Endowment VS Fixed Deposit

[blengend]

If say one were to choose between a 5 year Endowment plan VS a 5 year FD.

Wouldn't Endowment be better since the non-guaranteed returns from the policy is a lot larger than the returns from FD, so even if there is a shortfall in the projected non-guaranteed returns, there is still quite a big margin of safety before the returns from the endowment fall below the FD's returns.

Am I missing something out? I'm quite new to this.

 

[sandwicher]

Better off buying STI ETF than endowment. 2 cents.

 

[limster]

If say one were to choose between a 5 year Endowment plan VS a 5 year FD.

Wouldn't Endowment be better since the non-guaranteed returns from the policy is a lot larger than the returns from FD, so even if there is a shortfall in the projected non-guaranteed returns, there is still quite a big margin of safety before the returns from the endowment fall below the FD's returns.

Am I missing something out? I'm quite new to this.

You would take a 1 year FD and renew it every year. You therefore have the flexibility every year to put it into something that has better interest since interest rates will rise.

Endowment will make sense if interest rates are going to fall.

I bought a 7-year NTUC saving policy with Guaranteed 2.75% and watched my interest compound while interest rates on FD dropped to nearly 0.


But if I were to buy a 7 year policy now, the opposite will happen. I watch my interest rate stay constant while interest rates rise and banks/insurers offer more and more attractive products which I cannot buy because I am already locked in.

So in the end, the choice of product depends on your own view whether interest rates will go up or down.

 

[Keverus]

liquidity and opportunity cost.

 

[Tornesoul]

Wait for Singapore Savings Bond

Liquid, AAA, Capital guaranteed, coupon rises, backed by MAS/govt

http://www.mas.gov.sg/News-and-Publ...e-Savings-Bonds-for-Individual-Investors.aspx

 

[cscs3]

Wait for Singapore Savings Bond

Liquid, AAA, Capital guaranteed, coupon rises, backed by MAS/govt

http://www.mas.gov.sg/News-and-Publ...e-Savings-Bonds-for-Individual-Investors.aspx

Good choice, you get reasonable interest rate plus some flexibility.
Some more back by government.