OCBC asked me to take up a 10 year savings endowment plan and purchase funds from Lion Bank Asian Fund or Lion Bank Core Funds. Should I take this up, or invest in STI ETF + Bluechips + SSB and REITs? - Seedly

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Asked by Anonymous

Asked on 12 Nov 2018

OCBC asked me to take up a 10 year savings endowment plan and purchase funds from Lion Bank Asian Fund or Lion Bank Core Funds. Should I take this up, or invest in STI ETF + Bluechips + SSB and REITs?

I have savings of 2 years of my current salary and my only debts are a car loan and my HDB loan (less than a year left to pay). I have no investments.

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Jonathan Chia Guangrong
Jonathan Chia Guangrong, Fund Manager at JCG Fund
Level 6. Master
Updated on 07 Jun 2019

Learn to invest on your own. Why take the chance of having your funds locked up in an endowment that offers uninspiring returns? Not to mention costly funds that won't lead to something decent? Buying into a few reits and ssb may potentially offer something on par if not better, returns wise, with the option to liquidate without much costs. Do examine the reits to see if they fit what you are looking for before buying into them. Hope this helps

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Tee-Ming Chew
Tee-Ming Chew

12 Nov 2018

Agree on what Jonathan has mentioned. Personally don't like the idea of having my money locked for so long with little returns on them

Personally, I think that you will be better off investing on your own. In addition to STI "ETF + bluechips + SSB and REITs", you may consider investing in diversified global portfolio of ETFs via a robo-advisor. Refer to the following reviews for more information:

https://seedly.sg/reviews/robo-advisors

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Evaluate them individually.

10 year endowment vs SSB.

Fund vs STI ETF/ Blue Chip Stocks

REITs are a separate asset class. Can't compare with the provided recommendation.

For the Endowment, if there are not special benefits, it may perform better than the SSB while sacrificing liquidity and a yearly coupon.

For the funds, you'll have to go deeper into what you'll be investing in, and if you're confident in the outlook of the assets it holds.

And also, compare the fees to acquire. Will the banker charge you a sales fee for the funds? Will this be lower than the charges for buying the ETF and stocks?

Too little information to have a proper look for you as well. Bring up the alternative to your RM, see his response and then bring up his response and your proposal to another friend who's an investor or financial advisor. Gotta do your due diligence.

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Jun Hao Tay
Jun Hao Tay
Level 1. Freshie
Answered on 19 Dec 2018

Low cost index fund investing (into STI ETF) makes a lot more sense by keeping fees to a minimal. Those cost savings add up over long periods of time too. SSBs are a great way to get some fixed income exposure.

If you don't have much time (or interest!), it doesn't make sense to become an active investor and start looking at blue-chips or REITs as its quite a big learning curve.

I highly recommend reading the Millionaire Teacher (can get a copy at NLB) which talks a lot more about the entire process.

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Jim Ng
Jim Ng
Level 5. Genius
Updated on 20 Dec 2018
  1. I dislike endowment plans because of the commitment until the end of the policy term. If I were you, I will do away with the endowment plan. Regardless of how much savings you may have parked in the bank, you can't predict yourself being out of job. You can't predict when you'll need the emergency funds to be automatically taken out. So I don't to the lock my money aside in endowment plans.
  2. Mutual funds is one good way to diversify your portfolio. For Lion Bank Asian Fund and Lion Bank Core Funds, they have 2% one-time sales charge and 0.6% annual management fee. Why bother going through these fund companies when you can go directly through SGX? You can invest in blue-chip stocks or ETFs through the stock trading companies at just a one time 0.25% floor rate. That way, you get to save and diversify your portfolio too.
  3. Since you've no investments and are still new, I suggest you read up more on investments here: https://blog.seedly.sg/investment-product-short-medium-long-term/

Ultimately, it depends on your time horizon, your risk appetite, and your budget before you can determine what you should invest in. 👍🏼Cheers, all the best for your investing journey

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Now so many people getting asked to take up endowment. I think because of the rising interest rate. Interest rate have been really low after the financial crisis. Now its starting to go up. So please take this into consideration as well. Because you are going to lock your money inside during a rising interest rate period. A lot funds have high fees, robo advisors might also be another alternative you can consider if you are interested in investing in US.

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