Are ILP's really that bad?

Looking at pure investment ILPs, is it really that bad? Planning to put in my inheritance of 4.2mil, some have high welcome bonus, which is like free money. Plus i get A.I funds.

I see that my bank works with Manulife, but it doesn't seem attractive. Plus i don't wish to let my bank earn my fees, since SDIC insured up to 75K, i probably will leave around 100K in bank and invest the rest.

Why so many people disencourage ILPs?

I have zero clue on DIY investment. Was looking at brokerages, but seems like they have high fees too.. they have their own managed portfolios, but it doesn't seem like it will perform well.

Robo seems very cheap, I can get low fees like 0.2-0.4%, but not sure if robos can perform well..

Discussion (18)

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Seedly Rookie

03 Dec 2023

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JH L

Edited 02 Dec 2023

Now let’s start off with the basic reason of this post – I assume you don’t know how to DIY Invest (completely fine, we all start somewhere), and you are looking for product solutions that can help you invest into the market to get better returns vs what you get now, and you have already looked at a few other options.

I personally would like to see some examples of pure investment ILPs, because the ILPs I am seeing so far come with a death benefit (i.e. an insurance component). But from my prior experience seeing the ILPs (CompareFirst is a good friend here), ILPs are just thoroughly disadvantaged no matter what you are looking for in a product. In this case, convenience is expensive and deadly, and you incur a lot of opportunity cost to do so.

To address your concerns:

Robo-advisors are very popular because their fees are so cheap. If you truly want good returns, you need to look longer term. You cannot expect to hit a jackpot in one year barring individual stock investing, but you can get good accumulation if you give them more time. And when you give them more time, fee size and being flexible are your two biggest assets. ILPs cannot beat alternatives on both, and robo-advisors help you immensely here on both. If a robo-advisor is not performing, chances are your ILP funds are also not performing too.

Whatever the proponents of ILPs are suggesting for behaviour etc. , I can imagine that asking around will give you much cheaper alternatives with the same results.

You can also find plenty of low cost brokerages online if you know where to look.

For your case, why not just buy a broad-based index fund like CSPX or even the MSCI World Index and focus your efforts elsewhere?

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LE GUEZENNEC Xavier

02 Dec 2023

I have dca 17 years with ntuc income and I am positive by 30% to sum invested but an ssb would even have better performance. So endowsus s&p or msci based investment would surely do better. For sure high fees are eating all along the way and it is a rip off.

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Tharmaraj Ramesh

02 Dec 2023

Hello There!

I 100% understand why people would be against ILP's due to the fees involved etc. However, ILP is generally targeted more as a passive investment tool. Meaning to say you put in the $$ with a trusted financial consultant who gives you the monthly market updates and checks in on your investment portfolio regularly and not just sign your policy and eat the commissions.

Furthermore, ILPs are built to use your discipline to work on your wealth accumulation for the long run. After the initial 10 years of the fees, when you continue to accumulate your investments wealth for another 10-20 years, you can definately see the increase in your pot of gold.

If you are interested to find out more or clear any enquiries about ILP i would be more than happy to clear them for you. Rest assured I am not trying to sell you anything here unless you yourself 100% believe it is the right thing to do.

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