Tan Kin Lian's Blog: Investing a lump sum at 51 years

Tuesday, January 01, 2008

Investing a lump sum at 51 years

Dear Mr. Tan,

My mother is 51 years old now. She has $50,000 of cash to invest. What is your recomendation investment, annuity, etc?

REPLY
If she is investing for 10 years or more, it is better to invest in a low cost, diversified equity fund.

When she needs to draw out a monthly income, she can convert it into a life annuity. At that time, she should wait for a has good time when the investments showed a good gain of 5% to 8% per annum.

Read the following FAQs
http://www.tankinlian.com/faq/life.html

http://www.tankinlian.com/faq/savings.html

8 comments:

Anonymous said...: I assume that this money is your mother's retirement fund and she will need it at 62 or 65 years old.
She has a reasonably a long time horizon. If she desires 6% and above
she can invest in a medium to high globally, broadly diversified fund.
Her capital may double by the time she retires.
Remember not to invest in so called low risk product like Growth from NTUC or any of these endowment products.They are doomed to be mauled by inflation.; December 25, 2007 10:51 PM
Anonymous said...: With Inflation hitting 4.2% last month and expected to rise further
products like endowment, Growth and revosave are doomed.
Those who have invested in these product will be better off dumping them and switch to broadly diversified funds.
Don't hold on to them and hope that things will change. It is a hopeless hope.It is now or losses.; December 25, 2007 11:36 PM
Anonymous said...: I like the two gentlemen who commented to perhaps share with us their expert view in what to do with the $50,000, other than high globally, broadly diversified fund.

Many are really risk adverse. So what other alternative is there?; January 01, 2008 1:15 PM
Anonymous said...: Yes, endowment products , both single and regular are condemned to low return and in the face of inflation there might be losses in real term.
Many people think investing in ILPs or unit trusts is risky. Yes and no because it depends on who is your adviser. If you get a insurance salesman, he is not going to take risk to tell you how he can manage portfolio risk because he doesn't know how.
Let me advise you there is NO WAY wealth can be accumulated by using traditional products as your investment vehicle.These products are for the rich because they don't need growth for thier assets and they are not going to be starved even they invest in wrong products.But for the majority of people ,the less privileged and low income earners, these are the people who need to grow their assets. To borrow the cliche ,'they have to make their money work very hard" in order they
can have a decent retirement.
But very often, i see poor people are 'persuaded' to invest in endowment. The insurance agents frighten them of the riskiness of ILPs and mislead them into believing that endowment is guaranteed and no risk.This is misrepresentation.Endowment has risk too.
Where you are heading requires a good navigator. This is important and cannot be compromised. The next time ask your insurance agent , is he or she trained to bring you to where you want to go. You don't get an adviser who has a crane license
to fly you to China. Sure crash.; January 01, 2008 2:03 PM
Anonymous said...: Even a square head will know crane license cannot fly a plane.

I just had a single premium endowment plan that matured and the yield is 6.5%.

I was told some ILP can give 4 to 6%. Well, not so bad afterall.; January 02, 2008 5:56 PM
Anonymous said...: Try investing in another single premium endowment and see what you get.
When you invested in the endowment long time ago what was the projection? Was 6.5% the projected return or more? Tell us, was 6.5% the reason you invested or you weren't told by your insurance salesman or you had no inkling at all.
What I am trying to tell you these endowment products WILL NOT give that kind of return any more.You got the picture?
Next time when you fly SQ and over the PA system the pilot announces that he has a crane driver license
only but he assures you that the crane license is enough to fly a plane since it is lower than a crane.Both words have 'ane". So ok.
What will be your reaction?
Many insurance agents have crane driver's license but they tell you or have you believe that they have a pilot's license to fly you to where you are going.(your goals); January 02, 2008 11:59 PM
Anonymous said...: Zhumeng, don't talk like a Zhu and insult SQ pilots as well.

No one is absolute.; January 07, 2008 8:28 PM
Anonymous said...: You must be one of those agents who have a crane license trying to pass
off as pilot.It is no insult to say that you are a relative person and you come best among the worse, is that what you mean by "no one is absolute" Most insurance agents are like that.; January 08, 2008 10:26 PM