short terms savings plan?

[neanea]

Do we have a conclusion which is best for short term savings?

 

[sashti90]

Hi, actually I just did a calculation and your point is not entirely true.

The SSB returns will be $66,953 if you were to put in $6k a year for 10 years and take out all at the end of the 10th year. (http://www.sgs.gov.sg/savingsbonds/Your-SSB/Calculator.aspx) This would be marginally higher than the guaranteed returns on the plan I mentioned but significantly lower if you include the non-guaranteed returns.

If you put in $6k a year for 10 years and wait for it all to mature, you would get $7537/year from year 11 to 20 for a total of $75,370. This would be significantly higher than the plan I mentioned and would be a good deal but one would have to forego the flexibility of withdrawals.

We also have savings plans that offer the flexibility of withdrawals, of course that would mean a trade-off in returns.

Overall I would conclude that the SGS 10 year bonds or the SSB would be a good savings option but if you are looking for higher returns, there are other options available. Really depends on what the individual is looking for.

Sorry to say that even if non-guaranteed is given in full, the return is no better than SSB with vesting period of 10 years compared with 15 years for the proposal. Worst than SSB if non-guaranteed is less than half.

 

[chuanz]

If you put in $10k a year for 5 years and wait for all to mature, you would get $12560 from year 11 to 15 for a total of $62800 which is $2,200 lower than the guaranteed payout from AXA's earlysaver plan.

Pls lah, $5000 on $60k vs $12560 on $50k?

 

[sashti90]

Pardon me, I miscalculated that. Edited my post, do refer to that.

Pls lah, $5000 on $60k vs $12560 on $50k?

 

[henrylbh]

Hi, actually I just did a calculation and your point is not entirely true.

The SSB returns will be $66,953 if you were to put in $6k a year for 10 years and take out all at the end of the 10th year. (http://www.sgs.gov.sg/savingsbonds/Your-SSB/Calculator.aspx) This would be marginally higher than the guaranteed returns on the plan I mentioned but significantly lower if you include the non-guaranteed returns.

If you put in $6k a year for 10 years and wait for it all to mature, you would get $7537/year from year 11 to 20 for a total of $75,370. This would be significantly higher than the plan I mentioned and would be a good deal but one would have to forego the flexibility of withdrawals.

We also have savings plans that offer the flexibility of withdrawals, of course that would mean a trade-off in returns.

Overall I would conclude that the SGS 10 year bonds or the SSB would be a good savings option but if you are looking for higher returns, there are other options available. Really depends on what the individual is looking for.

Don't be deceived by absolute amount. SSB matures at end of 10 yrs with average return of 2.44%. The plan from 13th to 15th years you mentioned gives not better with non-guaranteed given in full in term of return per year.

One might as well go for Maybank SD giving guaranteed 2.467% per year payable half yearly for a relative short term of 5 years with non-guaranteed bonus of 1% at the end.

To be fair, ssb, sd or the plan is not comparable as the first two requires upfront payment against monthly for the plan. But what matters is the rate of return.

 

[chuanz]

Pardon me, I miscalculated that. Edited my post, do refer to that.

So, mind to share how confident are you on a potential client obtaining the non-guaranteed payout, either in full or partial? And if partial payout, how many %?

Don't worry, I wouldn't hold you to it or treat it as a contract, and certainly not even as an invitation to participate.

 

[henrylbh]

So, mind to share how confident are you on a potential client obtaining the non-guaranteed payout, either in full or partial? And if partial payout, how many %?

Don't worry, I wouldn't hold you to it or treat it as a contract, and certainly not even as an invitation to participate.

No point asking. The insurer is not confident and can only say between nil and 15,255 as terminal bonus. Gauge for yourself. The guaranteed payout is about 1% if no bonus and at best no more than 3% if bonus is given in full over a period of 15 years.

 

[Lewis.T]

Actually I'm looking at the SSB now for March, the calculator says if I hold 10k till maturity I get $2,493 total interest earned and 2.44% interest. Somehow the numbers and interest don't match up?

I might be having a little bit of a doofus moment, please correct my findings.

 

[sashti90]

Hey Lewis, ya if you input PV= $10k and FV= $12,493, N = 10 years, i/r = 2.25%. Thus, I think it should be 2.25% per annum.

Anyone can advise if I am wrong?

Actually I'm looking at the SSB now for March, the calculator says if I hold 10k till maturity I get $2,493 total interest earned and 2.44% interest. Somehow the numbers and interest don't match up?

I might be having a little bit of a doofus moment, please correct my findings.

 

[sashti90]

Hi, in my personal experience, most years the insurer is able to pay out the entire non-guaranteed bonus. Only if maturity is in years like 2001 dot com bubble burst or 2008 Global financial crisis, where there is a market crash, they would be paying out $0 non-guaranteed bonus.

Thus, I would say with 80% confidence that there will be the $15k non-guaranteed bonus. Expected value can be estimated as $15k x 0.80 = $12k.

So, mind to share how confident are you on a potential client obtaining the non-guaranteed payout, either in full or partial? And if partial payout, how many %?

Don't worry, I wouldn't hold you to it or treat it as a contract, and certainly not even as an invitation to participate.

 

[Pandule]

I think SSBs is a good product. Only that it's not automated. Some people need automated in their life

Like for example I can save up till 3k before I buy into SSBs. But more often than not. My mind will be distracted to get something. So with a savings plan. The money is already out before I can think of spending it. And if get a savings plan at least get it from a well known for savings plan like Tokio marine who has never cut bonuses then other companies. I feel.

But to each his own. We know ourselves best on whether SSB or savings accounts plan is good for us

 

[Lewis.T]

Bump for SSB returns calculation.

 

[henrylbh]

Thus, I would say with 80% confidence that there will be the $15k non-guaranteed bonus. Expected value can be estimated as $15k x 0.80 = $12k.

But the insurers don't have the same confidence as you

If they have the confidence, they could entice the buyers by saying that a minimum of 50% or whatever % of the non-guaranteed bonus will be given.

If my calculation is not wrong, even if non-guaranteed bonus is given in full, the 15 years plan is not attractive - about 3% return.