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Fergus Tan

Fergus Tan

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Fergus Tan

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Investment Linked Policies (ILP)

Insurance

Investments

Fergus Tan
Fergus Tan

()

Level 3. Wonderkid
Updated 2w ago
It's not an easy answer, because ILP by itself is a category of products. Saying that ILP is bad, is similar to saying "Stocks trading is bad", or "Options writing is bad", or "Buying insurance is a waste of money" Traditional ILP came about when people were unhappy with par fund returns of whole life policies, and they wanted more flexibility and control. Insurers then flip it around and gave people full flexibility. The biggest problem with that was that cost of insurance climbed over the years, and before you know it, people were actually left with a depleted account in their old age where they needed the coverage the most. More recently, you see a lot of ILP which is primarily an investment product but sold by insurers or financial advisory firms. Typically nicknamed 101ILP, they usually provide a death coverage of 101% of total premiums paid, or in other words, not much insurance coverage. In this sense, it's really not mixing investments with insurance. In this space of wealth based ILPs, you have AXA Pulsar, Manulife InvestReady Wealth, and Tokio Marine Atlas Wealth as the top 3 most popular ones. How it usually works is that you get an upfront bonus that may be paid in the first year, or up to a few years, but you have to commit to a time horizon. I will use Manulife InvestReady Wealth as an example because it's simpler to understand. All 3 illustrations are available online. https://www.manulife.com.sg/our-solutions/invest/investment-linked-plans/investready-wealth.html https://www.axa.com.sg/our-solutions/personal/savings-investments/pulsar https://www.tokiomarine.com/sg/en/personal/wealth/wealth-planning/tm-atlas-series/tm-atlas-wealth.html In the case of Manulife InvestReady, the illustrated example shows a choice of a 20-year plan where the annual premium is $12k. You get an upfront bonus unit of $7,200 (or roughly 60%). In the case of TM and AXA, they tend to give a bonus of up to 200% but spread over a few years. The trick you will see is the annual charge. Back to InvestReady, this means you start the account with $19,200 worth of investments. You have to pay a fee of 2.5% (made up of 0.7% and 1.8%) every year, for the first 10 years. After that, it will be a fee of 0.7% subsequently. A way to think about it, is that the upfront bonus units is used to offset the 2.5% paid over the subsequent years. If you were to run your numbers, in theory the additional bonus units might put you ahead of people who buy unit trusts directly. As for AXA and TM, they give much higher bonus units, because the fee charge per annum is also much higher, up to 7% per annum. So the balance point is if you believe that over the long run, investments are uptrending or not. If so, then bonus units help, since you frontload your profits. The biggest downside I see if you are locked in for the committed time period. If you surrender or withdraw before that, you are likely to lose a large chunk of it. To be fair, I think it's quite neutral versus directly investing in unit trusts. You can probably only say for sure on hindsight. You need to understand your objectives too, because even within the unit trust space, there are many pricing models, such as wrap accounts, non wrap, etc.

Career

Insurance

Savings

HDB BTO

Fergus Tan
Fergus Tan

()

Level 3. Wonderkid
Answered 2w ago
3k debts is not a big amount. Is your passion in financial sales, or just looking at numbers? To be honest, it's hard to advise because there really isn't much details on your current work, or skillset, or whatnot. Besides insurance sales, you can consider looking at other types of sales if you want to clear your debts quickly. Insurance or financial advisory is hard. Most people will reject you even before trying to understand you who are. In other industry, you might still be able to get the first meeting before your presentation skills are put to the test. My suggestion is to go check out the people who are hiring in the insurance and financial advisory space. Talk to them, ask them how they will help you, and try to find people who have gotten success recently, and if you feel you can model after them. It will be hard work. Good luck!!

Career

Salary

Fergus Tan
Fergus Tan

()

Level 3. Wonderkid
Answered 2w ago
To be honest, I think salary is the least of your concerns unless it's at least a 30% differential. There are too many factors at play also. Do your family depend on you heavily to pay expenses? Do you have any cash savings buffer? Will the wedding result in kids coming soon? Most people with high liabilities tend to take less risk with their career because they have bills to pay. Late 20s is hard to tell and is definitely different for males and females. I would assume you are male and have been working for about 5 years. From what I see, you are trending towards taking lesser risk, because you are looking more towards option 2. To be honest, there's no harm taking that, unless option 1 is paying 30% higher, or it is in a much bigger company. When you are looking to do quick job changes, the name of the company, and the title of your job matters. If you could give more details, it would be helpful too

CPF

Property

Retirement

Fergus Tan
Fergus Tan

()

Level 3. Wonderkid
Answered 2w ago
As a short answer, it depends on your income bracket. If you are below the 7% tax bracket, then I would highly suggest you keep cash. You could use this to do investments, which can vary depending on your risk tolerance and time horizon needs. If you are above the 7% tax bracket, you can consider looking at SRS. Some people who are more risk-averse might start putting into SRS at this point for tax savings. But do remember to invest your SRS, as they do not pay much interest in that account. The benefit of SRS is that you can choose to do withdrawals with a penalty, or you can use it for your retirement needs at a reduced tax rate. If you have maxed your SRS contribution for the year, then you can consider CPS RSTU. My suggestion is to find someone who can look at your numbers and provide options. In the end, your financial philosophy plays the biggest role. Don't follow another person's solution blindly without understanding why.

CPF

Retirement

Fergus Tan
Fergus Tan

()

Level 3. Wonderkid
Answered 2w ago
As a short answer, no. The 2 common tax relief product would be SRS and CPF RSTU. If you are below the 7% bracket, then it makes more sense to keep cash. If you are above the 7% bracket, then putting to SRS is a good thing to consider. If you have maxed out your SRS contribution for the year, then you can consider CPF RSTU.

Investments

Career

CPF

Savings

Fergus Tan
Fergus Tan

()

Level 3. Wonderkid
Answered 2w ago
$3k and $2940 is not much of an issue. I typically expect most people to round to the nearest hundreds anyway.

Investments

Savings

Lifestyle

Fergus Tan
Fergus Tan

()

Level 3. Wonderkid
Answered on 13 Aug 2019
The best way to quickly build up your warchest is to trade time for money. The amount you are aiming for is $3-6k. Realistically, it's possible to just do part time work or jobs to get that kind of money, given a 5 month timeframe. Some examples of interesting gigs 1) Working at a nightlife location. Some jobs can pay up to $20 per hour, but you get shitty hours. 2) Tuition. It's one of the highest paying work per hour. 3) Find random skill based gigs, like photography, or graphic design, or emcee. If you don't have professional experience, don't expect to be paid like a full time professional. But it should get you some money. 4) Learn a skill for a business, such as social media management, or helping people design websites. Some people write articles for others and can charge $50 to 100 per article. 5) Find a way to work around your poly campus, so that you can save time in commuting from school to work. Good luck!

Stocks Discussion

Investments

Savings

Bank Account

Career

Fergus Tan
Fergus Tan

()

Level 3. Wonderkid
Updated on 22 Jul 2019
There are many types of financial services representatives. You have stock brokers (or formally called trading representatives), you have financial adviser representatives (which can market insurance, unit trusts, alternative investments), you have robo advisory (which essentially invests in ETFs most of the time, though there are some doing a hybrid human-robo model). My suggestion is to shop around. Talk to a few people. Don't feel pressured to buy anything. There is a difference between a tied representative from an insurance company, a tied employee from a bank, and a representative from a financial advisory firm. If you are looking purely for investments, you can probably skip the rep from insurance company, and the employee from the bank. Unless you just want to get some insights. I don't know if you have covered your protection needs, or how savvy you are on holistic financial education. Hence, the best is really to talk to a few people. Don't feel like you owe them anything if you think their philosophy and style differs from your own. In everything, there are always pros and cons. Be it a human financial advisor, a robo advisor, or diy investment. Understand the pros and cons and make a choice thereafter. Most FA firms in Singapore are pretty okay. It's really the individual representative you want to take note of, and not necessarily the firm.

Investments

Fergus Tan
Fergus Tan

()

Level 3. Wonderkid
Answered on 22 Jul 2019
I hope that person has at least provided some factsheet to you.. https://www.manulife.com.sg/resources/investreadywealthiienglish.pdf Manulife InvestReady is a wealth/investment centric ILP. This is different from a traditional ILP, where it is a mix of protection and investment. That is, units are deducted to provide insurance coverage, and the cost of insurance increases as you get older. Other similar products in this class are Prudential's Pru Select Vantage Manulife's InvestReady Wealth AXA's Wealth Accelerate It's basically a wrapper that's NOT meant for insurance purposes, even if they call it investment linked policy. It has varying minimum investment period, which means if you terminate early, you will face a hefty charge. But the good news is that there is no upfront charges, and in fact, you get bonus units (For example, I believe you get 60% bonus units or $7200 for first year if you commit to $1k a month for 10 years) It has a wrapper charge, which is broken down into 0.7% + 1.8%, making a total of 2.5% per annum over the first 10 years, and subsequently 0.7% per annum, which is not too bad for a wrapper. It invests into unit trusts, including dividend paying ones, so you could technically receive dividends, even though you are not allowed to withdraw from the ILP. To me, if you are able to fulfil the investment quantum, and the time horizon, it actually makes sense. Reason is that the welcome bonus more than makes up for the annual charges, even if you invest directly into unit trusts. If you cannot hold for the minimum investment period, then it's best to invest directly into the unit trusts.

Investments

Savings

Retirement

Fergus Tan
Fergus Tan

()

Level 3. Wonderkid
Answered on 17 Jul 2019
A lot of interesting comments here, and to be honest there are many ways to go. Some righteous ones might say, you should spend the money on educating yourself. Some say you should get your toes wet and just invest in stocks. Others who might be more risk adverse will say buy a ETF or unit trust. They forgot. The first question should always be, what do you expect to get out of 25k? Now based on your question, you decided to invest the money, and decided the ratio to be 1:1 for a 5-10 years time horizon, and a more than 10 years time horizon. So if I may, I would want to deep dive on why 5 to 10 years. Is there a need for the money after that, and what happens if you hit a loss after that time period? Why I am asking is that if there is a fixed use for the money after a time period, then you should go for low risk assets so to ensure you hit your time frame. If all you are saying is, you want to invest for the long term, and you have no specific use for the money, but you want to be able to have a pot of gold for luxury if the investment makes a profit, then the recommendations would change. Hypothetically, if I was your age, and I would try to put myself into your mind-frame, what I would do is to try to do things that will generate intangible life lessons. Hence, I would invest a chunk into stocks directly. This could be blue chip stocks in Singapore, in order to have vested interest and subconsciously you will learn more about them. This could also be higher risk small cap stocks, where you must understand it is a gamble. I might also even venture into US stocks. Options selling is getting popular as a way of active income. If you don't intend to take courses, then put a small amount of money just to learn about that. What is your expectation for this? To be honest, you might generate 671% return from a single stock or option, or you could lose all the money. That's not the important thing. The key is long term consistency, and you are trying to preserve that notion while using the money to learn more. Next, I might look at other viable investments that would take less than 10% of my capital. So I might put a small bit of money into crypto currency, IF it is something I believe will appreciate. Of course, if you think it is a scam, you should avoid. In summary, a good 30-40% should go into a basket that is going to generate life lessons for you. Based on 25k, I might put $5-10k into bluechip types, 2-3k into options writing, and maybe 2k into crypto. The remaining 10k, I would probably put into an investment basket. This is money that is meant for future planning such as retirement. Hence, I would put this chunk into things like ETFs, Unit Trusts, ILPs, or super bluechip stocks. My expectation would be realistic and a longer term 8-12% annual returns. Ideally, not much time and effort should go into managing this, besides top ups, ocassional switches, etc. You should not even have to read financial reports and all too often. Reason is this. You are still fairly young. At your current age, you are going to make more in the next 5 years, than the money you saved in the last 10 years. What you want to do is to focus on increasing your earning potential. This could be focusing on your job (and climbing the ladder), or taking courses to build a side hustle. In the grand scheme of things, you could lose the 25k, and it will just be a drop in your life's ocean. Hence, you should use the money to learn things through experiences. Honestly, 25k, even if you miraculously did better than all the fund managers in the world and hit 30% annual return, it's only $7,500 and if you are a high earner, you might spend that on a business class ticket when you have a wife and 2 kids anyway. Of course, keeping cash in the bank and doing fixed deposits is the worse. Even buying Singapore Savings Bonds teaches you more life lessons. TL:DR: Spread your assets across different RISK classes, and use those as opportunity to be better in investment in the next 10 years. PS: Please don't invest shitloads into crypto mining or other get rich quick investments that promises 25% per annum, or some ridiculous monthly ROI.
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