Should I re-invest my money in India?

Dear Mr Tan

I had worked in Singapore (acquired PR and am still retaining it as of now) for 2.5 years but have now relocated to India and am working in India.

While in Singapore, I had subscribed for three united liked policies from Company X to plan for my children's education needs. The initial load is high 100% for yr-1 and 50% each in yr-2 and 3. It is nearly three years now.

Though I have moved to India, I continued servicing these policies regularly.

There is a lot of opportunity in India to get a relatively larger return compared to the returns from my insurance policies.

Should I continue servicing these policies OR should I terminate them and reinvest in India? Servicing these policies is bit difficult as I have to remit foreign currency each month and expensive (forex exchange costs etc.)

While India give a higher nominal return, the possible devaluation of Indian Rupee against the Singapore Dollar could change the scenario a bit.

VR

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Dear VR

i enclose a FAQ on the Ideal plan from NTUC Income. I think that this plan is similar to the plan that you have bought from Company X.

Ideal

You can see that the upfront charge for our Ideal plan is 45% of the annual premium, compared to 200% charged by Company X. Our annual charge is also quite low, compared to most other funds.

Apart from the difference in upfront charge, you should also consider the annual charge. A difference of 1% can work out to a lot of money over 15 to 20 years.

The options available to you are:

a) To continue the existing policies with Company X
b) To switch to other investment policies in Singapore with lower charges
c) To invest in India

You are correct in pointing out the higher return in India and the potential risk of devaluation. This is an area that I am not well versed in.

Generally, I encourage my policyholders to invest in a global equity fund, to enjoy diversification and a potentially higher return (compared to investing in a specific country).

You also mentioned the trouble of remitting money to Singapore. Perhaps you can take an annual premium policy, to avoid the need for frequent remittance.

I hope that you find my comments to be helpful. I wish you all the best for 2007.

Tan Kin Lian