PRUDENTIAL SAVINGS SAGA

[Lewis.T]

The bolded part is quite a bias opinion. I don't see any part where you put 'horrible' on endowment in this post while once a product is not suitable in very niche area, you tag 'horrible'?

That's the same as you saying endowment is horrible product for
1. any long term savers if they wanna take it out anytime
2. or if they want guaranteed 2%+ returns
3. or they want shorter than 20 years product.
4. or they want regular savers product that guaranteed returns and do more than break-even
5. or they want a 10 year liquid product
6. or they want a no penalty product
7. or they want a pro-rated returns product
8. or they want any combination of the above factors.

This is a fallacy of accent, the meaning of my sentence doesn't change even if you replace 'horrible' with 'rainbow', it just may be more confusing, but is easily understood as you read the rest of the paragraph.

Now, will agents put that up for comparison?
I doubt it. Not one agent has mentioned SSB without me mentioning it when meeting. Some agents here even posted before that he would not say this product even if he knew it exist unless probed.

I don't have to say endowments are horrible because you guys do it for me all the time, which in itself creates the reason for me to start this argument.

Also, how is SSB even horrible for regular long term savings when it can be compounded if you wanna build a bond ladder?
It is not for those without a little discipline. But other than the very niche area whereby it needs to be under $500/month, how can one even conclude a horrible tag for regular long term savings? What even justify that?

I refer you to this post of mine,
http://forums.hardwarezone.com.sg/m...al-savings-saga-5597811-10.html#post107363204

The table shows you the XIRR of a 'regular saving' into an SSB, where I used $2500 per year to give SSB a fighting chance. Remember that time horizon in multiples of 10 also best fits the SSB. Taking these into account,

Principle is $50k, total interest earned for the first 10 years is $593/yr no issues here, but now we have to start 10 new issues of SSB for years 11-20 with the interest received whenever large enough $500.

CAGR falls to a high 1+%, from 2.15%. Returns will be worse when we end on years that are not a multiple of 10.

Taking this information, after giving SSB 2 parameters that work to it's favour, it should still realistically under-perform a 20 year endowment.

So Agents uses such wordings to push down a product when they keep harping on that different products serves different needs? Now they are saying products are horrible when it doesn't match? Haven't heard any agents meet up and say ILP/endowment/wholelife is horrible coz of these and these blah blah...

I've already addressed this point 2 points above. Likewise, some of the people here are pushing down a product (endowments) as they feel a one size fits all solution is the best solution no matter the circumstance.

Number 5 is also really weird, the overall returns for this month's SSB is averaged out to be 2.32% using similar returns over 20 years. Don't understand how you even get 1% which is far from the 2.32% averaged out over the 10 years(or your case, 20 years with similar returns) even accounting for the effect of compounding no?

Firstly average returns is not CAGR, we do not want to fall into the inconsistent comparison fallacy here. We shall look at CAGR for both. I've already calculated that CAGR in the scenario is a high 1+% for SSB, and 3.25% for Pru's endowment.

That specific endowment also has an increase in CAGR when held over 20 years. The endowment also has the lowest CAGR among all it's premium term variations. (A 5 year premium term and 10 year premium term gives a higher CAGR.)

If you don't see all the punches I'm pulling against SSB and still coming out on top for the scenario then I'm sorry.

So finally this brings us back to this point, that different solutions cater to the needs of different individuals, and endowments are not the best thing since sliced bread but they have their place? If you disagree you can put up a new argument and I will address it.

Remember that my argument isn't that an endowment is better or SSB is better. They both have their purpose.

Edit:

 

[akwl88]

After a wall of text, you still dont dare show the BI of your endowment plans

I suspect it is because the plan you are selling is a very lousy plan and will be torn apart by pple here and you will be labelled a fraud which is why u dont dare to gpgt

Talk about transparency

 

[Lewis.T]

5 year variant 3.87% CAGR.

Summary

If you want to argue not realistic and non-guaranteed is a different story, but if you want to make that argument valid then I hope all your investments are in guaranteed products, if not you're a hypocrite because you are expecting the market perform negatively over the next 20 years.

Remember that market returns translates to par fund returns which translates to a lesser guaranteed bonus for the policy holder.

 

[akwl88]

 

[akwl88]

 

[Lewis.T]

Yup, expected no less from you. A hypocrite. If you are so negative about market performance for the next 20 years I suggest you sell off all your other investments and go 100% SSB.


PruWealth 5 years @ 4.75% projection

SSB as per fresh $2500 per year fund and coupons and maturity best reinvested for 20 years.

Supplemental calculation for SSB featuring interest received going back into the next issue of SSB

 

[akwl88]

putting in cimb fast saver 1% int rate

 

[akwl88]

Yup, expected no less from you. A hypocrite. If you are so negative about market performance for the next 20 years I suggest you sell off all your other investments and go 100% SSB.

i am comparing guaranteed returns nd you call me a hypocrite?

now you are touting ssb as investment tool liao?

 

[Lewis.T]

Your circular reasoning too strong. When you only want to compare guaranteed then almost nothing else will beat the SSB for a 10 year period that I can think of.

Read this, should enlighten you.

https://en.wikipedia.org/wiki/Circular_reasoning

However, if you want to take your goggles off and look at real world scenarios we can expect non-guaranteed to become guaranteed at some point, which is during the annual bonus declaration done by insurers.

Case in point
https://www.prudential.com.sg/expor...s/PDF/reports/abu/2016/CEO-Letter-English.pdf

 

[Mecisteus]

Lewis if one invests periodically with SSB, how do you know what are the future rates going to be?

Also, your returns from endowments are non-guaranteed. You won't know your actual returns until you reach the future time.

So all your XIRR calculations are pure guess work.

 

[akwl88]

Your circular reasoning too strong. When you only want to compare guaranteed then almost nothing else will beat the SSB for a 10 year period that I can think of.

Read this, should enlighten you.

https://en.wikipedia.org/wiki/Circular_reasoning

However, if you want to take your goggles off and look at real world scenarios we can expect non-guaranteed to become guaranteed at some point, which is during the annual bonus declaration done by insurers.

so chiu admit ssb is a better saving product than endowments based on guarantee returns?

imo, i will not lump non-guaranteed with savings tgt. it would become an investment liao

 

[Lewis.T]

Lewis if one invests periodically with SSB, how do you know what are the future rates going to be?

Also, your returns from endowments are non-guaranteed. You won't know your actual returns until you reach the future time.

So all your XIRR calculations are pure guess work.

I don't, but the reasoning is if SSB interest is to increase over the next few years, bonds should do better and bonds are a substantial portion of a par fund.

We have to take an expected return or we can never do a comparison.

 

[Lewis.T]

so chiu admit ssb is a better saving product than endowments based on guarantee returns?

imo, i will not lump non-guaranteed with savings tgt. it would become an investment liao

I don't think anybody has disagreed that it is better for guaranteed returns. That's the whole purpose of SSB? You've been using this circular reasoning all this time, which in itself doesn't form a proper argument.

You're not admitting that an endowment in the real world should almost always give you a better return than an SSB over the longer term?

I edited my post above but you may have missed it,

However, if you want to take your goggles off and look at real world scenarios we can expect non-guaranteed to become guaranteed at some point, which is during the annual bonus declaration done by insurers.

Case in point
https://www.prudential.com.sg/export...er-English.pdf

 

[Lewis.T]

Following your circular reasoning, SSB > Endowments > ETF because nothing in ETF is guaranteed?

SSB is better than ETF?
Endowments are better than ETF?

Obviously that's not true what. They have their own purposes.

Not sure why I'm arguing with an illogical person. Perhaps I'm becoming illogical myself. If anybody else wants to continue this discussion I will oblige, but don't base your entire argument on a fallacy like someone.

 

[Mecisteus]

I don't, but the reasoning is if SSB interest is to increase over the next few years, bonds should do better and bonds are a substantial portion of a par fund.

We have to take an expected return or we can never do a comparison.

If bonds are to do better and net of fees, your par fund is going to generate lower returns.

Do you see the problem?

 

[Perisher]

eh, fine with arguing the points here but mind leaving out personal insults?
intellectual, hypocrite blah blah blah... is not ok here.
If it gets too heated, perhaps take a step back and come reply later.

Peace.

 

[akwl88]

again you are lumping savings with investing

pls get your facts correct and go for retraining

as a saving product, ssb beats endowments hands down in terms of capital guaranteed anytime, liquidity and returns

if u view ssb as an investment, good luck to your clients

the calculations are presented earlier and to summarize:

Your plan shows at the 20th yr, only then the guaranteed returns will exceed the total premiums paid by a mediocre 0.97 %. if u surrender before the 20th yr, you will make a loss.

It is in fact a very lousy and useless plan, locking up money for pathetic returns without liquidity.

and you sell this to the public, telling them this is a saving product

gg max

 

[Perisher]

again you are lumping savings with investing

pls get your facts correct and go for retraining

as a saving product, ssb beats endowments hands down in terms of capital guaranteed anytime, liquidity and returns

if u view ssb as an investment, good luck to your clients

the calculations are presented earlier and to summarize:

Your plan shows at the 20th yr, only then the guaranteed returns will exceed the total premiums paid by a mediocre 0.97 %. if u surrender before the 20th yr, you will make a loss.

It is in fact a very lousy and useless plan, locking up money for pathetic returns without liquidity.

and you sell this to the public, telling them this is a saving product

gg max

Which plan is that? Got link to the returns you mentioned?
From what I see Lewis' stand is that endowment returns are better than SSB.

 

[Lewis.T]

If bonds are to do better and net of fees, your par fund is going to generate lower returns.

Do you see the problem?

Yes but there's a substantial margin between the CAGR of the endowment and SSB as per my calcuations for a long term scenario (20 years) of 3.2% vs 1.5%

The SSB has to have it's interest increased drastically for it to outperform an endowment projecting at 4.75%. The SSB will still not win when the CAGR matches at 3.2% because of the way coupons are given out from SSB and the 10 year maturity period.

When the situation calls for it, the insurers will not want to become obsolete and will structure endowments accordingly if your scenario becomes true.

We have to take likelihood into account. What is the likelihood of SSB's interest maintaining a high (higher than 3.2%) interest rate for the next 20 years?

 

[akwl88]

5 year variant 3.87% CAGR.

Summary

If you want to argue not realistic and non-guaranteed is a different story, but if you want to make that argument valid then I hope all your investments are in guaranteed products, if not you're a hypocrite because you are expecting the market perform negatively over the next 20 years.

Remember that market returns translates to par fund returns which translates to a lesser guaranteed bonus for the policy holder.

up for perisher mod