Savings policy

[Startup]

I just took up a savings policy from a local insurance company. My reason is simple. I want to force myself to save up. I also want the fairprice vouchers that come along with it.

 

Each month I have to pay 2k for 10 years. At the end of 2 years, I get 5.6k every year for up to 120 years old. Of cos I don't expect myself to live that long.

 

After 10 years the guaranteed capital is 240k which is the exact amount of total premium.

 

I would like to seek everyone's feedback on this policy. Is there a better way to save up?

 

 

[Vactic]

2k per month sounds a lot. But I think is a good plan cos from 11 Yr onwards u just keep getting the payout and can cancel anytime to get back the 240k 

[zac89]

Depends on your age and salary. 2k is a lot if you're earning less than 7k and without your first home, it will pose a challenge to you in buying your home in the future, since you be committing to these policy for the next 10 years, and you can't take it out the money from this policy. 

[Startup]

25 minutes ago, zac89 said:

Depends on your age and salary. 2k is a lot if you're earning less than 7k and without your first home, it will pose a challenge to you in buying your home in the future, since you be committing to these policy for the next 10 years, and you can't take it out the money from this policy. 

You are right. I don't like the idea of having one's money locked in for a long period of time.

 

I made sure I don't have those issues you mentioned before taking the plunge.

 

[123ZZZ]

The bank also offered this same plan, can’t remember whether Aviva or GE plan.

Think if you can use this plan to force yourself to save money.

For me, I will take up this plan since already bought property, also bought investment property, paid up insurances including life, critical illness, hospitalization, etc. then to treat this as pension.

 

But if you need this money in the next few years to either pay for property downpayment or monthly installment then this investment plan is not so liquid.

 

You could open another bank account to put money in every month with discipline or you could also put the money once accumulated every 10 months into fixed deposit, or even blue chip stocks.

 

it’s your choice so plan what you want to do.

[StockBottom]

I am not sure how old you are, or your risk appetite.

 

1. Top up SA to get that 4% interest, and tax relief up to $8k

 

2. Buy Singapore Saving Bonds once a month (max $200k, 10 years)

 

3. Buy Tbills once or twice a month (6 or 12 months)

 

4. DCA into an ETF

https://www.investopedia.com/articles/mutualfund/05/etfdollarcost.asp

 

5. SRS? (I'm not familiar with this though)

[And then]

4 hours ago, Startup said:

I just took up a savings policy from a local insurance company. My reason is simple. I want to force myself to save up. I also want the fairprice vouchers that come along with it.

 

Each month I have to pay 2k for 10 years. At the end of 2 years, I get 5.6k every year for up to 120 years old. Of cos I don't expect myself to live that long.

 

After 10 years the guaranteed capital is 240k which is the exact amount of total premium.

 

I would like to seek everyone's feedback on this policy. Is there a better way to save up?

 

 

Not sure whether I got the calculations right, but the returns do not look that great.

After 10 years, you would have put in 240K

The payment of 5.6K is not even 2.5% of 240K

Wouldn't that seem awfully low?

[Startup]

23 minutes ago, And then said:

Not sure whether I got the calculations right, but the returns do not look that great.

After 10 years, you would have put in 240K

The payment of 5.6K is not even 2.5% of 240K

Wouldn't that seem awfully low?

You are not too wrong actually.

The returns are not that fantastic at first.

But it will be worth it if one lives to a ripe old age.

[Startup]

3 hours ago, StockBottom said:

I am not sure how old you are, or your risk appetite.

 

1. Top up SA to get that 4% interest, and tax relief up to $8k

 

2. Buy Singapore Saving Bonds once a month (max $200k, 10 years)

 

3. Buy Tbills once or twice a month (6 or 12 months)

 

4. DCA into an ETF

https://www.investopedia.com/articles/mutualfund/05/etfdollarcost.asp

 

5. SRS? (I'm not familiar with this though)

Actually I would like this thread to be a discussion on various options to grow our money or prepare for retirement.

 

To be honest, I have been very tempted to get a sugarboy. But instead of squandering my money away, I decided to reduce my disposable income. It's really true, when men have money, they will start to do more nonsense.

[Vactic]

4 hours ago, And then said:

Not sure whether I got the calculations right, but the returns do not look that great.

After 10 years, you would have put in 240K

The payment of 5.6K is not even 2.5% of 240K

Wouldn't that seem awfully low?

Would he alr have taken 8x 5.6k? So at 10th year he would have alr get 50k so that's 20% returns in 10 yrs I think its good considered tat is guaranteed?

[Vactic]

3 hours ago, Startup said:

Actually I would like this thread to be a discussion on various options to grow our money or prepare for retirement.

 

To be honest, I have been very tempted to get a sugarboy. But instead of squandering my money away, I decided to reduce my disposable income. It's really true, when men have money, they will start to do more nonsense.

If 1 day u still want sugar boy I'm glad to sign up 🤣

[Guest Fatty]

14 hours ago, Startup said:

I just took up a savings policy from a local insurance company. My reason is simple. I want to force myself to save up. I also want the fairprice vouchers that come along with it.

 

Each month I have to pay 2k for 10 years. At the end of 2 years, I get 5.6k every year for up to 120 years old. Of cos I don't expect myself to live that long.

 

After 10 years the guaranteed capital is 240k which is the exact amount of total premium.

 

I would like to seek everyone's feedback on this policy. Is there a better way to save up?

 

 

How old are you now?

[Startup]

Anyone tried syfe before? Is it safe and reliable?

 

https://www.syfe.com/income-plus

[Guest Not great]

14 hours ago, And then said:

Not sure whether I got the calculations right, but the returns do not look that great.

After 10 years, you would have put in 240K

The payment of 5.6K is not even 2.5% of 240K

Wouldn't that seem awfully low?

Actually the return is even worse because you have forgotten compounding - the funds making up that 240k would have been earning interest during the 10 years they were being invested. And the value of the 5.6k a year is hugely dependent on the age of the person taking out the policy. Also, to invest $240k to get some fairprice vouchers? 

the advice from @StockBottom is much better but, of course, the insurance agents don’t make money from this approach so they try and sell these gimmicky policies with crappy giveaways and returns instead. 

[Guest Not great]

12 hours ago, Vactic said:

Would he alr have taken 8x 5.6k? So at 10th year he would have alr get 50k so that's 20% returns in 10 yrs I think its good considered tat is guaranteed?

no, it doesn’t sound like he is getting the 5.6k annually until after the 10 years

 

 

[Guest Not great]

16 hours ago, And then said:

Not sure whether I got the calculations right, but the returns do not look that great.

After 10 years, you would have put in 240K

The payment of 5.6K is not even 2.5% of 240K

Wouldn't that seem awfully low?

with compounding, it’s more like 1.5-1.8%, which is not great especially in current interest rate environment 

[StockBottom]

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Edited July 12, 2023 by StockBottom

[StockBottom]

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Edited July 12, 2023 by StockBottom

[Guest Won]

Top up your CPF and max it out ASAP that's the best investment strategy. It's safe. And the compounding interest is crazy. 

 

I started topping it up when I turn 23 yo. My investment friend say I'm crazy to lock up my money in CPF and cannot use it. But that's the point of CPF what. Money to be used for retirement. Not now. 

 

Today my cpf value is closed to 900k. But I never use it to buy property or anything. By the time I retired should exceed 1 million. 

 

Compared to him who invest in all this schemes. Yes. He made some good return but he also spend it all on travel and expenditure. 

 

Who is more ready for retirement? Me or him? 

 

I can start living now not worrying about retirement because I did the early work and let the magic of compounding interest do it's work. 

 

While he is worrying about this retirement. And I also just received an AIA letter that informed me that he has finally left that company. After 20 years... 

 

I think I won in this race. 

[Guest Poor enough]

8 minutes ago, Guest Won said:

Top up your CPF and max it out ASAP that's the best investment strategy. It's safe. And the compounding interest is crazy. 

 

I started topping it up when I turn 23 yo. My investment friend say I'm crazy to lock up my money in CPF and cannot use it. But that's the point of CPF what. Money to be used for retirement. Not now. 

 

Today my cpf value is closed to 900k. But I never use it to buy property or anything. By the time I retired should exceed 1 million. 

 

Compared to him who invest in all this schemes. Yes. He made some good return but he also spend it all on travel and expenditure. 

 

Who is more ready for retirement? Me or him? 

 

I can start living now not worrying about retirement because I did the early work and let the magic of compounding interest do it's work. 

 

While he is worrying about this retirement. And I also just received an AIA letter that informed me that he has finally left that company. After 20 years... 

 

I think I won in this race. 

 

Plus my lifestyle have remained the same since I was in my 20s. Minimalist. Student. Eat for energy. No travel. Public transport. Cab only when absolutely necessary. Buy discounted games not on release days. Sell used items on carousel. Never chase the phone upgrade. Each phone last me 5 years when the battery usually die and I just change a new one. Phone plan sim only. Don't need many many pairs of clothes. 2 sets of shirts and pants is enough. Shoes one pair wear until need to change. Hole. Worn out sole. 

 

No point savings... If you are spending like mad. Best savings come from cutting your spending. 

 

Everyone can do it. Cannot? Imagine you are sentenced to prison tonight. You basically stopped spending tonight already. 

 

You can do it 

 

Also I don't buy toilet paper anymore. Let's just say I get my daily supplies from office... Stocked up on Friday for weekend. I take just enough. 

 

If don't have how? Use water to wash lo. Everything is possible. 

[Guest Not great]

So the more I think about this product, the worse it actually is…

 

say you put $240k away at $2k per month in a savings account which pays 3% (which is a pretty modest rate). At the end of your 10 years, you end up with $275k due to compounding,

 

then you want to take out annually $5.6k from this lump sum, which is 2% of the $275k. You could do this for 50 years until you deplete the lump sum even if the lump sum earned no more interest.

BUT it would continue to earn interest… so your $275k at the end of the first year of paying out is actually $277k EVEN AFTER you have taken your $5.6k out. After the second year, it’s $279k and on and on. 

No fairprice vouchers are worth losing this much money to insurance agents who only care about their commission. 

 

[Vactic]

8 minutes ago, Guest Not great said:

So the more I think about this product, the worse it actually is…

 

say you put $240k away at $2k per month in a savings account which pays 3% (which is a pretty modest rate). At the end of your 10 years, you end up with $275k due to compounding,

 

then you want to take out annually $5.6k from this lump sum, which is 2% of the $275k. You could do this for 50 years until you deplete the lump sum even if the lump sum earned no more interest.

BUT it would continue to earn interest… so your $275k at the end of the first year of paying out is actually $277k EVEN AFTER you have taken your $5.6k out. After the second year, it’s $279k and on and on. 

No fairprice vouchers are worth losing this much money to insurance agents who only care about their commission. 

 

I'm not sure if this is right. From my understanding after the 10th year he will receive 5.6k annually without deducting the lump sum. So if he cancel this plan 50 yrs later he would get his lump sum + 50 x 5.6k. Is this right?

[Singroc]

16 hours ago, Vactic said:

Would he alr have taken 8x 5.6k? So at 10th year he would have alr get 50k so that's 20% returns in 10 yrs I think its good considered tat is guaranteed?

20% for 10 years or approx 2% pa. Not a very good return if u ask me. CPF OA already 2.5%.

[Startup]

3 minutes ago, Vactic said:

I'm not sure if this is right. From my understanding after the 10th year he will receive 5.6k annually without deducting the lump sum. So if he cancel this plan 50 yrs later he would get his lump sum + 50 x 5.6k. Is this right?

 

I think everyone has different ideas and plans on how they should save up for retirement. 

 

I am fully aware that this policy is not the best way to grow my money but it's something I am comfortable with as I am not into investment or trading. So it's better than just leaving it in the bank.

 

To set the record straight, I get an annual payout of 5600 from 3rd year on. If I live up to 82 years old, the total guaranteed returns is $410k, which to me is actually good enough.

[Guest Not great]

2 minutes ago, Startup said:

 

I think everyone has different ideas and plans on how they should save up for retirement. 

 

I am fully aware that this policy is not the best way to grow my money but it's something I am comfortable with as I am not into investment or trading. So it's better than just leaving it in the bank.

 

To set the record straight, I get an annual payout of 5600 from 3rd year on. If I live up to 82 years old, the total guaranteed returns is $410k, which to me is actually good enough.

You posted asking for feedback on the policy, of course different people have different views.

 

why don’t you just post the link to the actual policy so people can weigh it up for themselves with the full facts? You can see from the different comments and questions that there are different assumptions being made about the details of it…

[Startup]

1 minute ago, Guest Not great said:

You posted asking for feedback on the policy, of course different people have different views.

 

why don’t you just post the link to the actual policy so people can weigh it up for themselves with the full facts? You can see from the different comments and questions that there are different assumptions being made about the details of it…

I would rather not do that. My purpose of asking for feedback is not so that i can learn that this is not a fantastic policy so I would regret it as I have already committed to it 

 

My purpose is to understand more about different ways of saving up or growing one's money other than buying a savings policy.

 

I can see why it's not so fantastic but I only want to force myself to save up a portion of my disposable income. Other than that, I am still open to other options. Which is the reason for this post.

[lonelyglobe]

2 hours ago, Startup said:

To set the record straight, I get an annual payout of 5600 from 3rd year on. If I live up to 82 years old, the total guaranteed returns is $410k, which to me is actually good enough.

Is your life and money, as long as u r happy, anyway u already took up the policy so there is no return back. 

 

So u paid a total of 240k over 10 years and return will be 5.6k per year, let say from 30 years old till 80 (that is  the average lifespan of sporean), u get a total of 5.6k x 50 = 280k. Must really live a long life to reap the maximum benefits. 

 

Generally as a guide,  50% of pay goes to daily expenses,  20% for insurance saving policy and 30% for other committment like loan, oversea trip, parent allowance etc. 

Edited July 12, 2023 by lonelyglobe

[NE-STR]

Any local insurance policy I think have a 14 days look see period? 

 

Its ok to back out and get into another better plan rather than forcing it down this path down.

 

Also for the policy, there are deductibles which I always look out for and Agent didn't really touch on... its a year on year thingy.

 

All the best!

[Guest Local]

Hope you won't struggle to keep up with the premiums as time goes on 🙏

[gucici]

4 hours ago, lonelyglobe said:

Is your life and money, as long as u r happy, anyway u already took up the policy so there is no return back. 

 

So u paid a total of 240k over 10 years and return will be 5.6k per year, let say from 30 years old till 80 (that is  the average lifespan of sporean), u get a total of 5.6k x 50 = 280k. Must really live a long life to reap the maximum benefits. 

 

Generally as a guide,  50% of pay goes to daily expenses,  20% for insurance saving policy and 30% for other committment like loan, oversea trip, parent allowance etc. 

Paid up $240k after 10 yrs. 

Then 11th year onwards receive $5.6k per year guaranteed? And need 50 years to get $280k?

But any point in time after 10th year, you may cancel the policy and take back $240k guaranteed. 

 

Is that correct? 

 

If the above is true (guaranteed), perhaps the insurer is betting that you cant live that long. No insurer wants to be on the losing end. 

Should you cancel the plan, you lost the opportunity interest gain for 10 years. 

Alternatively ways, use your money to buy blue chip stocks and earn dividends. Dbs, Sia..

Edited July 12, 2023 by gucici

[earth_tone]

-

Edited July 12, 2023 by earth_tone

[Guest Not great]

9 hours ago, gucici said:

Paid up $240k after 10 yrs. 

Then 11th year onwards receive $5.6k per year guaranteed? And need 50 years to get $280k?

But any point in time after 10th year, you may cancel the policy and take back $240k guaranteed. 

 

Is that correct? 

 

If the above is true (guaranteed), perhaps the insurer is betting that you cant live that long. No insurer wants to be on the losing end. 

Should you cancel the plan, you lost the opportunity interest gain for 10 years. 

Alternatively ways, use your money to buy blue chip stocks and earn dividends. Dbs, Sia..

the insurer will never sell a product where they don’t make money - how else to pay for all the commissions and incentives for their agents…
 

you can see from my rough calculations above why this policy is a bad deal, especially if you are starting it when older. 

[gucici]

38 minutes ago, Guest Not great said:

the insurer will never sell a product where they don’t make money - how else to pay for all the commissions and incentives for their agents…
 

you can see from my rough calculations above why this policy is a bad deal, especially if you are starting it when older. 

Yea. Many clauses esp non guaranteed returns

[Guest Retiree]

Startup, you should have invested long-term in a Unit Trust with Regular Savings Plan (min $100 per month).

E.g. I have invested in Allianz Income & Growth Fund for passive income (monthly dividend about 7-8%p.a.)

[Guest Lihh person]

You should have invested in bitcoin. 

That's the problem with money, even when you have them. Society conjures up ideas that makes you feel like you don't have them. 

 

 

Homeless people would have gladly used to the 2k. Homeless ppl can survive. Why can't you and here you are worrying about your future? About how comfortable you will stay in. 

 

You don't need so many space or condo la. Just 6 feet under the ground. But aiyah underground space also need money. I guess we just need to be dispersed into air or onto the sea as ashes. 

[keyboard]

Annuity. Bad. Period. You can't outlive the risk already calculated and it's can't outrun inflation. $240k 10 years ago is not equal to $240k today and is not equal to $240k 10 years later. $240k when you're 80 yrs old don't even say. If it's at 2%, you get back half your money, will you buy anything to pay full price but tell the seller, it's ok, i only want half of it.

 

The fact that you are already looking at long term means you can afford to lock up this amount of money. Even lower risk things like SSB (can withdraw once a month) gives you better return in the long run without principal loss. Don't forget if the company goes bust. There goes your monies also.

 

2k a bit low to be sugardaddy though.