What are the pros and cons of starting a savings plans with prudential? What are most people's thoughts on it? - Seedly

Insurance

Asked by Anonymous

Asked on 24 Apr 2018

What are the pros and cons of starting a savings plans with prudential? What are most people's thoughts on it?

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

Besides what both Cheries have mentioned, I'll add on one more con: relatively low returns. Returns of about 3% a year is kinda low and you will likely need to set aside a large amount of premium to reach your financial goals.

If you are comfortable with holding stocks and know which are the good ones to hold they may potentially be a better idea returns wise and help reach your financial goal faster. You can also setup a recurring monthly programme through something like ocbc's blue chip investment plan.

Personally I won't touch an endowment plan precisely cos of what I mentioned above. Started on one years back as I didn't know any better but sold it away a couple of years ago to fund something that is giving me mid double digit returns a year compounded.

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Thanks for asking! As a Prudential representative, I'm happy to walk you through the plans we have at Prudential in detail.

The common cons associated with any endowment or savings plans would be the long time horizon and commitment period. Most clients I work with have the initial worry of wanting to "draw out their savings" at an emergency. However, my practice focuses on a growth mindset rather than a narrow mindset. On top of educating my clients on why a long term savings plan will seriously benefit their silver years of life, I also aim to work closely with my clients to instill both confidence and capabilities to grow their income and professional selves.

The pros associated with the plan Cherie wrote here would be:

  • Guaranteed returns that grows in the long term
  • Additional (non-guaranteed) bonuses, on top of guaranteed returns

A long term savings plan would help supplement your retirement income, on top of what you might receive from the CPF board and other products you might have purchased.

If you're interested in knowing more, feel free to contact me!

Cherie Tan

♡ Go Beyond Financial Planning: Empower Yourself & Enrich Your Life:

Contact me now: https://cherietan.typeform.com/to/wdlOfu

🛎 Associate Wealth & Financial Planner (AWP, AFP)

🛎 Singapore Accredited Mortgage Planner (SAMP)

Representing Prudential Assurance Company Singapore (Pte) Ltd Reg. No. 199002477Z

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Gabriel Tan Jun Wei
Gabriel Tan Jun Wei
Level 3. Wonderkid
Answered on 11 May 2018

Hi there

Cherie has touched on the technical aspects of the savings plan!

What is your objective on getting the savings plan? They are still popular in the market today because some people just want to put their money outside of their bank at a higher interest rate with certain guarantee to have their capital back.

Again, educate yourself by reading more about investing. If you simply have no interest in learning about finances, work with a trusted financial advisor!

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Cherie Julianne Tan
Cherie Julianne Tan, Content Strategist at Seedly
Level 6. Master
Updated on 06 Jun 2019

Hi there, I'm presuming that you are referring to an endowment plan, I have listed down some of the pros and cons to it.

Pros:

  • Guaranteed returns
  • There are also non-guaranteed returns
  • It disciplines you to save regularly
  • Some insurance coverage (but if you are looking solely for saving purposes, this might be a disadvantage as it comes at some costs)

Cons:

  • Long commitment period
  • The actual return on the participating fund is not what the policy holder receives.

Some may prefer doing their own investment as it provides more flexibility and control at lower cost, some may prefer investing into Singapore Saving Bonds and some might prefer endowment plan as it of a more disciplined structure. There are many tools around that will help encourage savings, ulltimately, it is important to know what your goals are and what you want to achieve while doing so. Here we have laid out the basics on saving plans, but please do your own due diligence before making any commitments!

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