Personal Finance 101 (LLI)
Asked by Anonymous
Asked on 05 Dec 2018
Insurance savings plans are typically put into a participating fund with an element of guaranteed and non-guaranteed returns comprising of majority bonds. The general idea is a very conservative growth that keeps up or just slightly beats inflation while preserving capital as well as other features such as a higher benefit in the event of untimely death and expedited payouts. You typically expect 2.5 - 4% net overall.
There are other RSPs, especially commonly offered by POSB Invest-Saver for the STI or the ABF Bond Fund, which can have mixed returns as well ranging from 2 to about 7% depending on your risk profile.
Lastly, Robos also have a range of risk that you can choose from which will typically generate between 3 - 10% annualized.
The risk for robos is typically much higher, since the investments are made overseas and have more focus towards equities - so you add up things like currency risk. Of course, you also get a higher return.
In summary, no, they are not the same. Higher risk is higher return. But if you're looking at 'savings' in a conservative sense and not 'investing', then you should stick with conservative investments. If you want to invest aggressively, you can do much better than robos.
You can always drop me a PM if you'd like to start saving.