facebookWhere should I start my regular investment plan? - Seedly

Anonymous

12 Feb 2020

āˆ™

Insurance

Where should I start my regular investment plan?

Should I invest in a pure investment product( eg AIA Pro Achiever) or just do own investment thru brokerage firms like Poems. Iā€™m aware of the high fee (2.5%) from insurance companies compared to brokerage of 0.25%.

Discussion (14)

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Sharon

12 Feb 2020

Life Alchemist at School of Hard Knocks

Updated 12 Feb 2020

About AIA Achiever, I calculated the rate of return today. It came up to 6.7%. Considering I held it for 12.5 yrs, this is definitely super long for this kind of rate (for your comparison, MIT came up to 200% for 10 years holding). If it's XIRR (for monthly contribution), it's a sad 0.8%. sobs

Frankly speaking, I'm not expecting much from AIA (Pardon me, but I really have er... not-so-good impression about them...) So to me, it's quite good already, as long as they don't lose my money. LOL. I hold it so it balances out my risker investments.


Not sure how's AIA Pro Achiever (maybe an upgraded version), but I had the AIA Achiever, which I bought 12 years ago. It breakeven only recently, i.e. the total investment exceeds total premium contributed. I don't think it's a good investment vehicle. I reckon a lot of it went into the commission of the sales person in the first few years. Anyway, now I just treat it like a savings fund.

Rather, I think you should attend some courses out there how to build your portfolio of equities and read more. Our CPF is already machiam like a bond.

Hence, if you are in your 20s & 30s, my suggestion to invest entirely in stocks instead. I usually like to go for companies that pay reasonable dividends (beware of super high dividend yield, sometimes the co. may not be what it seems e.g. Hyflux), are growing and resilient.

So even if the market goes south, you still get some returns. Remember to keep your cost of buying the stock to less than 1%.ā€‹ā€‹ā€‹

Elijah Lee

21 Jan 2020

Senior Financial Services Manager at Phillip Securities (Jurong East)

Hi anon,

I don't recommend investing via an insurance policy. Investments and insurance should be clearly seperated.

When you invest via a policy, you become bound by the T&Cs of that policy.

Transactional costs aside, I personally feel that the need to liquidate as I wish is important in investing, as long as I can accept the market value at the time of liquidation.

There are better ways to invest. You can do so on your own terms, or get an advisor to manage for you (note: this is not the same as commiting to a policy), we are talking about advisory here.

You can easily set up an RSP with any brokerage firm to get yourself started, and have the complete freedom to start, stop and restart any time.

Naturally, there are many options at this point, but you should take your time to learn about the various asset classes, and then decide what is best for you.

Brandan Chen

21 Jan 2020

Financial Planner at Manulife Singapore

Hi Anon,

There are indeed a plethora of options to consider when it comes to a regular savings plan. Below are just some common options.

1) POEMS

2) Insurance ILPs

3) Robo advisors

4) POSB STI

5) and many more

As a financial advisor myself, my portfolio mainly consists of ILPs, US Equities, REITS, S&P500 ETF. Its common for new investors to be bombarded with the various investment options available when starting out their investment journey.

A easier way of helping you make the decision would be to consider the following factors:

1) Investment knowledge - how equipped are you with understand the financial markets and grasping financial concepts

2) Capital - How much money are you intending to start off your investment journey with? It should be the amount of money that you are willing to lose as investment returns are never guaranteed

3) Time & Effort - how much of your personal time and effort are you willing to put in to do your research and understand the financial markets better?

With the 3 factors above, you could more or less decide if you are more of a passive or active investor.

If you fall into the active category, and is willing to put in time and effort into understanding what and when to invest, perhaps DIY-ing your investment through buying of stocks/unit trust would be more suitable for you.

If you fall along the more passive category, and has only basic investment knowledge, you may consider doing an RSP-ETF, ILP from an insurance compan, Robo Advisors. Amongst these options, ILP would typically have the highest fee but not necessary the lowest return net of fees. Furthermore, most ILPs in the market now offer capital guarantee upon death which is something that none of the other investment tools out there would offer.

At the end of the day, what matters most is still your risk appetite, if you are able to stomach temporal losses and willing to take on more risk to gain higher returns, equities and other high risk investments may be more suitable for you.

Also, if your final decision is to take up an ILP, it would be important to consider the skill and knowledge of the advisor in providing you sound advice on portfolio allocation and also a back-up plan should your investment goes south.

Feel free to drop me a message at https://brandanchen.manulife.sg should you need more clarity!

You can break down those investment products and buy them yourself. Save yourself the agent and commission fees. Their portfolios are available for public to study.

The difference between the 2.5% - 0.5% = 1.5% spread is the opportunity cost of DIY investing. If yo...

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