Monday, July 30, 2007

Financial Planning for the Young (revised FAQ)

I have updated the FAQ on Financial Planning for the Young. It consolidates several FAQs. It should be clearer and more comprehensive.
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4 comments:

Anonymous said...

Your FAQs are very informative. I have a question to ask. Is the single endowment plan, Growth, by NTUC a good investment vehicle? You have advised against any product with lock in.I notice that this Growth has lock in. In order to benefit the full return you have to keep it till maturity. It may be considered a low risk but then its guaranteed component is very low especially in the early years and it is only 1.5% when it is held to maturity. I think the investor is better off taking about the same risk with well diversified portfolio. Consider these two downsides, ie. long lock in period and low return I won't recommend anyone investing in this product.
What is your view, Mr. Tan?

July 23, 2007 12:39 PM
Tan Kin Lian said...

Based on the current bonus rates, the Growth policy should give a return of 3% to 4% p.a. at the maturity date.

It is a good plan for a policyholder who does not wish to take investment risk, and is willing to invest for the full term.

The upfront cost is low. The return on maturity has been quite fair.

For those who are prepared to take risk, it is better to invest in a well diversified fund.

July 23, 2007 3:14 PM
Anonymous said...

If the Growth Policy can return between 3%-4% do you think it is wise to invest your CPFSA in this product?
CPFSA gives a guaranteed 4% without the risk and no need to hold to maturity.
I have one NTUC agent persuading me to invest my special account balance in the Growth POlicy. Trying hard to convince me about the insurance, which is actually a personal insurance stripped of all other benefits. I am amazed by her argument.

July 31, 2007 9:48 AM
Anonymous said...

Hi Mr. Tan,

I'm convinced that NTUC offers the most cost effective ILPs.

As for the level of risk, why is the Growth policy less risky than a well diversified fund?

July 31, 2007 10:29 AM

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