You can build up a nest egg of $1 million by saving only $300 a month over a working career of 40 years.
If you invest this money to earn an average return of 8% per annum, it will accumulate to $970,000 over 40 years.
If you earn 10% per annum, it will accumulate to $1,673,000 over 40 years.
By investing in a large, well diversified fund of equities, the average return over a long period has been around 8% to 10% per annum.
If you invest in a low cost fund, the charge could be as low as 0.5% per annum. This allows you to keep most of the return for yourself.
However, if you invest in a high cost fund that takes away 2% per annum, you may have 30% of the total money disappear.
Saturday, August 11, 2007
Promoting cooperative insurance in Singapore
I am invited to Japan to present a paper on my experience in building up NTUC Income. The paper is entitled "promoting cooperative insurance in Singapre.
You can read the paper here.
This paper may be of interest to policyholders to learn about how NTUC Income was able to give a better return to them in past years.
You can read the paper here.
This paper may be of interest to policyholders to learn about how NTUC Income was able to give a better return to them in past years.
Fixed deposit rates
With the global stockmarket in turmoil, it may be better to keep the money in fixed deposit or the money market fund for the time being.
You can refer to this website for the latest information of the best interest rate offered by the banks. This information is fairly up-to-date, but may get outdated quite quickly, as the rates may changed daily.
It gives you a good idea about what is likely to be available in the market. Before you invest, it is best to re-confirm the latest offers from the top three in the list.
I hope that you find this reference to be useful.
You can refer to this website for the latest information of the best interest rate offered by the banks. This information is fairly up-to-date, but may get outdated quite quickly, as the rates may changed daily.
It gives you a good idea about what is likely to be available in the market. Before you invest, it is best to re-confirm the latest offers from the top three in the list.
I hope that you find this reference to be useful.
Money market funds
Dear Mr Tan,
Which money market fund gives a better return, NTUC or Lion Capital?
REPLY
Please read this website for a comparison. Dr Money told me that the information is quite up-to-date.
However, before you finally invest your money, it is better to call the fund manager and check the latest information.
Which money market fund gives a better return, NTUC or Lion Capital?
REPLY
Please read this website for a comparison. Dr Money told me that the information is quite up-to-date.
However, before you finally invest your money, it is better to call the fund manager and check the latest information.
Invest my retirement savings
Dear Mr Tan
I have recently retired from work and taken out my money from the CPF.
I have a large sum of money kept in the bank earning a miserable interst rate of 2%. Is is safe for me to invest in a unit trust or investment fund to earn a higher return? What is a good time to invest in the stockmarket after it has corrected?
REPLY
You can read this FAQ.
My preference is:
* invest $200,000 in a life annuity
* invest the balance in a large, well diversified fund
As the global stockmarkets are still in turmoil, it is better to keep your money in the money market fund (to earn 1.5% to 2%). When the stockmarket has corrected to a lower level, you can invest in the combined fund.
You should talk to an insurance adviser.
I have recently retired from work and taken out my money from the CPF.
I have a large sum of money kept in the bank earning a miserable interst rate of 2%. Is is safe for me to invest in a unit trust or investment fund to earn a higher return? What is a good time to invest in the stockmarket after it has corrected?
REPLY
You can read this FAQ.
My preference is:
* invest $200,000 in a life annuity
* invest the balance in a large, well diversified fund
As the global stockmarkets are still in turmoil, it is better to keep your money in the money market fund (to earn 1.5% to 2%). When the stockmarket has corrected to a lower level, you can invest in the combined fund.
You should talk to an insurance adviser.
Buy a modest amount of critical illness cover
Dear Mr Tan,
I really enjoyed your blog. You are very knowlegeable not only in terms of insurance but also investments. Contrary to what other people say, I think you are one of those expert investors.
I would like to ask your opinion about the i-term insurance. I attempted to buy one but was distracted/dissuaded by the NTUC advisers.
The reason given was there was a difference in the definition of terminal illness as described in the I-term insurance and critical illness in other insurance products.
The insurance payout is for terminal/"sure death" illness in I-term insurance. But the definition for "critical illness" is less "serious illness".
Is this true?
REPLY:
The critical illness policy provides a wider definition. If you contract a critical illness, the sum assured is payable immediately. The premium for critical illness is more than 10 times of i-term (and 20 times of decreasing term).
My personal preference is:
* buy decreasing term insurance to provide the death and permanent disability insurance (restricted cover).
* invest the difference in a low cost, well diversified investment fund.
* buy a medical insurnace plan (like Medishield) to cover the cost of treatment of critical illness. If this is insufficient, it can be supplemented by my savings (which will be quite large after 10 or 20 years)
* (optional) - buy critical illness cover for $50,000.
I hope that this tip is helpful to you. Read this FAQ to get a comparison of premium rates.
I really enjoyed your blog. You are very knowlegeable not only in terms of insurance but also investments. Contrary to what other people say, I think you are one of those expert investors.
I would like to ask your opinion about the i-term insurance. I attempted to buy one but was distracted/dissuaded by the NTUC advisers.
The reason given was there was a difference in the definition of terminal illness as described in the I-term insurance and critical illness in other insurance products.
The insurance payout is for terminal/"sure death" illness in I-term insurance. But the definition for "critical illness" is less "serious illness".
Is this true?
REPLY:
The critical illness policy provides a wider definition. If you contract a critical illness, the sum assured is payable immediately. The premium for critical illness is more than 10 times of i-term (and 20 times of decreasing term).
My personal preference is:
* buy decreasing term insurance to provide the death and permanent disability insurance (restricted cover).
* invest the difference in a low cost, well diversified investment fund.
* buy a medical insurnace plan (like Medishield) to cover the cost of treatment of critical illness. If this is insufficient, it can be supplemented by my savings (which will be quite large after 10 or 20 years)
* (optional) - buy critical illness cover for $50,000.
I hope that this tip is helpful to you. Read this FAQ to get a comparison of premium rates.
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