facebookHi, I'm 28 years old, planning to put my money somewhere instead of bank. Should I do short term endowment plan (10 to 20 years) or long term (until 100 years of age)? Or retirement plan? Thank you? - Seedly


12 Nov 2020



Hi, I'm 28 years old, planning to put my money somewhere instead of bank. Should I do short term endowment plan (10 to 20 years) or long term (until 100 years of age)? Or retirement plan? Thank you?

I understand there is guaranteed and non-guaranteed portions so I am worried if I choose the plan until 100 years of age, I might only get back guaranteed amount which is not a lot! Should I put short term for 10 years first? Or just go ahead with retirement plan? I can put $10k a year. Should I do both short term plan (10years) and retirement plan? Split my $10k? I'm not comfortable with investment at the moment but who knows 10 years later, I might try out investment.

Discussion (18)

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William Seah

12 Nov 2020

Financial services consultant at Pias

Actually. What do you mean by low risk?

if by low risk you mean low chance of loss, then endowments have low volatility ( since it's almost always on a upward growth trajectory; very few have flat guarantees), then endowments fit the bill. If by low volatility you mean a relatively predictable outcome (endowments project their return), then it also fits the bill.

but if by low risk you refer to liquidity risk, that's another risk that endowments dont do so well; most cases to get money out requires some form of surrender which impacts returns.

there Is also a need to see how endowments fit in your overall plan; the impact of an endowment on your portfolio's risk profile. That's another aspect that should be considered.

Frankly, instead of endowment / retirement plan, I would recommend you do the rstu top-up first, and get tax relief.

A) For women, once you have children, the working mother child relief is so much, you don't need to consider SRS.
B) Next cpf rate is guaranteed, and I would say if you average it out for long periods, the insurance companies do not dare to guarantee they can match 4%
C) the rstu contribution is determined by you. If your circumstances change, you can don't make contributions in that year (eg when you are saving for wedding / hdb). Endowment and retirement plans require regular feeding... Not the best option when you are not clear what you are setting aside money for.

I would also suggest you start with investing. Look for low fees, and for beginners, perhaps index investing on S&p 500.

I saw a lot of comments below mentioning about personal investments. To be frank, I personally feel that if you do individual investments, you have to be prepared to take charge to learn and to "watch" the market. It's quite a lot of effort on your part actually, and not everyone is interested or has enough expertise to do it (doing investments without sufficient knowledge is just like gambling).

As for endowment, I don't think anyone should compare the returns to investment because the risk itself is very different. Endowments are meant to be on the lower end of the risk. If you want something safer, lesser effort, then it is a good idea. And most of the times, companies doing endowment are big enough with sufficient expertise in investment (some even hired a team of professional fund managers for it). With a much larger pool of funds, it also has a much better holding power in the investments which will give you a safer return in the long run (not for short term). You can look out for last week's Sunday Times, as it has reported the investment performance of the companies - which can help you to select a better company for your endowment plan.


11 Nov 2020

Turbo-charge Your Savings with REPs at PolicyWoke

Hi Anonymous,

For short-term endowment plans (10 to 20 years), if you are unable to find suitable brand new ones, next option is to find traded endowment policies (TEPs), which are those that were given up by original policyowners and then re-sell as short-term, high-interest savings plans. Budgetpantry has written a review on how it works. However, it is best that you seek advice from a financial advisor to determine if TEPs is suitable for you.

Diclaimer: PolicyWoke trades endowment policies as a resale broker.

Go for plans with flexibility after a certain tenure. i got this endowment plan from prudential, pay...

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