For 10 years, I admit, I have been paying into an ILP. At first, it is because I have no understanding of the financial market, and thought I did.
I recently stopped my ILP, just last year, in fact. I also stopped my investment into a fund portfolio by AVIVA.
Why?
Simply because I realised that the rewards of putting money into the funds have strangely under-weighted the risks. Or rather, I lost money over the 10 years, instead of gaining it.
Much of it went by the way of fees, I think. I took up a term insurance instead of the ILP and covered myself for a higher amount with the same cost. I also got a early critical care insurance instead of the critical care insurance that allows me to claim if I have stage 1 critical illness for treatment instead of having to wait for the doctor to pronounce that I have x months left to live.
Incidently, I also got it from another agent that critical care insurance, and life insurance will be paid out the moment your doctor pronounce your impending death, so there really is no difference.
For a read on ILP, you can refer to the link on Money Sense
5-reasons-why-singaporeans-still-continue-buying-ilps-today
Another interesting and fun product I was introduced with was from another insurance policy, where you get a one off top up of 50% of what cash you put into your account, but have to commit to 30 years of paying in.
The agent claims to have a 65% return on the product after 6 years, and of course his client is very happy, until you realise that it includes the 50% top up that was done. So it was really 15% return over 5 years in the booming days of 1998 - 2014, which works out to be 3% that a very safe fixed deposit with the insurance company will pay you anyway.
Ever since 10 years ago, I started out really being very interested with investing and building a retirement sum for my nest egg. I tried my hands at various things, stocks, MLM, ILPs, managed Fund portfolios, And I will say that I have generally lost money.
It is the case of not knowing enough.
I also started studying how to trade using technicals and understanding financial jargon, as well as practicing personal finance prudence.
I read blogs, and books. Attended lessons and webcasts. So I find myself getting more and more familiar and realise that the only way for you to reach your goals is to find your way.
Of course there is a few misses that happen along the journey, and we all get back with experience and hopefully, learn from our mistakes.
A few issues online about investing in bonds catches my interest.
There are a lot of people who do not realise that bonds are a lot like stocks, they can be traded, there is a price, a commission and a spread.
It also has risk in it and though not as volatile as the stock market, you must understand that once the company keels, everything goes. As a retail investor, you are right at the bottom of the food chain, you might as well be the producer, where you take all the risk with nothing to gain. The first lenders usually gets the money repaid first, if there are any.
Some good reads:
why-20-something-singaporeans-shouldnt-invest-all-their-money-in-bonds
There are also new platforms I am looking at, such as P2P lending, the sums are low and we can get better returns than normal. But it much more difficult to evaluate if the business will go well. Remember these people do not qualify for the stringent bank loans, they cannot even go to credit companies, that's why they are now looking for you.
In bad times, there is a greater possibility of default, also we have to see if the proposed usage of the funds are feasible. If it is not, it will fail and you will lose your money, even putting it in a 0% account is better than losing your principal.
is-your-p2p-platforms-interests-aligned-with-yours
There are so many things to share, and I will have to end it here. Till next time.
