Tan Kin Lian's Blog: Invest in a low cost fund

Thursday, July 12, 2007

Invest in a low cost fund

When you buy term insurance, you still have to invest the difference in a suitable fund.

Look for a fund with low upfront fees and annual fees.

This website shows you the fees charged by various insurance companies on their investment-linked products. Most of the fees are far too high.

10 comments:

Anonymous said...: Hi Mr Tan

What do you think of investing in Global Resource Fund ?
Will this be a recommended fund for long term investment ?
Under what circumstance will this fund be subjected to voilate price flunctuation ?
It will be good if you can share your opinion this fund with us. Thank you.

C.K. Ong; July 12, 2007 11:51 AM
Anonymous said...: I was actually quite interested in the NTUC Idea Plan (which seems to be lowest ILP products), until I found that the overhead might be just a little too high for small amount of regular premiums.

The Idea (ID5) Plan charges $4 per month. If one contributes only $100 per month, the policy fee works out to 4%. If we factor in the 3.5% sales charge, the one-off load is already 7.5%.

To bring down the load to 5% (which is probably what most banks charge for unit trusts investment), one has to invest about $270 per month.

ILP overhead seems to a bit too high for small monthly investment contributions. But of course, ILP do offer some insurance coverage, and the fund sizes from NTUC is pretty large too.

PS: I heard the ID7 version of the Ideal Plan do not charge any policy fee. Does anyone have any details about it?; July 12, 2007 11:23 PM
Khiat Han Hwee Adrian said...: A global resource fund is an alternative investment sector outside the traditional geographical asset allocation.

It will be good to invest around 5-10% into this area for long term. Volatility remains but lower compared to a single country fund.; July 13, 2007 1:07 AM
Khiat Han Hwee Adrian said...: Buying term insurance is an easy way to ensure ones get adequate cover.

However many who buy term do not invest the rest. They spend the rest on luxuries instead.

An adviser has to watch out on this trend and to teach their clients how to invest the rest the proper way.; July 13, 2007 1:12 AM
Anonymous said...: Id7 has the lowest charges of the ID family of regular ILPs. You save tremendous amount of money with this plan.Unfortunately, NTUC insurance agents won't tell you that it is available because you have to buy direct from the business. The agents won't shoot their own foot. So where is the honesty and sincerity we heard from some of the agents.; July 13, 2007 12:03 PM
Anonymous said...: If the NTUC agents tell you there is ID7 they don't have to do business.
They keep thjis secret. No wonder they havve a lot of well kept secrets
but these they will never reveal.; July 13, 2007 1:19 PM
Anonymous said...: Mr. Anonymous 11.23pm, so far no agent from Income has come forward to tell you all about ID7 ideal plan.
Why? If they tell you everyone who wants a regular ILP will rush to business centre to buy. And this will leave the agents dry. So what is your conclusion? Answer is conflict of interest. Anyway , be hopeful. One may come forward.; July 13, 2007 10:24 PM
Tan Kin Lian said...: If you wish to know about ID7, you should visit the business center and talk to the salaried consultant.

I hope that it is still available for direct purchase.

I believe that the agent does not promote this product as they do not earn enough commission to justify their time and effort. The consumer has to be fair to the agent as well.; July 14, 2007 7:36 AM
Anonymous said...: Mr.Tan, for compliance, disclosure is the insurance agent's onus.When there is an alternative product, especially a better one, by the same company it is the responsibility of the agents to disclose to the client and explain the features of the product if possible. Will NTUC agents do it????
ID2 makes more money for the agent. Who wants to tell the client? Stupid, right?; July 14, 2007 4:09 PM
Anonymous said...: NTUC consultants, i.e. staff at the business centers, do not earn commissions. However, they told me that the number of policies sold do somewhat impact their performance. (I didn't ask for the details.)

Anyway, I called up the business center to inquire about ID7. It does not charge any policy and commission charges. And so the staff are willing to promote it. However, it does charge $4 per month, regardless of the monthly investment amount.

If you contribute more than $270 per month (as mentioned in the "11:23PM" post above), ID7 is better than most unit trusts (excluding those obtained online for a fair comparison).; July 15, 2007 2:23 AM