You can calculate the yield on a life insurance policy by using an Excel spreadsheet as explained in this article.
Sunday, October 9, 2011
Distress with an investment linked policy
A consumer approached me for advice. He invested his CPF savings and regular savings in an investment-linked policy sold to him by a friend. After some time, he found that the value of his savings had depleted by nearly 40 percent. He was concerned and approached me for advice - should he terminate his policy. The friend who sold him the policy had since left the insurance company.
He showed me the names of several funds that he had invested in. He had bought a recurring single premium policy, I told him that the loss could be due to the following factors:
- expenses deducted from the savings to pay commission to the agent
- high annual fees deducted from the fund
- decline in the market.
I am not familiar with the charges that are taken away from each recurring single premium, nor the annual fees deducted from the fund, and for the insurance coverage. But the deduction seemed to be quite high.
I had advised consumers many times to avoid investment-linked policies that have high deductions. I advised them to attend the financial planning workshop and the life insurance talk organised by FISCA. Many consumers did not heed my advice, and went to invest in the wrong products, causing them to lose many tens of thousand dollars. It is a very painful experience.
To attend the talk, you should register now at http://easyapps.sg/assn/Org/Event.aspx?id=5
He showed me the names of several funds that he had invested in. He had bought a recurring single premium policy, I told him that the loss could be due to the following factors:
- expenses deducted from the savings to pay commission to the agent
- high annual fees deducted from the fund
- decline in the market.
I am not familiar with the charges that are taken away from each recurring single premium, nor the annual fees deducted from the fund, and for the insurance coverage. But the deduction seemed to be quite high.
I had advised consumers many times to avoid investment-linked policies that have high deductions. I advised them to attend the financial planning workshop and the life insurance talk organised by FISCA. Many consumers did not heed my advice, and went to invest in the wrong products, causing them to lose many tens of thousand dollars. It is a very painful experience.
To attend the talk, you should register now at http://easyapps.sg/assn/Org/Event.aspx?id=5
Saturday, October 8, 2011
Prepare your Financial Plan
Here are sample financial plans for people at various ages:
Age 25
Age 35
Age 60
This financial plan shows how much you can withdraw from your savings at retirement to last for a lifetime, net of inflation. It allows you to see the effect of changing your savings and investing them to earn a higher return.
You can prepare your own financial plan using this tool.
Age 25
Age 35
Age 60
This financial plan shows how much you can withdraw from your savings at retirement to last for a lifetime, net of inflation. It allows you to see the effect of changing your savings and investing them to earn a higher return.
You can prepare your own financial plan using this tool.
Hedge funds can make big losses
When you invest in a hedge fund, you are giving money to a fund manager to speculate for you. The fund can speculate in any type of assets - shares, currencies, commodities. They can borrow money, i.e. leverage, to speculate in bigger stakes. The fund manager can make a lot of profit, but can also make a humongous loss. The hedge fund charge high fees, usually 3% or more of the invested assets, and can also take a large part of the profit, e.g. 20% of the gains. But, when the hedge fund loses big on the bets, they do not compensate the investors for the losses. Hedge funds managers can be multi-millionaires.
It can be reckless for trustees of trust funds or corporate funds to invest their money in hedge funds. But many of them do. This is why hedge funds are so successful. Here is a story of a hedge fund that performed badly this year.
It can be reckless for trustees of trust funds or corporate funds to invest their money in hedge funds. But many of them do. This is why hedge funds are so successful. Here is a story of a hedge fund that performed badly this year.
Financial planning test
How much do you know about financial planning? You can do this test.
http://tankinlian.com/admin/file.aspx?id=458&PK=67932871ae14102ea52e240ed918ec56
http://tankinlian.com/admin/file.aspx?id=458&PK=67932871ae14102ea52e240ed918ec56
Financial Planning Tool and Handbook
You can use this financial planning tool to carry out a projection of your savings and investment yield, net of inflation. This tool helps you to make the right decision for your future. You can read the handbook here.
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