Endowment

[machoguy02]

Hi,

Anyone has good recommendations for endowment plans?
30K total (can be one lump sum or annual 10k payment/year for 5 years, etc)
Looking at a holding period of 10-15 years.

TIA.

 

[TheSavvyBuddy]

If it is at least 10 years holding period you can consider Singapore Savings Bonds as well. To be fair, some endowment plans do give a little bit more returns (if you are in luck). SSB provides similar returns but it is capital guaranteed and you can get your funds back within a month without penalty.

If you want to put your money strictly into endowment plans, consider those that are capital guaranteed.

 

[Shion]

Why not SSB ?

 

[machoguy02]

Hi All,

Thanks for the reply!
I have already bought some SSB way back in 2016.
Looking to diversify where I am placing my money as well.

 

[Thoreldan]

Don't go for endowment unless you feel rich and wanna contribute to agent's car and condo

 

[Maeda_Toshiie]

Hi,

Anyone has good recommendations for endowment plans?
30K total (can be one lump sum or annual 10k payment/year for 5 years, etc)
Looking at a holding period of 10-15 years.

TIA.

With such a long time period, you can invest in a mix of stock and bond ETFs.

 

[chopra]

pls visit shiny things and read e whole thread.

 

[TheSavvyBuddy]

For Endowment Great Eastern Flexi Goal, it is capital guaranteed, is it good?

I went to take a look and based on their Scenario 1 illustration, the total projected yield is 3.40% p.a. Sounds not too bad but when you look at the fine print, it is based on projected investment rate of return of 4.75% p.a. In this case, it is as good as paying 1.35% in fees.

If the actual investment rate of return is lower than 4.75% (which is quite likely), you are going to get a lot less than 3.4% - probably in the 2+% range. If that's the case, it is quite close to the returns you get from SSB, minus the liquidity.

Having said which, it is not a bad choice if you are comfortable locking in a sum in endowment and forget about it for 10-15 years.

If you are looking for higher returns, investing in ETF is the way to go. Agreed with chopra, Shiny Thing's thread is a gem.

 

[mSnooze]

Thanks I brought the plan and lock it up for 25 years

That is a pretty bad plan tbh, very low capital guaranteed value.

 

[Shion]

Thanks I brought the plan and lock it up for 25 years

If can, surrender it during the free look period

 

[Shion]

I went to take a look and based on their Scenario 1 illustration, the total projected yield is 3.40% p.a. Sounds not too bad but when you look at the fine print, it is based on projected investment rate of return of 4.75% p.a. In this case, it is as good as paying 1.35% in fees.

Provided the insurer can achieve 4.75% p.a.
So I felt that the amount they put on the brochure is like pluck out of nowhere...

If the actual investment rate of return is lower than 4.75% (which is quite likely), you are going to get a lot less than 3.4% - probably in the 2+% range. If that's the case, it is quite close to the returns you get from SSB, minus the liquidity.

What are the chances that the overall returns is only 1+% ?

 

[Maeda_Toshiie]

Thanks I brought the plan and lock it up for 25 years

You locked your money, but not the rates.

 

[antonpoh]

Thanks I brought the plan and lock it up for 25 years

Maybe you want to read this link first.

https://forums.hardwarezone.com.sg/money-mind-210/endowment-problem-5761008.html#post112416452

 

[machoguy02]

thanks all for the advice.

will read through shiny things thread.

 

[machoguy02]

just for sharing purpose, how does an agent earn commission if i were to buy an endowment plan?

 

[Smokey.B]

An agent earns a commission on a percentage off your total premium. For an endowment plan, it can be off the first 5-6 years.

You would likely be misled that buying an endowment will make an agent filthy rich.

In life, everything has costs and commissions. Only people with narrow mindset will keep thinking about costs and commissions paid to the agent. The bigger question to ask is, how will the product benefit you? If it does benefit you greatly, even if the agent makes a hell load of money, are you not going to buy it? Petty, really.

Machoguy, what are your goals when setting aside this lump sum? No one here can tell you if endowments are a good way to go (or really recommend any instruments) if we do not have any idea what is the rationale behind setting aside this lump sum.

Cheers.

I do some correction for u

“An agent earns a commission on a substantial percentage off your total premium”

The biggest problem with these plans is that a huge chunk of the capital is paid to the agent as fees. So right from the start it is very difficult for the customer to breakeven not to say earn $.

 

[JuniorLion]

I do some correction for u

“An agent earns a commission on a substantial percentage off your total premium”

The biggest problem with these plans is that a huge chunk of the capital is paid to the agent as fees. So right from the start it is very difficult for the customer to breakeven not to say earn $.

That's where the "Effects of Deductions" illustration comes in.

 

[Shion]

There will be many gurus who will advise you to put into SSB, stocks, etc, but if 10-15 years later or during this period your portfolio gets rocked real bad, none of these gurus will step up.

I am not saying that endowments are the best choice as well. Endowments, although the returns will not be optimal, still serve certain niche purposes. The main key purpose of an endowment is to save and protect at the same time. But whether this purpose is actually something you seek, it is up to the individual.

Protection, savings and investments should be FULLY independent of one another.

 

[JuniorLion]

One thing I observed.

People tend to overestimate their capability. Oft heard "I can do better than funds..."

How many dare say they actually make good returns?

 

[Shion]

nowday everything is very transparent, gt the table of deduction one, I saw it in my contract, so on my 25 years endowment will deduct 4k

on top the guaranteed return, every year sure gt some bonus like 2% or 3% one la

wun like totally 0% one

they are not as high as they projected for 4.75%, but it is also not that bad either

so we have to be objective too

Who told you that ?

There are insurers who cut bonus during down periods.

And those are just merely static figures. Unless they declare how much commission is for agents, agency and the formula to calculate effects of deductions and the other figures, I see nothing transparent about it.

The above applies for anything including bank products.