help on finance products

[Firmament1987]

Hi all finance guru,

I have been going through a good number websites trying to understand all the different product and honestly its making my head spin so tot maybe asking for help wld be easier..

As you all would have figured out i'm a noob in all these stuff i'm 25yr old male and have about 20k sitting around doing nothing.. per month i set aside about 2.5k for savings so in a year or so i'll be sitting on even more just simply leaving them to be eroded by inflation therefore wanna put them in some place where i can grow them

but yet with limited knowledge about the different products its super hard to decide on anything.

at the moment the easiest to figure out would be
time deposit(1.1% maybank)
fixed deposit(abt 0.5%)
savings deposit(0.87%)

I'm looking for something in for about 5 - 10years and of course as much returns as possible...with as little risk as possible, i understand the higher the rates the higher the risk i'm looking at probably 3 - 5% which from my limited reading are considered quite low risk products any thoughts which type of products would be suitable?

Looked through some endowment fund for those 5 years kind the premium 1k a mth type(great eastern endowment 5) but don't understand how come the guaranteed is lower then the premium ie after 5 years you have paid 60k but the guaranteed only 55k+ although non guaranteed is 25k la.. but.. its non guaranteed..at least principal should guarantee...

I am not exactly looking for insurance as in health although i figured endowment has a health insurance portion to it.. don't think i will need it within 5 years frame.. if only can trade in the insurance portion for more growth...

Not sure if there are products which allow you to like put 20k in for a growth of 3%pa then per mth pay maybe a premium of 500 or 1k or something then yearly you can choose to reinvest the payout or just take the $

agents are welcome to share more about your products..

Thanks!!

 

[Dividends Warrior]

Go to NTUC Income website. Alot of plans......

Btw, why u wanna let agents earn?

 

[Firmament1987]

Go to NTUC Income website. Alot of plans......

Btw, why u wanna let agents earn?

exactly too many plans i see till head also pain.. basically looking for those 5 year premium and 8 or 10 yrs can cash out type.. look at great eastern, axa tokio marine etc etc see till blur.. actually i read and read based on my risk appetite at the moment i think only thing that i can do is endowment though would love to know more about other stuff too...

buy direct from NTUC or Tokio marines etc better then going through agents meh? tot end day its the same cost for us?

 

[Firmament1987]

I was wondering if any of you gurus have made a list of what type of products there are in the market what is the risk level and in your opnion what are the best products available be it high risk or low risk etc

 

[lzydata]

If you are able to commit to that much savings per month, or even just say $500, and you are OK with 3-5% returns, then the agents will have the products. It's just that the policy will usually run for 15-20 years and you don't have control over what your money is invested in.

Why don't companies put more information about their products online so we can compare? I agree this is a problem. The companies will tell you that this is because premiums and returns differ by age, gender and health condition and that they need to see each client individually to give the best financial planning advice.

That is true enough. Another reason is that by not revealing their prices, insurance companies can prevent people from comparing them with other companies'. Without the ability to check the numbers, usually a client can only trust what his or her agent is saying and recommending, or take the trouble to meet many agents and listen to many individual sales pitches, which most people won't.

MAS is now pushing for an online aggregator for term insurance policies, so hopefully that will become reality in the not too distant future. But other more "advanced" policies? Not much hope.

Why can't insurance companies at least guarantee the amount of premiums paid for as long as 5 years? For all I know some insurance companies can, responding to market demand. People do appreciate the sense of security that comes from a bank deposit-like guarantee: you put in $x, you can get $x out.

In such policies, the insurance company pools together its clients' premiums and invests them in a portfolio of cash, bonds, stocks and property, while keeping aside a part of it for commissions and expenses and to meet insurance claims, since it is also an insurance policy. Banks also invest deposited funds and they also have expenses, but they do not need to pay out insurance claims and they don't pay agent commissions. I think these are the two main sources of the discrepancy. Because part of your premiums have to be spent and/or put aside, they cannot guarantee you the full amount, but they will make it up with investment returns.

Since you seem to be quite knowledgeable and self-motivated about such matters, have you considered investing your money yourself, assuming you have already arranged your insurance coverage? You can pool your money over 6 months or a year and invest in high dividend-yielding stocks or REITs that give at least 5% a year. If you want a more diversified portfolio, you can buy the STI ETF that owns all the component stocks of the STI. If you are more adventurous and risk tolerant, you can even go for growth stocks that do not offer a high dividend, or any dividend at all.

If you allocate maybe 30% of your money to stocks and 70% to bonds and cash (this includes time/fixed deposits), you would be doing basically what the insurance company does if you bought a policy with them (except the insurance coverage). You get more flexibility than an endowment policy, and the good chance of getting far more than 3-5% pa returns in the long run. The catch is that there is no more hand-holding by the insurance company or bank - no guarantee of your principal.

 

[FP_IFA]

exactly too many plans i see till head also pain.. basically looking for those 5 year premium and 8 or 10 yrs can cash out type.. look at great eastern, axa tokio marine etc etc see till blur.. actually i read and read based on my risk appetite at the moment i think only thing that i can do is endowment though would love to know more about other stuff too...

buy direct from NTUC or Tokio marines etc better then going through agents meh? tot end day its the same cost for us?

Look at Tokio Marine Nest Egg GIO. You can structure it into a pay 5 and mature at 10 year. Guaranteed return alone better than premium while non-guaranteed is good as well (~3.5% per annum). Imho, find it better than the latest NTUC Revosave 5Pay10.

 

[Epps_Sg]

1. For a start, you can read this informative forum post about insurance and investment from posts #1 to #4 . Happy reading...

2. Can't decide which product to use? Spread your money across a few products, eg. some in fixed deposit, some in endowment, and some in lower risk bond/stock passive investing or dollar cost averaging (investing) etc.

That way you get to experience each financial product for yourself first hand, and hopefully get to be more financially savvy faster. Preferably invest in short term instruments first (one to few years) because hopefully, in next few years, you can research and try pick up some investing skills and invest yourself - you wont want your cash tied up then.

The thing about investing is, the earlier and longer you invest, the more the compounding interest grows your savings faster. Investing should be simple and not rocket science.

 

[Motherliquor.P]

If you are able to commit to that much savings per month, or even just say $500, and you are OK with 3-5% returns, then the agents will have the products. It's just that the policy will usually run for 15-20 years and you don't have control over what your money is invested in.

Why don't companies put more information about their products online so we can compare? I agree this is a problem. The companies will tell you that this is because premiums and returns differ by age, gender and health condition and that they need to see each client individually to give the best financial planning advice.

That is true enough. Another reason is that by not revealing their prices, insurance companies can prevent people from comparing them with other companies'. Without the ability to check the numbers, usually a client can only trust what his or her agent is saying and recommending, or take the trouble to meet many agents and listen to many individual sales pitches, which most people won't.

MAS is now pushing for an online aggregator for term insurance policies, so hopefully that will become reality in the not too distant future. But other more "advanced" policies? Not much hope.

Why can't insurance companies at least guarantee the amount of premiums paid for as long as 5 years? For all I know some insurance companies can, responding to market demand. People do appreciate the sense of security that comes from a bank deposit-like guarantee: you put in $x, you can get $x out.

In such policies, the insurance company pools together its clients' premiums and invests them in a portfolio of cash, bonds, stocks and property, while keeping aside a part of it for commissions and expenses and to meet insurance claims, since it is also an insurance policy. Banks also invest deposited funds and they also have expenses, but they do not need to pay out insurance claims and they don't pay agent commissions. I think these are the two main sources of the discrepancy. Because part of your premiums have to be spent and/or put aside, they cannot guarantee you the full amount, but they will make it up with investment returns.

Since you seem to be quite knowledgeable and self-motivated about such matters, have you considered investing your money yourself, assuming you have already arranged your insurance coverage? You can pool your money over 6 months or a year and invest in high dividend-yielding stocks or REITs that give at least 5% a year. If you want a more diversified portfolio, you can buy the STI ETF that owns all the component stocks of the STI. If you are more adventurous and risk tolerant, you can even go for growth stocks that do not offer a high dividend, or any dividend at all.

If you allocate maybe 30% of your money to stocks and 70% to bonds and cash (this includes time/fixed deposits), you would be doing basically what the insurance company does if you bought a policy with them (except the insurance coverage). You get more flexibility than an endowment policy, and the good chance of getting far more than 3-5% pa returns in the long run. The catch is that there is no more hand-holding by the insurance company or bank - no guarantee of your principal.

Where do you buy etf, reits and bonds? Is the commission charged high?

 

[Dividends Warrior]

Where do you buy etf, reits and bonds? Is the commission charged high?

STI etf and REITs can buy from the Singapore stock market. Some bonds too.

 

[Motherliquor.P]

STI etf and REITs can buy from the Singapore stock market. Some bonds too.

Where do we go about opening an account to buy singapore etf and bonds?

 

[lzydata]

Where do we go about opening an account to buy singapore etf and bonds?

Read this first: http://forums.hardwarezone.com.sg/s...account-singapore-updated-2012-a-3628498.html

 

[Firmament1987]

Dear Guru,

Thanks for the replies and PMs Pardon me if i am not replying pm as quickly.. also been doing abit of research therefore got some questions.. I'm also trying to compile a chart and share i believe what i encounter in my journey of learning is what others after me will likely ask as well..

As i understand the products in the market can be categorized into

1) Stocks
2) sg bonds
3) unit trust
4) Traded Life Policies
5) Exchange traded funds (ETFs)
6) Real Estate Investment Trusts
7) Structured Deposits
8) Contract for Differences
9) Investment-Linked Insurance Policies

A couple of Q on these,

1) which of these are mainly buy and sold by us and which of these are "products" sold by banks? ie usually per month pay a premium of X amt and you dont need to look at it? for instance endowment

2) in 1 - 9 which of these are considered highest risk to lowest ie can lose total capital understand of course it depends on what you buy, assuming you don't know what you are buying, whats the chance that it will be fully gone, for example.. Endowment there is this assured sum, so even you don't knw what you are buying and co close.. a good portion of principal is still there. or sg bonds even anyhow buy but since sg bond is quite safe so probably in the middle of risk

3) in a volatile market such as current would it be advisable to buy any of the mid risk products? for example i was told unit trust is putting $ into a large co and they "invest" for you. so in my thought would it be safer if say i put the $ when the situation is calmer rather then putting them in now?

4) apart from endowment, is there anything else is a guranteed return of principal? at least a 80% or something?

5) is Investment-Linked Insurance Policies aka endowment?

6) this is personal i was trying to access myself..also as a quick reply to all PMs.

My profile is
Amt/mth = 500/month for each product, i'm looking at buying 2
time frame = 5 - 10 years time frame
i'm probably not looking at endowment as i'm looking at returns not the insurance portion, if they can take out insurance portion and turn those into returns it would be great
risk = Average appetite,

for agents interested to sell me products, i'm looking for something average risk, i understand all product have risk but based on history of your company, asset allocation etc, whats the chance that i will lose all my $?

for example if i invest in singtel stocks, also there is risk that i may lose everything but whats the chance that singtel collapses? something like that

for the returns understand it is also non guaranteed however based on companies history whats how often do they miss payouts?

Right now i only heard on endowment and slightly on bonds, i'm quite keen to know more about bonds esp sg bonds as understand its one of the next safest and gives a better yield to endowment however.. my nature is to understand what options there are in the market prior to making a decision therefore would appreciate if you take time to explain

Thanks for all the time taken to read and explain or sell to me!

 

[Epps_Sg]

My replies in blue. I not guru, just someone with slightly more investment experience than you right now.

Dear Guru,

Thanks for the replies and PMs Pardon me if i am not replying pm as quickly.. also been doing abit of research therefore got some questions.. I'm also trying to compile a chart and share i believe what i encounter in my journey of learning is what others after me will likely ask as well..

As i understand the products in the market can be categorized into

1) Stocks
2) sg bonds
3) unit trust
4) Traded Life Policies
5) Exchange traded funds (ETFs)
6) Real Estate Investment Trusts
7) Structured Deposits
8) Contract for Differences
9) Investment-Linked Insurance Policies

A couple of Q on these,

1) which of these are mainly buy and sold by us and which of these are "products" sold by banks? ie usually per month pay a premium of X amt and you dont need to look at it? for instance endowment
Buy and sold by self: 1 2 3 5 6 7 8 (3 can be regular payment using Regular Savings Plan, and can be sold by banks and insurance also usually at the highest charges)
products with regular payment: 9 ilp (9 can be single premium also)
unfamiliar: 4

2) in 1 - 9 which of these are considered highest risk to lowest ie can lose total capital understand of course it depends on what you buy, assuming you don't know what you are buying, whats the chance that it will be fully gone, for example.. Endowment there is this assured sum, so even you don't knw what you are buying and co close.. a good portion of principal is still there. or sg bonds even anyhow buy but since sg bond is quite safe so probably in the middle of risk
highest to lowest risk: 8 1 9 3 5 6 7 2 - cfd, stock, ilp(not for investing, more for insurance), unit trust, ETF, REITs, Structured deposits, SG bonds.
unfamilar: 4

3) in a volatile market such as current would it be advisable to buy any of the mid risk products? for example i was told unit trust is putting $ into a large co and they "invest" for you. so in my thought would it be safer if say i put the $ when the situation is calmer rather then putting them in now?
There are pure equities (stock) unit trusts, pure bond unit trust, mixed stock/bond unit trusts, commodities unit trusts, real estate unit trust, energy unit trust etc. etc. All have different risk profile. For a start, look at only equities and bond funds, either separately or mixed. in current volatile market, better to buy good equity fund with good bond fund, perhaps in ration 50/50 or 30/60 - to be rebalanced back to this ratio yearly - this would be about mid to mid-high risk. A mid risk would probably be a pure bond fund with good track record. Best time to buy pure equity bond is at stock market bottom, best time to buy bond fund is at stock market top.

4) apart from endowment, is there anything else is a guranteed return of principal? at least a 80% or something?
Only things i know of are:
1. structured deposits with 'black and white' saying 'Capital gauranteed' - avoid thos saying "capital protected" only.
2. MAS treasury bills of 3 months and 6 months - this is the highest rated capital insured instrument, because govt can always print more money ot pay back or tax ppl to pay back, even are not so good. If t-bill can fail, other instruments will be in far worse shape.
3. Singapore govt or corporate short term bond held to maturity. I dont think most ppl would want to hold mid to long term bond till maturity due to interest rate risk.

5) is Investment-Linked Insurance Policies aka endowment?
Nope. Regular premiums ILP are insurance product that requires you to pay insurance company to invest yourself instead of letting them invest for you, while letting the agents and insurance company get huge cut of commissions. Single premium ILP are investment tools with highest initial sales charges. Endowment are actually forced regular savings plan for people who cannot invest, with huge penaty if one tries to terminate the plan early - it just comes with low death/TPD coverage, with optional riders for higher coverage.

6) this is personal i was trying to access myself..also as a quick reply to all PMs.

My profile is
Amt/mth = 500/month for each product, i'm looking at buying 2
time frame = 5 - 10 years time frame
i'm probably not looking at endowment as i'm looking at returns not the insurance portion, if they can take out insurance portion and turn those into returns it would be great
risk = Average appetite,

for agents interested to sell me products, i'm looking for something average risk, i understand all product have risk but based on history of your company, asset allocation etc, whats the chance that i will lose all my $?

for example if i invest in singtel stocks, also there is risk that i may lose everything but whats the chance that singtel collapses? something like that

for the returns understand it is also non guaranteed however based on companies history whats how often do they miss payouts?
I am a conservative to mid-risk investor, doing DIY passive investing. No product to sell here, just you may be interested in some products i had highlighted in this forum post (click) about Money Market Fund and Bond Fund (Unit Trust).

Right now i only heard on endowment and slightly on bonds, i'm quite keen to know more about bonds esp sg bonds as understand its one of the next safest and gives a better yield to endowment however.. my nature is to understand what options there are in the market prior to making a decision therefore would appreciate if you take time to explain
Better to buy SG bonds together with equities (stock or stock index fund) as part of a lower volatility diversified portfolio, which is what i did, although i also have other assets class according to the portfolio strategy that i follow. Before you invest in any products or assets, do make sure you learn as much about therm as possible before you start.

Thanks for all the time taken to read and explain or sell to me!

 

[terence89]

Hi Firmament 1987, I have sent a pm to you. Take a look=). Thanks

Hi all finance guru,

I have been going through a good number websites trying to understand all the different product and honestly its making my head spin so tot maybe asking for help wld be easier..

As you all would have figured out i'm a noob in all these stuff i'm 25yr old male and have about 20k sitting around doing nothing.. per month i set aside about 2.5k for savings so in a year or so i'll be sitting on even more just simply leaving them to be eroded by inflation therefore wanna put them in some place where i can grow them

but yet with limited knowledge about the different products its super hard to decide on anything.

at the moment the easiest to figure out would be
time deposit(1.1% maybank)
fixed deposit(abt 0.5%)
savings deposit(0.87%)

I'm looking for something in for about 5 - 10years and of course as much returns as possible...with as little risk as possible, i understand the higher the rates the higher the risk i'm looking at probably 3 - 5% which from my limited reading are considered quite low risk products any thoughts which type of products would be suitable?

Looked through some endowment fund for those 5 years kind the premium 1k a mth type(great eastern endowment 5) but don't understand how come the guaranteed is lower then the premium ie after 5 years you have paid 60k but the guaranteed only 55k+ although non guaranteed is 25k la.. but.. its non guaranteed..at least principal should guarantee...

I am not exactly looking for insurance as in health although i figured endowment has a health insurance portion to it.. don't think i will need it within 5 years frame.. if only can trade in the insurance portion for more growth...

Not sure if there are products which allow you to like put 20k in for a growth of 3%pa then per mth pay maybe a premium of 500 or 1k or something then yearly you can choose to reinvest the payout or just take the $

agents are welcome to share more about your products..

Thanks!!