cancel. There's option to withdraw 2nd year onwards, that's why it's low?

Oh ya, the numbers you gave, is it assuming you withdraw the cashback? That might be why it's so low.

 

[akwl88]

cashback option is a stupid thing

tell pple to save for future then offer cashback

dumb move

 

[Mecisteus]

Thanks for this!



yea, just signed still can cancel. There's option to withdraw 2nd year onwards, that's why it's low?

I suggest you cancel this plan and find out of the alternatives.

 

[anfielder]

cashback option is a stupid thing

tell pple to save for future then offer cashback

dumb move

This should be a "break glass in case of emergency" option. I don't think agents emphasize this enough.

 

[akwl88]

RSP = investment

if save money = high yield bank acct/ssb/fd

take note of liquidity if u want high or low

 

[Mecisteus]

If you have $500 to save monthly, you can consider splitting some into Singapore Saving Bonds or overseas ETFs. This method requires a little bit discipline and manual executions on your part unlike buying STI ETF through POSB Invest Saver.

 

[mSnooze]

Thanks for this!



yea, just signed still can cancel. There's option to withdraw 2nd year onwards, that's why it's low?

I can show you plans with cashback and guaranteed portion higher than your total premiums paid easily. There are a few of those out there.

Nevertheless, you can get a copy of Shiny things ebook or read around the forum before you get anything. Many things you can do with money to grow money.

Sent from Samsung SM-G935F using GAGT

 

[Shion]

If you get PruFlexiCash Protection Plus, it has a high death benefit (4x of your sum assured). Furthermore it is not capital guaranteed.