Dear Mr. Tan,
I would like to seek your advice on personal finance.
Recently i met up my insurance agent to discuss about long term investment ( retirement, education for kids). I was offered something like, save for 10 years, pay out at the age of 65 years old for 20 years.
The return is guarantee 3% plus bonus add up to total of 4.75%. When i look at the product info, what caught my eye and surprised me is the distribution cost. For total premium paid of around 200k, the distribution cost is around 13,000, which is around 7%! I think it is way too high!
When i showed this concern of high fee to my agent, she sort of like saying, dont envy of what they are paid, cos of the effort and trouble they all experience as agent ( which i do not totally agree). And she is saying this is the norm and what is available in the market.
I believe what she offered is not the only option. I was considering DIY regularly purchase ETF. I only worry if i could consistent have the return of 3%.
What do you think about my situation? Is there anything I can do? Thank you very much.
I have seen many benefit illustration of this type of product. The product is bad for consumers.
I agree with your that the distribution cost is too high. If you study the effect of deduction, you will be shocked at the amount that is taken away from your accumulated premium.
Read this book to understand what this "effect of deduction" means.