Are retirement plans considered a fixed income component of a financial portfolio?

I have read that a portfolio should consist of equities, fixed income and cash. I have started on RSP on ETF. and considering to get a retirement plan offered by insurance. Are these plans considered fixed income portion of my investment plan? Also SSB (fixed income) comes with such low interest. Why are people still subscribing to it?

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Pang Zhe Liang

13 Mar 2020

Fee-Based Financial Advisory Manager at Financial Alliance Pte Ltd (IFA Firm)

There are many ways to plan for your retirement.

Investment

Some early adopters may prefer the use of investment as opposed to traditional participating endowment policies as they have a longer time horizon. Consequently, they can deploy various investment strategies to improve thier retirement pot over time.

Participating Endowment

Most participating endowment policies have a guaranteed component. As a result, they form the fixed income portion of your entire financial portfolio.

More Details:

What is a Participating Fund?

For the purpose of retirement, I usually prefer a step-up guaranteed stream of income. This will be a natural hedge against inflation in the future.

A combination

Of course, many of my clients use a combination of investment and endowment policies to achieve the best of both worlds - potentially higher return from the bull market while cushioning the impact during a bear market.

Such combination is simplified through AIA as it provides such a hybrid combination in a single policy (lesser expense ratio as compared to using an individual policy each).

Singapore Savings Bonds (SSB)

Generally, Singapore Savings Bonds are safer than bank deposits. Some of my clients have maxed out the yield from the bank and may need liquidity in the short term. Hence, SSB becomes a viable option.

I share content on estate planning and financial planning here.

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