Tuesday, August 07, 2007

Withdraw from Combined Fund

Hi Mr Tan

I have taken up the combined fund from NTUC Income. I am now investing a part of my monthly earnings.

I want to know. If I need money to pay for my car or flat, can I withdraw from the combined fund? Are they any penalty?

REPLY

You can withdraw from the combined fund based on its bid price. There is no penalty.

However, when you invest in the combined fund, you have to pay at the offer price, which is 3.5% higher. This cost is already deducted upfront.

If possible, try to avoid withdrawal and re-investment, as you have incurred unnecessary cost. It may be better for you to take a higher loan and to make a higher repayment (including a temporary cessation of your savings into the combined fund.

You can read this FAQ on Financial Planning for the Young.
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2 comments:

Anonymous said...

You say you are investing part of your salary on a monthly basis. Is this plan ID2 ideal plan? How long have you been on this plan? Did you know the break even comes around the third year if the fund you chose has performed well otherwise it may be as far as 5 years. This is because of the 45% distribution charges. (spread over 3 years) If you have invested for few years you might not have made profit.
Withdrawing might even make it worse.
But if you have bought the ID7 directly from the business centre there is a possibility that you can make money now. The ID7 ideal plan has very low or no distribution cost.

August 08, 2007 8:21 PM
Khiat Han Hwee Adrian said...

You may like to understand the interest rate of your car and housing loan.

If they are in the region of 4-5% p.a, you may consider paying back part of your loans by selling your Combined Funds.
However, you may like to seek advise on how the sales will affect your overall retirement fund.

You weight the pros and cons and decide.

August 08, 2007 11:48 PM

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