Asked by Anonymous
To be honest, it is depending on what is the purpose/objective for the plan? There is many alternative options. And premium term affects the overall ROI of the plans. Let me put this in a simple way: Paying a 20 years premium does not guarantee you will have a good return as every plan is designed & calculated differently. Sometime a short term premium (5 years premium) with a long duration (maybe 20 to 25 years of holding period) can give a much higher ROI however this is solely depending on your budget.
But for someone who just started working, I would recommend you to look into your cash flow (expense), learn on how to manage it, create an emergency funds & saving up in alternate bank accounts (especially if you do not have a saving habit, time to build the habit). You may put partial of your saving into SSB while you learn more about endowment, investment.
Please do not hurry and commit into a plan without understand its nature. If you really wish to speak privately, do feel free to pm via facebook~
you will be locking up your cashflow for very long time for mediocre returns. are you comfortable with it?
compare the returns with ssb avg 2%+ for 10 yrs, with 1 month flexibility
dont rush to lock in your money without comparison
Long term endowment (or commonly called savings) plan works to make you disciplined in savings. For a fixed plan, i.e. can't withdraw during the policy term, it ensures you have a sum of money to use for at the end of the policy term. For a flexible plan, i.e. you have option to withdraw money during the policy term, it allows you to have some spare cash at any point in time.
Just to share I started my endowment plan when I was schooling. When I graduated in end 2008, it was bad job market. It took me 3 months to find a job (when others before and after me already have offer when they graduate). During that time I exhausted my bank savings but luckily I had endowment plan to withdraw cash to tide over things for a couple of months before the paycheck comes in.
Sometimes you never know when you need that extra cash - having a long term savings plan ensure that you'll have something somewhere along the line! The pros is definitely there. But be ware not to over-commit and bite off more than you can chew. You won't want to get an endowment plan that over stretch your financial capability!