SG Budget Babe
Asked 1w ago
Which option will be better?
Well it would depend on my risk profile, appetite, and strategy.
If I'm risk adverse, I'll never buy stocks, if i love taking risk, I might never buy an endowment plan.
So it's an individual choice and it has to be.
Ultra-long term buy & hold of broadly diversified, cheap and large, physically replicated passive indexing stock ETFs (complemented by 5-10% physical gold) with periodic (f.ex. quarterly) investing via a cheap online broker and all currency switches made (not by the broker or bank but) by Transferwise seems a sound strategy. Avoid mutual funds/unit trusts at all costs.
There's more than 2 options to your hypothetical question.
Let me broaden the scope of your question by suggesting another option which guarantees your capital, gives you a decent return relative to endowment plans, and gives you liquidity. Singlife Manage is a decent product that gives you 2.5% per annum. :)
The better option will be one that fulfils your needs.
If you prefer a financial instrument with some form of certainty in its returns, then a participating endowment plan may be a better choice. However, there will be a minimum lock-in period, and you shouldn't expect exceptionally high returns.
On the other hand, if you prefer a financial instrument that is capable of generating potentially higher return, then investment may be a better choice. However, you need to have the foresight to pick the correct funds as the returns are non-guaranteed.
Having mentioned that, there are also situations when we can consider a hybrid solution, i.e. half endowment, half investment.
Either way, I won't put $10,000 into a single stock as the lack of diversification poses unnecessarily high risk.
All in all, there is no right or wrong answer. Above all, meeting your needs is all that matters.
I share quality content on estate planning and financial planning here.
Nice answer from Hariz above, I think my own investment experience and emotional stability counts as well.
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