Wednesday, April 09, 2008

High yield in the past years will not be repeated

Dear Mr. Tan,
NTUC has advertised its yield on endowment policies at about 6% per annum. This is attractive, compared to the low interest rate on fixed deposits. Will I be able to get this type of return in the future?

The yield of 6% was obtained on the endowment policies bought 20 to 30 years ago, and matured this year. This high yield was possible due to:

a) High interest rate prior during 1970s and 1980s.
b) High return from the stock and property market
c) Low expenses in the past years

Going into the future, the yield should be much lower. I understand that the new products being sold today project a return of less than 2% per annum.

In the future, life insurance products will usually give a poor return due to:
a) A high proportion invested in low yielding bond
b) High expenses to pay agents commission and marketing

If you wish to have a higher return, you should invest in a low cost, diversified investment fund, as shown in this FAQ:


Anonymous said...

This is misleading and misrepresents the future.The public should be careful of the insurance salesmen who use this to lull you into believing this will be repeated.
The long term bond is so low and the guaranteed component of the traditional endowment is less than 1.5%. To get 3% you should thank your good health that you live long enough to see it.
The so called "best kept secret' was actually Mr. TanKL's but someone is using it to steal the credit.It is like using someone's backside skin on the face.
Be wary of the unscrupulous insurance salesmen who would say and stoop to say anything.

Anonymous said...

Mr Tan, NTUC advertisement says "Honesty is the best policy".

Yet, they try to suggest that the policy can get 6% yield in the future, when the yield is much lower. This is misleading and not honest.

Anonymous said...

The devil never claims or announces he or she is evil, right? Likewise the one who claims honesty is the best policy is likely the one who is likely to be dishonest. Action tells you.
MAS should stop it.

Anonymous said...

In investment, they used to say that
Yesterday's star performer is tomorrow's fallen angel. Ntuc maybe telling you that, to expect something to happen, a bomb. But it is dishonest to use 'honesty is the best policy' when it is hiding something from you.

Anonymous said...

Recently I went to NTUC Income to ask about the bonus this year. I noticed the statement on the wall that talks about Peace of Mind. I find the phrases there embarrassing as many of them are no longer true from my experiences there. NTUC Income was not able to give me the answers about the bonus but kept referring to their advertisment. I am not interested in the advertisement but to what I can get rather than a generic statement aimed at soliciting new customers. Shameful indeed when they cannot answer to existing customers but can put up advertisements for new customers.

Anonymous said...

What was the average dividend during 24 March 2000 to 15 Feb 2008? 1.74%

What was the capital gain?
minus 1.63 % !!!

(Source: )

What is the possible future return?

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