Investing into ETF fund vs Endowment plan - which is a wiser choice given that I am an 18 year old investor? - Seedly
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Investing into ETF fund vs Endowment plan - which is a wiser choice given that I am an 18 year old investor?

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I can't say which is a better choice. You should spend some time understanding both asset classes. One gives you the returns of the market, but it can also give you the losses. The other is a guaranteed return investment with downside protection and some upside potential, regardless of market conditions.

Which would you prefer? (This, you have to answer yourself)

If you have enough budget, there's also no harm doing both. Protecting our downside is part of risk management when investing. Endowments offer a way to do just that for a portion of your portfolio, without any intervention or management needed from your end.

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Boon Peng
Boon Peng
Level 6. Master
Answered 3d ago

First of all, congrats on wanting to start your investing journey at such a young age. Personally I wish I have started investing at your age given the powerful concept of compounding. Since you are young, you might want to understand the associated risks involve for both products (ETF & Endowment plan). In summary, one should have an investment objective in mind before starting their investment journey. Wishing you all the best! :)

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Si Yu
Si Yu
Level 2. Rookie
Answered 6d ago

ETFs

Pro: flexibility in withdrawing anytime but may have high loss or high return.

Cons: requires you to do more research and reading. May be times where you may require to do leveraging.

Saving Endownment plan

Pro: Low risk. will be easier and simpler whereby u look at the guarantee value table. (Discourage you on looking at non-guarantee value as you may not get the exact value as stated so don't put too high hopes on Non-guarantee value.)

Cons:

make sure you have the patience/commitment to pay the policy term(5/10/15/20/25 years). Ask yourself if you prefer short term or Long term payment.

Surrending the policy halfway will result in you get nothing or lower than what you have save in initially.

suggestion: For your age , if you have little or no knowledge on ETFs will suggest you to take saving endownment plan.

Since you are young, during this period you can try taking up course on finance related or do some reading to build on your knowledge and understanding. While in future, when u have extra cash , try on ETFs.

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Alan Kor
Alan Kor
Level 6. Master
Answered 2w ago

ETF for sure

Dont waste your time and money on endowment plans. They tend to yield mediocre returns in the range of 0-3%( if lucky) and lock up your money and cashflow for a long period of time.

Dont buy liao ,then regret and surrender early!

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Tay WenHao
Tay WenHao
Top Contributor

Top Contributor (May)

Level 7. Grand Master
Answered 2w ago

As many have suggested, ETF instead of endowment. Returns for ETF will be significantly higher over time and the other advantage is theres no lock in period or contract.

For endowments, if you terminate prematurely, you will lose you capital. Though ETFs are also subjected to the market fluctuations, it is generally quite stable and usually more profitable than endowment.

When you get more knowledge in investing, you can go for stock picking or even venture into overseas market like US Stocks or S&P500.

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Ben Ng
Ben Ng
Level 3. Wonderkid
Answered 2w ago

Hi there!

Firstly, you have to ask yourself a few things.

1) Your investment time horizon

2) Your Risk Profile - Would you prefer something that provides a guaranteed cash portion?

3) What is your goal?

For me, I have a long time horizon, I prefer to take calculated risks to obtain higher returns on my investment and I aim to achieve Financial Independence by the age of 40. And the only way, I am gonna achieve this is by investing. Definitely not putting my money into an endowment plan.

Hope this clarifies.​​​

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Hey there! My answer to you is.... BOTH!

We ultimately need a guaranteed form of income and a variable income (investment) so the question is when should you do it. However at your stage now, I will recommend endowment because they are guaranteed. You need knowledge and money to invest, and by money, I mean emergency funds because in the event of a crisis, you don't have to liquidate your investments for cash flow. Investments are not guaranteed. If however, you feel that you have adequate emergency funds and knowledge, I think you can opt for investmenets first. Dollar Cost Averaging will be a good way to start.

Note that endowments often requires a certain time period for you to put money in; it will depend on what you're comfortable with.

Financial planning is an integral part of life. You can reach me here to find out more.

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Both have pros and cons. You can play with the numbers here:

https://www.aaronleow.com/wealth-projection-calculator

Use the above as guidelines and decide which you prefer: Wealth or Income.

Equity has no guarantees, while endowment funds have built-in guarantees which will warranty a lower return. In fact, it is almost a guarantee that endowments will garner a lower return than equity. Because if they have higher returns than equity with a guaranteed capital, no one would invest in equity.

They are completely different asset classes and should be treated as such.​​​

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Heng Kai Le
Heng Kai Le, Mondomover at School Of Life
Level 6. Master
Answered 2w ago

When I was your age, I signed up for a 30-year endowment plan in NS. So I have been paying $32.50 for the past 20+ years. To date, I have contributed $7600+ towards this endowment plan. If I were to surrender it now, I would receive about $10000+. So about $3000 gain over a 20-year period.

Other endowment plans may pay out more, but I think ETF funds will yield you more returns in the long run.

I don't regret buying that endowment plan though because i was young and information about investing was scarce at that time. haha

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Johnson Koh
Johnson Koh
Level 4. Prodigy
Answered 2w ago

I would choose ETF anyday, at 18 yo you have heck load of time ahead for compounding to do it's work.

I am not comfortable with giving so much for commission for a long term endowment plan.

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Lok Yang Teng
Lok Yang Teng
Top Contributor

Top Contributor (May)

Level 9. God of Wisdom
Answered 2w ago

It depends on risk appetite, objective and investment capital. ETFs are generally risker investments aimed at capital appreciation over long term whereas for endowment plans, it offers guaranteed value and some bonus at maturity with lesser potential gains.

While age does indicate longer investment horizon, it does not tell about his risk tolerance and other special considerations regarding fianancial background needs to be factored in.​​​

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