Single premium endowment has its attractions

COMMENT POSTED IN MY BLOG

Your FAQs are very informative. 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. To get 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?

REPLY

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.