What are better investment options to AIA Pro Achiever for someone with limited investment knowledge, no time to monitor funds, looking at 10-15 years investment horizon, targeting returns of 5%? - Seedly

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Asked by Anonymous

Asked on 21 Nov 2018

What are better investment options to AIA Pro Achiever for someone with limited investment knowledge, no time to monitor funds, looking at 10-15 years investment horizon, targeting returns of 5%?

Summary of AIA Pro Achiever: 100% premium invested, can choose targeted interest returns ranging 3%-8%, 2.5% sales charge for first 13 years thereafter no charge, trust funds managed by renowned Mercer, 5% additional bonus after 13 year, can withdraw interest from 3-6th years, can withdraw principal from 7th year

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Lok Yang Teng
Lok Yang Teng
Level 6. Master
Updated on 21 Nov 2018

The sales charge is more than 10% higher than what you'll get from ETFs. Assuming $200 monthly (since min. premium is 2.4k annually) and 13 years duration, you have wasted at least $2600 in sales charge which would have been better off with more units. Unless you're planning to use the plan for maybe like 50 years, then it possibly is more worth it. Do take note:

  1. Partial withdrawals are not allowed prior to the payment of 3 years of annual premiums. A partial withdrawal charge applies on withdrawals made prior to the payment of 13 years of annual premiums.
  2. If you surrender your policy prior to the payment of 13 years of annual premiums, a surrender charge applies.
  3. A 5% sales charge will apply on all top-ups

If you're planning to invest ~$200 monthly, you can opt for ETFs. If you have a lump sum, you can go with Singapore Savings Bond. Both requries minimal intervention and still provide returns. Just my take.

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Valery Lee
Valery Lee
Level 2. Rookie
Answered on 30 Nov 2018

just do a pure investment and avoid insurance companies investment plans if possible. it's true, fees are the worst. now it may seem like it's a good deal but tbh your money shouldn't be held up just bc you want to terminate early.. anyway you can start an account with poems for little to no charge and if you're worried about monitoring the funds, i suggest you pick a diversified portfolio of different industries you are comfortable with and at least know what the heck is it about. if all come to nought, just save up, cash is king haha you can top up your cpf or you can buy lump sum retirement plan which has pretty good returns depending on what is your needs. trust me, it sucks when you put money into whatever and years after, it's still depreciating, you are better off saving that money lols

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Jonathan Chia Guangrong
Jonathan Chia Guangrong, Fund Manager at JCG Fund
Level 6. Master
Answered on 28 Nov 2018

Forget ILPs or unit trusts, as fees are horrendous and performance of funds can be uninspiring. If you just want a hands off investment method with minimum input on your end, look into what Andrew Hallam discussed in his book millionaire teacher - couch potato strategy. Basically a blend of a world Etf, local stock Etf and a bond Etf. Rebalance every quarter or so. Believe this book is available at the library. Have a good at reading it. Alternatively, have a look at robo advisories as well. These can potentially meet your targeted return with much lower fees compared to what ILPs charge. Hope this helps

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Alan Kor
Alan Kor
Level 5. Genius
Answered on 28 Nov 2018

fund returns are not policyholders' returns

better know the difference

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Brandan Chen
Brandan Chen, Financial Planner at Manulife Singapore
Level 5. Genius
Answered on 21 Nov 2018

There are always several options for investments, ILPs such as AIA Pro Achiever is one of such options. One thing to note is that no matter what you decide to invest in, what matters more is that you understand the risk involved and what are you investing in.

There are always alternatives such as:

  • ETFs
  • RoboAdvisors

When you mention an investment horizon of 10 to 15 years, what is the objective of the investment?

Is it for retirement?

If its for a specific goal, perhaps investment in such ILP funds may not be suitable for you because you have to take into consideration that no one can predict exactly when markets will crash. What happens then at the end of your time horizon when u need the money and the underlying investment underperforms?

Depending on your risk appetite, long term returns for someone that is growth seeking, especially with a timeline of 10 - 15 years, 5% should be quite easy to meet. Ultimately, it depends on the underlying funds that you/your financial advisor selects and whether your financial advisor does his job of constantly reviewing your portfolio.

If you would like a 2nd opinion on other investment plans or options, feel free to drop me a PM at https://www.facebook.com/brandan.chen

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