Saturday, November 10, 2012

Get a return higher than inflation

The life insurance companies are doing a roaring business because their product offer a better return, compared to the low interest rate paid on fixed deposits. Consumers may not realize that they are locking up their savings for a long period, sometimes up to 30 years, for a return of 2% per annum. This will not cover inflation.

Consumers should invest in a low cost index fund, such as the STI ETF, and earn a much higher return, that is likely to be much higher than inflation. The difference over a 30 year period can be about 40%. Do you prefer to collect $500,000 or $300,000?

1 comment:

zhummmeng said...

Although comparison to bank deposit rate is banned insurance agents are still using it to fool or con their unwary customers, especailly the aunties and old folks into believing the salesmen are offering a more superior products.This is exploiting their ignorance and the low interest rates. This is despicable but the insurance agents have no qualms and conscience so long that they squeeze some money out of them. This is cheating and ill gotten commission the insurance agents won't bat an eyelid to steal from the old folks.
Wondering MAS is aware of this illegal comparison many insurance companies and agents are using. Maybe MAS has bigger problems to grapple with and protection of consumers is not important as compared to the interests of the insurance companies .

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