Where can you put your money to grow your retirement fund and yet sleep well?
Here is what happened with prolonged low-interest rate environment in the past decade.
- The property prices are at ridiculous level and beyond your reach
- Your living expenses increase year by year
- Your salary increment cannot keep up with inflation
- You receive peanuts for your money sitting in the bank.
No wonder Singaporeans are desperate for guaranteed return products and would rush to anything with “promised return” without scrutiny.
I talk a lot about investment in my blog, but in everybody’s portfolio, there should always be a layer of safe return because you don’t know what will happen in the future.
Do you know the simplest way to get a guaranteed investment return in the medium term is through a good endowment plan? It will not only deliver a steady return but also take away your worry of your investments in case of a stock market crash.
What is an Endowment Plan
An endowment plan is issued by an insurance company to meet your financial goals such as retirement. You can use it to build up savings over a fixed term. In Singapore, endowment policies are protected under Policy Owners Protection scheme, so you have one more layer of safety when it comes to the word “guaranteed”.
Currently, China Life Insurance offers one of the best endowment plans in Singapore. It is a 5-Year Endowment Plan called China Life SaveReward 101. It is the best alternative to any fixed deposit or Singapore Savings Bond and offers the highest return among all the medium term endowment plans.
Unlikely other insurance products, this endowment plan has 3 Guarantees:
- Guaranteed capital
- Guaranteed yield
- Guaranteed acceptance
Many people have no idea that many endowment plans sold in Singapore have no capital guarantee. That is why I emphasise on the word “good endowment plan” at the beginning.
You may be promised to have a guaranteed cash value every year, only to realise that you have lost tens of thousands of dollars when it is time to take back your money.
China Life SaveReward 101 has a guaranteed lump sum maturity payout. So if you are going to retire in about 5 years’ time, you are assured to have this fund to realise your retirement dream.
Moreover, you only need to pay 3 years premium for this 5-year plan.
China Life SaveReward 101 is a non-participating endowment policy. In layman’s term, it means that the yield is not subject to the performance of insurance company’s investment funds. It is not a projected return, it is guaranteed.
You can choose either SGD or RMB as the currency for this plan.
If you choose SGD, your annual yield is guaranteed at 2.25% per year. If you wonder just how much 2.25% can compound over 5 years, I will do the sum for you.
For example, if you want to start saving for a home business or travel around the world, and you put in $20,000 per year for 3 years. 5 years later, you will get back $65,598.
On the other hand, with the rise of China and more demand of Renminbi, you may want to diversify your retirement savings to RMB for potential currency appreciation.
With savings in RMB, you can get an even higher guaranteed yield at 3.62% per year. A 100,000 RMB yearly premium policy will grow to RMB 345,990 when the policy matures.
To enjoy the benefits of this plan, you do not need to make any health declaration or go for any medical check-up, so it is hassle-free for you.
Just in case you may doubt the stability of China Life Insurance company, the group is the largest financial insurance corporation in China. It is also a Fortune Global 500 company, ranked 94 in 2015, with a brand value of over RMB 182 billion.
Like all the good endowment plans such as NTUC Capital Plus, this is a limited tranche product. The reason is that for the insurance company to guarantee you such yield, they have to find a unique investment opportunity which does not come by every day.
The first tranche of this endowment plan has been fully subscribed last year. China Life Insurance has just launched the second tranche.
Update: please note this Tranche has been fully subscribed. please click here for the latest tranche offer.
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