Getting an ILP PLAN from AIA

[parchiao]

So finally, once you are 'forced' to give concrete examples, you give the example of someone investing in the Nikkei at the top of the Japanese bubble as the example of how ILP can beat Index+term.

You of course ignored my question of what ILP can beat a portfolio suggested by Random Walk Down Wall Street + Term because you can't name one. So in desperation you use the smokescreen tactic and talk about someone who buys Nikkei 225 at the top of the bubble?


Other forummers can judge for themselves whether they think you trying to be helpful and giving advice to others, or just putting up a smokescreen. Already others have mentioned that your so-called 'advice' in this area is 'not helpful' at all.






When another forummer recommended reading Random Walk Down Wall Street. He is obviously trying to be helpful, to let people following the debate learn more about index investing.

As for your reply, it shows no interest at being helpful. It is another smokescreen to distract people. You are so afraid that beginners will read the book that you want to 'scare' them by telling them you need to study EMH first?

Random Walk Down Wall Street can be read and understood by a beginner with no need to study "investment topics" such as EMH first. The thesis is simple, and the advice is sound. It is not promising you the highest possible returns, but it is promising you that you will not underperform the market, like the majority of funds do. And like I mentioned above, you have yet to name an ILP that can beat the portfolio suggested by Random Walk - which means that Random Walk Portfolio beats ILPs - and still you don't want to concede this, preferring to hide behind the 'technically wrong' smokescreen.

http://fortune.com/2014/02/05/buffett-widens-lead-in-1-million-hedge-fund-bet/


You are probably richer and maybe even a better investor than the average investor, with your 5-figure dividend income. Your portfolio probably outperformed the markets so obviously you think that index investment is not for you because you will continue to outperform the market.

But I fail to understand why you want to continue to troll Perisher who is basically advocating what Random Walk advocates. Random Walk type portfolio, eg: Shiny Thing's local adaptation, is very suitable for average investors and the book will explain why.

Maybe its to show that you are a cleverer investor that doesn't need index investing? In these forums, its better to show how skilful you are in financial matters by being helpful and giving concrete portfolio advice (eg: Shiny Things model ETF portfolio). So if you think Perisher is wrong, suggest your own portfolio.

How about the STI ETF vs the AIA Greater China Equity Fund since the beginning of the year? I have mentioned something similar before when I illustrated my point about the need to switch and not buy and hold when using the HSI vs STI comparison. Or are you going to now say DCA or have to do this comparison over a longer period of time. The original argument was to buy and relax, which I disagreed as such highlighted the need to switch and consider timing, as such superior returns can be achieved.

As to whether it is helpful, I certainly think so. I see a lot going on in here that is no better than what RMs or Insurance agents do i.e. biased opinions. So if I debunk the arguments that do not come along with what the assumptions are in the illustrations that have been put up or do not reveal the flip side of the scenarios, that is called trolling? I can certainly give the benefit of the doubt that there are good intentions, but I do not think it is right to misrepresent by not providing for a full picture.

I still stand by my argument, anyone who wants to invest should learn more about it before doing so, it is the most sound advice. I see some people sharing a lot on the forum, I don't see why others should be denied to learn outside of the forum.

As for EMH, it still ******** to me. But I won't complain if everyone thinks likewise i.e. buy into the idea of EMH, because it only makes the market more imperfect in my opinion.

 

[w1rbelw1nd]

How about the STI ETF vs the AIA Greater China Equity Fund since the beginning of the year? I have mentioned something similar before when I illustrated my point about the need to switch and not buy and hold when using the HSI vs STI comparison. Or are you going to now say DCA or have to do this comparison over a longer period of time. The original argument was to buy and relax, which I disagreed as such highlighted the need to switch and consider timing, as Eucharistic superior returns can be achieved.

As to whether it is helpful, I certainly think so. I see a lot going on in here that is no better than what RMs or Insurance agents do i.e. biased opinions. So if I debunk the arguments that do not come along with what the assumptions are in the illustrations that have been put up or do not reveal the flip side of the scenarios, that is called trolling? I can certainly give the benefit of the doubt that there are good intentions, but I do not think it is right to misrepresent by not providing for a full picture.

I still stand by my argument, anyone who wants to invest should learn more about it before doing so, it is the most sound advice. I see some people sharing a lot on the forum, I don't see why others should be denied to learn outside of the forum.

As for EMH, it still ******** to me. But I won't complain if everyone thinks likewise i.e. buy into the idea of EMH, because it only makes the market more imperfect in my opinion.

So you have highlighted a few examples in which index investing is not good. The point about having some reservations is legitimate, and I also personally feel that a overly simplified index portfolio (SG bonds and sti etf only) can be a bit more risky than what some of the others say as well.

Yea, some of us oversimplified things, and like you say there are instances that marketing timing and switching across geographical exposure can bring better returns than a very simple sti/abf etf portfolio. That kind of stand is pretty damn obvious to me, but if you think that some newbies need it highlighted to them, then so be it.

Anyway, would appreciate if you can teach us how you switch your investment. How do you decide if something (especially in an active fund in ilp) is overvalued/undervalued? In my opinion it is more difficult to do so because the funds take concentrated bets on certain companies that are within their investment theme.

 

[limster]

How about the STI ETF vs the AIA Greater China Equity Fund since the beginning of the year?

So your idea of concrete examples you have given so far include buying Nikkei 225 at the height of the bubble, and putting 100% into a China unit trust instead of a diversified indexing portfolio.In 2008, someone proudly proclaimed that he had a 100% China portfolio because the China Govt will never let the stock market collapse in an Olympic Year. I never saw him post since.

And all this is supposed to convince people that ILP is better than a diversified portfolio of ETFs? I don't think so. It just seems like an example of hindsight bias. Anyway, we'll wait for others to respond, maybe they'll thank you for your great advice that they should have invested in China last year.

My China exposure is about 15% but its not just all 15% into one single China unit trust (duh!), even when punting China, I prefer to spread across ETFs/unit trusts and 'average out' the return. I don't see it contradicting the indexing approach. The indexing approach should form the bulk of your portfolio while a smaller percentage can be used for what is effectively punting. Not all punts turn out well. Hindsight bias never sees the risk, only the return.

 

[parchiao]

So your idea of concrete examples you have given so far include buying Nikkei 225 at the height of the bubble, and putting 100% into a China unit trust instead of a diversified indexing portfolio.In 2008, someone proudly proclaimed that he had a 100% China portfolio because the China Govt will never let the stock market collapse in an Olympic Year. I never saw him post since.

And all this is supposed to convince people that ILP is better than a diversified portfolio of ETFs? I don't think so. It just seems like an example of hindsight bias. Anyway, we'll wait for others to respond, maybe they'll thank you for your great advice that they should have invested in China last year.

My China exposure is about 15% but its not just all 15% into one single China unit trust (duh!), even when punting China, I prefer to spread across ETFs/unit trusts and 'average out' the return. I don't see it contradicting the indexing approach. The indexing approach should form the bulk of your portfolio while a smaller percentage can be used for what is effectively punting. Not all punts turn out well. Hindsight bias never sees the risk, only the return.

100% exposure into China? Should have invested in China? ILPs better than a diversified portfolio? I don't believe I have said any of that, can you quote me where I did? The reply was only in response to the notion of only needing to buy into an index fund and sitting on it. I have mentioned this many times over, but some people cannot understand my words literally and prefer to take it out of context and translate that to something else. So I see what you are doing, plucking ideas out of nowhere to add to mine.

Just because I don't buy into the idea of EMH does not mean others should not. I have said that there is no holy grail in investing, and I have said no one way is better than the other. If you are happy with the returns you are getting for the risk that you are willing to take, so be it. However, I would not stoop so low as to tell others to only do what I do because I think it is best. This is not an index fund forum nor is this thread about index investing, I don't see myself as trolling nor do I see why I cannot contribute to a way different from others.

As for hindsight bias, it does not apply to me with regards to China. I saw the limited risks well before last year, now I see the returns.

 

[disavowed]

Aiya parchiau just diam lah. This is an informal forum, if anyone accepts the advice here just like that without doing further homework then he is naive. So how to u expect people to reply to ts initial query? Please seek a professional financial adviser? That's what had gotten him in his situation in the first place. Recommending an index fund is no perfect holy grail of investing but it's undeniably a good way to start get the ball rolling. If u so zai go write a book

 

[Perisher]

Parchiao can't get over the fact that index investing is a good start already, not a maximize your gain, fund switching etc etc... stuff. If parchiao were to advise anyone, it's either read more or don't invest. He has a narrow mindset even when he say others are advising only one way. We ain't advising just 1 way, we are advising to start simple and move on from there. You can choose other more complicated way if you are keen to.

Actually everyone here is going in circles, he won't accept index investing as a good start for the general folks. we won't advise read and understand investment deeply or don't invest at all. He can't see that's a tad extreme and would be why many beginners give up and get an ilp instead.

E.g. How would you feel if your friend who understand investing just tell you to read it yourself or don't invest at all? You would tend to just ask a so-called FA and buy ilp. Parchiao's advise would likely push many to buy ilp instead of BTIR but of course he won't see it that way.

 

[parchiao]

Parchiao can't get over the fact that index investing is a good start already, not a maximize your gain, fund switching etc etc... stuff. If parchiao were to advise anyone, it's either read more or don't invest. He has a narrow mindset even when he say others are advising only one way. We ain't advising just 1 way, we are advising to start simple and move on from there. You can choose other more complicated way if you are keen to.

Actually everyone here is going in circles, he won't accept index investing as a good start for the general folks. we won't advise read and understand investment deeply or don't invest at all. He can't see that's a tad extreme and would be why many beginners give up and get an ilp instead.

E.g. How would you feel if your friend who understand investing just tell you to read it yourself or don't invest at all? You would tend to just ask a so-called FA and buy ilp. Parchiao's advise would likely push many to buy ilp instead of BTIR but of course he won't see it that way.

Yes, please continue to go around in circles by putting words in my mouth and saying I will tell others to buy an ILP when clearly I have not. I don't see why anyone should buy an ILP or index fund without first learning about investing. And I DO tell people not to invest if they don't even want to bother to learn more about it. You mentioned an analogy about investing akin to eating. Eating is a basic need, investing is not.

 

[parchiao]

Aiya parchiau just diam lah. This is an informal forum, if anyone accepts the advice here just like that without doing further homework then he is naive. So how to u expect people to reply to ts initial query? Please seek a professional financial adviser? That's what had gotten him in his situation in the first place. Recommending an index fund is no perfect holy grail of investing but it's undeniably a good way to start get the ball rolling. If u so zai go write a book

Very good. So now others who suggest not taking the index investing route and instead learn more about investing should keep quiet? I am shocked by how this forum has changed over time.

 

[disavowed]

Very good. So now others who suggest not taking the index investing route and instead learn more about investing should keep quiet? I am shocked by how this forum has changed over time.

No, none of the index advocates here have advised against learning more about investing. What they disagree with is your blatant disregard for the superiority of index investing compared to ilp. An ilp will always lose to index investing in the same sector due to higher fees.

 

[w1rbelw1nd]

Forget it guys.... He ain't gonna share with us his investment method of switching funds/investment. He probably carry on being a captain obvious and hindsight bias champion without giving any concrete examples on how he swtiches his investments

 

[w1rbelw1nd]

No, none of the index advocates here have advised against learning more about investing. What they disagree with is your blatant disregard for the superiority of index investing compared to ilp. An ilp will always lose to index investing in the same sector due to higher fees.

Not always la, you buy ilp with funds with China exposure you would have done better for the past year ma.

I think index investing is on ON AVERAGE, better than any form of active investing in the long run due to the higher fees involved in active investing. There will be outliers in active investing that beats the index, but index will do better than the average returns of actively managed funds.

 

[Perisher]

Yes, please continue to go around in circles by putting words in my mouth and saying I will tell others to buy an ILP when clearly I have not. I don't see why anyone should buy an ILP or index fund without first learning about investing. And I DO tell people not to invest if they don't even want to bother to learn more about it. You mentioned an analogy about investing akin to eating. Eating is a basic need, investing is not.

2 things wrong here.

Firstly, I did not say you will tell others to buy an ILP, read the quoted text again.

Secondly,
'It's like saying if you don't understand the food, don't eat it even though we are just recommending rice in general. You don't have to know every little detail to know it's generally good as a basic to feeding yourself.
Feel free to explore other food if you want to, just start it right.'

It isn't about investing being a basic need. It's the idea behind it that matters, that is you are saying 'if you don't understand something, don't touch it.' It's about the basics of investing.

 

[disavowed]

Not always la, you buy ilp with funds with China exposure you would have done better for the past year ma.

I think index investing is on ON AVERAGE, better than any form of active investing in the long run due to the higher fees involved in active investing. There will be outliers in active investing that beats the index, but index will do better than the average returns of actively managed funds.

Uh if u buy an etf with the same exposure to china? The ilp will be worse off due to higher fees

 

[parchiao]

Forget it guys.... He ain't gonna share with us his investment method of switching funds/investment. He probably carry on being a captain obvious and hindsight bias champion without giving any concrete examples on how he swtiches his investments

At the risk of being called names, I prefer to reveal little since it only works for me. What I am certain of is my way has so far produced higher than average returns and requires far less involvement than any of you would think. The smart ones who have been investing in cycles AND do not feel the need to always keep invested will might be able to derive from this what I have been doing.

 

[parchiao]

2 things wrong here.

Firstly, I did not say you will tell others to buy an ILP, read the quoted text again.

Secondly,
'It's like saying if you don't understand the food, don't eat it even though we are just recommending rice in general. You don't have to know every little detail to know it's generally good as a basic to feeding yourself.
Feel free to explore other food if you want to, just start it right.'

It isn't about investing being a basic need. It's the idea behind it that matters, that is you are saying 'if you don't understand something, don't touch it.' It's about the basics of investing.

Thank you. But please stop linking me to ILPs, it does not add up to infer that people will buy ILPs just because of my approach to tell people not to invest until they have learnt more about it.

 

[w1rbelw1nd]

At the risk of being called names, I prefer to reveal little since it only works for me. What I am certain of is my way has so far produced higher than average returns and requires far less involvement than any of you would think. The smart ones who have been investing in cycles AND do not feel the need to always keep invested will might be able to derive from this what I have been doing.

Some part of me was hoping that you will give some insights... But oh well, looks like you have nothing substantial to share other than "caveat emptor" to Perisher's recommendation.

I guess the newbies need that reminder from someone....

 

[anfielder]

Uh if u buy an etf with the same exposure to china? The ilp will be worse off due to higher fees

over the long run, almost certainly. but over short periods, well, sometimes the fund manager gets lucky.

 

[parchiao]

Some part of me was hoping that you will give some insights... But oh well, looks like you have nothing substantial to share other than "caveat emptor" to Perisher's recommendation.

I guess the newbies need that reminder from someone....

That was actually the intention, until . . . . . .

Anyway, I am signing off from this thread, it has gone off tangent for quite some time.

Best wishes to everyone who has contributed.

 

[SpinFire]

Sharing my personal experience with all.

My parents bought an ILP (from AIA as well) in 2000. Here are the details:

Coverage $90,000 (Death, TPD and Late CI)
Annual premium $2400
Premium paid $38,400
Premium invested $33,840
Premium charge $4,560
Policy fee, admin, supplementary & benefit charge $5,906

Funds invested (25% each):
AIA Regional Fixed Income Fund
AIA Global Bond Fund
AIA Global Equity Fund
AIA Regional Equity Fund

Looking at the details, the charges are INCREDIBLY high. The total admin & policy charges amount to almost $10,500 which is around $700 a year. After FIFTEEN years, the policy has finally broken even.

In comparison, one can get a $200k term policy at around $300 a year (remember to buy till age 65 only, anything above that will be expensive). The remaining $2100 can be used to invest in an ETF. According to SPDR STI ETF statistics, it has an annual return of 9% over a 10-year time frame.

My Dad's friend who sold him the policy left AIA a few years later, and my Dad was assigned a random financial agent. Due to the commissions-based nature of Singapore's insurance industry, the new agent has no incentive to provide further financial advise (e.g. re-balance portfolio, or review existing policies). I doubt he even knows my Dad is his client.

Oh well, no one out there is interested in your financial well-being except yourself and loved ones. Buy an ILP if you want to chip in to help your financial agent buy his new car, and help the insurance company finance their new office in the new building downtown.

 

[MaoZeDuo]

Sharing my personal experience with all.

My parents bought an ILP (from AIA as well) in 2000. Here are the details:

Coverage $90,000 (Death, TPD and Late CI)
Annual premium $2400
Premium paid $38,400
Premium invested $33,840
Premium charge $4,560
Policy fee, admin, supplementary & benefit charge $5,906

Funds invested (25% each):
AIA Regional Fixed Income Fund
AIA Global Bond Fund
AIA Global Equity Fund
AIA Regional Equity Fund

Looking at the details, the charges are INCREDIBLY high. The total admin & policy charges amount to almost $10,500 which is around $700 a year. After FIFTEEN years, the policy has finally broken even.

In comparison, one can get a $200k term policy at around $300 a year (remember to buy till age 65 only, anything above that will be expensive). The remaining $2100 can be used to invest in an ETF. According to SPDR STI ETF statistics, it has an annual return of 9% over a 10-year time frame.

My Dad's friend who sold him the policy left AIA a few years later, and my Dad was assigned a random financial agent. Due to the commissions-based nature of Singapore's insurance industry, the new agent has no incentive to provide further financial advise (e.g. re-balance portfolio, or review existing policies). I doubt he even knows my Dad is his client.

Oh well, no one out there is interested in your financial well-being except yourself and loved ones. Buy an ILP if you want to chip in to help your financial agent buy his new car, and help the insurance company finance their new office in the new building downtown.

actually i wanna make a few points.
true, ilp sarks ttm. but 15 years back, would your dad invest in an ETF?
the older and less financial savvy generation would be better off with an ilp than nothing.
on the contrary, if your dad's fren had recommended him to buy term invest etf, he might be skeptical about the no-cash-value part and not get any insurance at all.
but this is definitely a good case study to show and educate whoever sees this on this forum or even share it with your friends.
my 2 maos.
dont flame moi.