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Dollar X Syndrome
Do you suffer from “Dollar X Syndrome”?
There are many people who suffer from Dollar X Syndrome which prevents them from effectively accumulating their savings. They will either consciously or unknowingly associate an arbitrary amount of savings in their bank as a comfortable figure of money to have. When their savings fall below $X, they start to become uneasy and save more to reach closer to their comfort zone. When they have more than $X, they feel comfortable to spend, usually unnecessarily, until they fall back down to X dollars.
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NTUC Income Relaunching Capital Plus, Again
NTUC Income is relaunching Capital Plus on 11th July 2011.
It is a 2-year single premium savings plan with a guaranteed return of 1.4% p.a. The minimum sum required is $10,000 cash or SRS, and the plan is available to all between 16 to 80 years of age.
“Double Charges” in a Regular-Premium ILP
There are charges involved in both investing and getting insurance coverage. Purchasing stocks incurs a brokerage fee, and investing in unit trusts involves annual management fees and sales charges. Bulk of the first few years of premiums of an insurance policy goes to “distribution costs” (mainly commissions to the agent). Typically, distribution costs are highest in the first year and steps down over the next few years of a policy.
Regular-premium investment-linked policies (ILP) are touted by many agents to be for both insurance and investments, but do you know that many such policies charge the policyholder distribution costs (on top of investment charges) on his investments, and investment charges (on top of insurance charges) on his insurance?
What is Buy Term Invest the Rest?
Buy Term Invest the Rest is a strategy that provides an alternative to whole life insurance policies. The rationale for such a strategy is that one can invest the savings in premiums one receives by purchasing an inexpensive term policy rather than a pricier whole life policy. The accumulated savings and investment returns will then make up a sum of money for one’s insurance needs in future when the term policy ceases.
Here’s the Math for such a strategy: