I have heard very good words about you and I really hope that you can spare some time to advise me on an investment issue.
I have just started working for a while so I can be considered as someone who can take high risk. I bought funds on my own and I want to get a savings plan as to diversify my money.
I came across this Savings Investment Plan by X.
Benefit Illustration based on 9% investment return: On the 11th year, should earn around 13k profit on top of accumulated premium.
Break even is expected between 7 to 9 years.
Although it is non-guaranteed, the agent said that the market prices just keep going up, and stocks prices also, so it is definitely a gain in long term of around 10-20 years.
Agent advised me to take out the earnings and capital on the 11th year (eg, when the prices are good), and keep remaining 1K to continue the plan and go another cycle.
I came around another savings endowment plan which gives a lot lower rate, eg. 11K profit after 15 years.
The Savings Investment Plan is Non-guaranteed at all and depends on the unit's bid prices and economy.
I am quite interested in the projected returns but I worry that it might not even give me enough to break even since it is entirely Non-guaranteed. I have heard some people say that some companies can don't give you any non-guaranteed amount and that will be a disaster.
What do you think about non-guaranteed amounts and how often do you see companies do that? Do you think that it is safe for me to take up this Savings Investment? Or should I just take up a savings endowment plan since I can invest on my own and earn more profits?
Please fax the Benefit Illustration for this policy to me at 64053100.
You should ask the agent to explain the following matters to you:
1) How much is the distribution cost? This is the amount taken away from your savings to pay commission to the agent and other expenses. It should be not more than 50% of the annual premium.
2) What is the "effect of reduction" compared to the accumulated premium (at 5% and 9%) at the end of 25 years. This effect of deduction should not be more than 15% (to give good value to the customer).