As we have mentioned many times, interest essentially is the cost of borrowing money.
Sometimes when we take up loans, we pay interests. Sometimes when companies want to borrow money, they issue bonds. And bondholders earn interests.
For individuals who try to earn interests, Singapore Saving Bond has been the go to instrument. However in recent times its 1st year interest rates has dropped below that of fixed deposits.
The Feburary issue of SSB has very disappointing interest rates.
Source: Singapore Government Securities
On the other hand, while Fixed Deposits provide marginally higher interest rates, the have many restrictions/risks in place:
1) The minimum deposit amount may be out of reach for some.
2) Has a lock in time period usually 1 year; and there is penalty for early withdrawals.
3) After the lock in time period, individuals have to source for another place to deposit money for another year.
Source: MoneySmart
This post is not going to talk about the economics of high or low interest rates environment.
We have one very simple objective here. What other options can give interests that are HIGHER?
Enter Singlife Endowment Series Four
Singlife has recently released a Single Premium 3 year endowment plan. The premise is similar to it's predecessors.
1) You put in a lump sum amount of money. (Cash only, minimum S$5,000)
2) Wait 3 years and receive your money plus guaranteed interests of 2.25% per annum (compounded 6.903% after 3 years).
For illustration, if you put in $10,000, you will receive $10,690.30.
This short term endowment plan has higher returns than either SSB or Fixed Deposits. Obviously, these 3 are different products, you need to sit down with their respective product distributors to understand in detail.
However, from the returns point of view, Singlife Endowment Series Four has higher returns.
That's the review if you just want higher returns.
Partial Withdrawal Options
During the 3 years you may partially surrender the policy to withdraw part of the surrender values. The death benefits and maturity values will be reduced accordingly.
The death benefit is the higher of 105% of single premium or surrender value.
Screenshot from Benefit Illustration of a $10,000 single premium.
Unique Feature: Free Withdrawal Option!
3 years is considered a short term endownment, however, a lot of things can happen in 3 years.
There are certain conditions, if met, Singlife will allow you to withdraw part of the single premium without incurring surrender charges, and without interests.
The conditions are:
Medical reasons
If you or your spouse is certified by a registered medical practitioner to:
to be permanent; or
Life stage events
Financial reason
For all intents and and purposes, this is a very good feature for a short term endowment to have. I wish future issues by Singlife and other insurer will be able to incorporate this.
Please email me at josh.tan@promiseland.com.sg or join telegram https://t.me/sgfinancial to be notified when there is a release!
Conclusion
Bearing in mind that Endowment plans are a different products compared to SSBs or Fixed Deposits or a regular Bond.
However, from a guaranteed interests stand point, at 2.25%p.a for just 3 years Singlife Endowment Series Four is an attractive product in this low interest rate environment.
It is perfect for you if you:
1) are risk adverse
2) have no idea what to do with their money
3) want to grow money conservatively with guaranteed returns
Regardless, if you are curious as to what you can do with your money than put in the bank, do speak to a licensed professional like an independent financial advisor.
#NOTE: Plan sold out 6Mar2020.
Please email me atjosh.tan@promiseland.com.sg or join telegram https://t.me/sgfinancial to be notified when there is a release!
Last updated on June 8th, 2020 at 10:35 pm