Read? What is good Financial Planning?
Saving is saving
Insurance is insurance
Investment is investment
Know clearly the difference among them - Saving, insurance, and investment and don't start comparing them one to one like Apple to Apple when obviously they are NOT!
Recently; Uncle8888 has read in FB's comment section that some are advocating topping up children CPF OA as children's university fund and making CPF looked like super saver account with the wonder of compounding interests and multi-purpose.
When our financial goals e.g. our children's university fund or retirement are decades away; don't be so naive thinking that we will always be there to top up CPF account to meet the financial goals.
Financially savvy or prudent ones will first seek to protect against human asset and then save or invest towards financial goals!
Read? The Three Matters On Personal Finance: Saving, Insurance, and Investment!!! (2)
Posts
i think Insurance can be in between "saving & Investing" if you can afford it.
ReplyDeleteBecause of our super low FD rate for so many years.
i have not cashed out my family's life policies because it is better then FD rates from the bank.
Besides, still enjoy the benefits of the policies(touch wood).
Are you still paying annual premiums?
DeleteOf course lah.
Delete1 policy (my wife) single premium @ the age about 37 (At that time i bought for estate duty tax in case...touch wood)
1 policy fully paid this year.
2 policies till 85
My son's policy till 55
Another of my son's policy till ??
Total premium for all policies P/A is $2725 now.
One of my son policy i will cash out in 3 or 4 years time because there is a jump of Non - Guarantee sum.
After that i see no point carrying on this policy because this premium P/A is $868.
Ouch!
DeleteNot so bad lah.
DeleteAll are into money better than the current Bank's FD rate.
Even the $868 p/a policy is about to break even.
If you look at the cash return P/A, it pays for the policies's premium by themselves.
As long can service comfortably then OK lah.... Just take it as fixed income portion of overall portfolio.
DeleteHowever nowadays these par insurance not so favourable. Annual bonuses declared very much reduced from previous decades.
Previously in the 1980s or 1990s, can breakeven within less than 10 years.
Now takes almost 20 years to breakeven, even if buy at 20+ age.
For today's generation, can get better returns & protection by buying term and simply invest the rest in low-cost bond funds or bond ETFs.