Monthly saving plan

[dbzfan]

What are the disadvantages of signing up a monthly saving plan with an insurance company which give higher returns than if you were to put the money in the bank?

One disadvantage is the long tie down period ... any others?

 

[Trazora]

You would need to take into consideration the distribution fee (aka admin fee/commission fee) and whether the returns are guaranteed when determining whether insurance company are giving higher interest rate.

 

[makav31i]

I am currently saving my spare money with the POSB Save-as-you-Earn...Two years and additional 2% interest per annum...maybe something to consider which is not a long tie down period...After two years, reevaluate if there is any such deals or better in the market...

 

[Trazora]

I am currently saving my spare money with the POSB Save-as-you-Earn...Two years and additional 2% interest per annum...maybe something to consider which is not a long tie down period...After two years, reevaluate if there is any such deals or better in the market...

But additional 2% only to the monthly contribution, so not worth salary crediting to dbs/posb if this means not being able to credit salary to say boc smartsaver to get 1% interest for the whole savings up to 60k

 

[makav31i]

But additional 2% only to the monthly contribution, so not worth salary crediting to dbs/posb if this means not being able to credit salary to say boc smartsaver to get 1% interest for the whole savings up to 60k

1% of $60k is $600... Maximum monthly contribution of SAYE is $3k...

If we do simple calculation using the above calculation by multiplying the interest earned from $100 by 30 (for maximum contribution of $3k/month) the interest earned over two years is $51.31 x 30 or $1,539.30...Of course the amount will be higher because of the higher starting amount as compared to $100...So $1,539.30 vs 2 years of 1% or $1,200, the choice is very obvious right?If you got $60k in BOC, would you not want to jump ship to this and just need to save $500 a month more with this as you would be putting in $72k in 2 years...

 

[Maeda_Toshiie]

What are the disadvantages of signing up a monthly saving plan with an insurance company which give higher returns than if you were to put the money in the bank?

One disadvantage is the long tie down period ... any others?

Highlighted.

Why. Why? Why!

http://www.posb.com.sg/personal/lan...ml?pid=sg-posb-vanity-investments-investsaver

-------------

Before the insurance agents come into this thread, describe clearly what plan you have signed up for. If you haven't read the fine print, now it is a good time to.

 

[Trazora]

1% of $60k is $600... Maximum monthly contribution of SAYE is $3k...

If we do simple calculation using the above calculation by multiplying the interest earned from $100 by 30 (for maximum contribution of $3k/month) the interest earned over two years is $51.31 x 30 or $1,539.30...Of course the amount will be higher because of the higher starting amount as compared to $100...So $1,539.30 vs 2 years of 1% or $1,200, the choice is very obvious right?If you got $60k in BOC, would you not want to jump ship to this and just need to save $500 a month more with this as you would be putting in $72k in 2 years...

If I got $60k in BOC smartsaver, I would continue salary credit to BOC and open another account that don't need salary crediting for higher interest. I can continue to earn the 1% on the $60k and also additional interest on the 2nd account. The additional interest on the 2nd account can easily be more than $339.30 in 2 years following the same savings pattern for SAYE.

If I starting out fresh without any savings, I would prefer BOC smartsaver to SAYE as I can easily get at 3.4% to 3.55% interest for all my savings (below $60k) without having to worry about locking-in in my money in SAYE just for the additional 2% interest.

Of course, there may be other considerations also and I respect your views. Let's come back to the thread starter's query.

 

[henrylbh]

What are the disadvantages of signing up a monthly saving plan with an insurance company which give higher returns than if you were to put the money in the bank?

One disadvantage is the long tie down period ... any others?

If you intend to save long term like 25 years with insurance company, you might as well dump it into your CPF with guaranteed minimum return of 2.5%. No insurer dares to guarantee 2.5% even for long term. Insurer can only give projected return and you certainly never get what is projected. If you willing to tie your fund or save long term like 25 years, the money dumped into CPF can still be used for housing, medical and investment with no penalty like insurance savings.

 

[Mecisteus]

Too many disadvantages to list down. The only consolations are that you are forced to save and you are given a "free" but puny insurance coverage.

In a nutshell, you got so much to lose and just a little to gain.

 

[Sai777]

Highlighted.

Why. Why? Why!

http://www.posb.com.sg/personal/lan...ml?pid=sg-posb-vanity-investments-investsaver

-------------

Before the insurance agents come into this thread, describe clearly what plan you have signed up for. If you haven't read the fine print, now it is a good time to.

TS, take the advice from the bro above.

Dun waste $$ wif insurance cum investment cum saving shLT. I know as I being thru' and I regretted that I did not have the financial knowledge back then.

 

[IFA_Advisor]

What are the disadvantages of signing up a monthly saving plan with an insurance company which give higher returns than if you were to put the money in the bank?

One disadvantage is the long tie down period ... any others?

Disadvantage maybe that the insurer bonuses is not guaranteed. About 1.x% could be guaranteed based on the insurer you choose plus terminal and revisionary bonuses.

Again, yield can be close to 4%/annum if you are able to park your money longer

I will say the tied down period is both a advantage and disadvantage. Most Singaporean will have more in their CPF (tied down) than their liquid savings.

 

[henrylbh]

Disadvantage maybe that the insurer bonuses is not guaranteed. About 1.x% could be guaranteed based on the insurer you choose plus terminal and revisionary bonuses.

Again, yield can be close to 4%/annum if you are able to park your money longer

I will say the tied down period is both a advantage and disadvantage. Most Singaporean will have more in their CPF (tied down) than their liquid savings.

Disadvantage is the commitment to keep paying when a person becomes in need of money due to circumstances. About 1% guaranteed yield is only when you abide by the tenure of the policy. You lose a lot if somehow decide you can't keep up with it or that premium payment is competing against important needs subsequently.