insurance - enhanced endowment policy suck! - Part 1
I have three endowment polices, one for each of the three kids. The first endowment for 1st kid matured on last Oct 2009 and the annualized return is 1.64% after XX years with XX insurance co and far away from the projected value.
The second one will mature in Nov 2010. Let see how bad the annualized return will be?
The third one will mature in Mar 2016 for the youngest kid who is now in Sec 3.
At that time, I was a dumb investor and low in FQ and probably that investment decision made was really the right fit for a dumb investor. That is the price I paid for a peace of mind.
Is this really a peace of mind? It has fell far short of the projected value. What if that is the only fund I have? Will I still have a peace of mind?
I have repeatedly remind my kids not to discuss with any financial advisers when they start working next time but get the financial advisers to talk to me first as I am no longer a dumb investor with low FQ.
There will be plenty of tough questions to grill them and then I shall walk away after some free coffee and may be some finger food too. So shiok!
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Hey Bro8888,
ReplyDeleteJust to qualify some things I mentioned about endowment.
1)First of all, I intend to put in only a portion of the amount I want to save into endowment. For example, if I project that the child's education needs 150k, I will put the university's fee part into it. So maybe 100k out of 150k will be into endowment.
2)I only look at the guaranteed part of the projection, not the whole projected value. I do not include any non-guaranteed part. Even if I look at the projected value, I only look at the 3.75% part, not the higher projected one. I think last time the projected % is quite high. So, for the 100k I mentioned in point 1, I mean 100k guaranteed portion.
3)The rest I would save/invest.
The rationale is that in case my investing don't work out, I would at least be able to pay the university's fee. I tried my best, so let the child get tuition or scholarship to pay for expenses. If the insurance company invests badly, at least I wouldn't die because my plan is based on the guaranteed portion, not the non-guaranteed part. The worst case is that I pass away, then at least the kid's university fee which is covered by endowment is covered for.
That's the best one can hope for :)
For those without CPF, I think this may be the best route to ensure the financial ability to pay at least the university's tuition fee which can be significant. Right move, brolp.
ReplyDeleteWell thought out LP. Your method sounds good to me.
ReplyDelete