What investment/safer instrument would you recommend for a mum at 50yo? My mum’s fixed deposit is going to be due soon. A staff asked if she wants to continue to put in for another 10years to get higher interest. Any advice?

Hi Anonymous,

For resale endowment, it is best for her to seek advice from a financial advisor, to determine if it is suitable for her savings needs. This is because the brokers who trade resale endowments are unable to give any financial advice.

Similar to buying a new one, resale endowments also have this clause:

"Buying a life insurance is a long-term commitment. An early termination of the policy usually involves high costs and the surrender value (if any) may be less than the total premiums paid."

Hope this helps.

HiHi,

It really depends on 2 things. Risk Appetite and Time Frame. If your Mum is still gainfully employed, then there's at least another 15years ahead which makes investing a viable option. I don't think FD will do much interest rate (1%?), I know there are some products with a 6yr timeline with ~3% guaranteed rate. If you put into endowment then MAYBE < 4% (you really need to cal the IRR, some are so much worse) and your money gets locked up for quite a long time.

On your note of OA/ILP, I understand. Do you know that out of 74 unit trusts approved under CPFOA, i would not recommend anything more than 10 and only like ~35 of them (on 10yrs basis) beat the 2.5% interest. So you really need to know what you are getting into and many proclaimed "FA" will just push whatever.

Whatever you do, after taking into consideration of Risk appetite, I will always advocate the following:

1. Diversify your investments. Be it Unit trusts, Reits, ETF, Managed Funds across countries or sectors. (These can be done in as little as $100/month)

2. Regular Savings Plan. Means you invest over a timeframe like 6-12months for the Principle and go for continuous monthly add-in.

3. Portfolio Balancing. Need someone to look at your overall plan regularly (6m/1yr) to put you back on your original allocation plan.

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