I came to be aware of such investment about 3 years ago when a friend invited me to an office in Tanjung Aru Plaza. The company registered in Malaysia to market this investment was Eagle something. The talk was shared by a speaker from Singapore. Among the guests were some insurance agents, unit trust agents and of course, potential investors.
On the back drop of the office were impressive pictures of on-going constructions going on in the marketed sites.
We were told by convincing returns of the plots of lands sold in previous projects. This so-called new land was in Canada. The land was purchased in big piece and divided into smaller plots so that the price is affordable to retail investors like us. Investors are guaranteed with minimum returns and liquidity, blah blah blah. Once the Canadian authority approves the project plan, the plots of land will worth many times more than what we invest. Investors are invited to Canada to view the land, and even given the plot number like our land title. XD:
I had doubts in my mind as to why market the Canadian land in Singapore and Malaysia? How can I entrust this Malaysian Registered company to safeguard my money? All the financial investments in Malaysia are regulated and must be approved by Security Commission and Bank Negara. Should anything wrong, I don't think SC and BNM will get their hand in. Furthermore, instead of investing in land banking oversea which I have no control and won't have access to any reliable source of information related to my investment, why don't I just invest in Malaysia? Isn't plantation (oil palm) land more likely to give me better return?
I have not gone back to ask the investors about their investment but I have this interesting site to tell me my instinct was right.
http://www.learnmoney.co.uk/advice/advice-87.html
Tuesday, 28 June 2011
Wednesday, 22 June 2011
Endowment Polices (2)
Why buy endowment?
As what I mentioned in earlier blog, I shall not buy endowment plan for its return, because its return is as low as putting money at FD. Furthermore, once committed, you have a long wait for maturity. The waiting period is at least 20 years depending on the type of plan you have chosen.
Then, why endowment?
1. Endowment can be used to protect family wealth against spendthrift and immature beneficiaries.
e.g. A rich grandfather wants to show his love to his grandchild whom he may not live long enough to see till his tertiary education. Instead of leaving behind the money for the son to keep for the grandchild, Grandfather can pay a lump sum upfront to buy an endowment plan for his grandchild that gives yearly cash benefits. This can be used as grandchild's school and tuition fee. When the child is ready for his tertiary education at 20 years old, the policy will mature and thus let the child has a lump sum to continue his study.
2. To protect family assets from creditors and claimants.
When a person is declared bankruptcy, his creditors and claimants can claim from his bank account and other belonging. This is really heart broken when a middle aged person who has accumulated his wealth painstakingly suddenly facing the blow due to business failure. What will happen to his children? Do you know that money in the policy cannot be claimed by creditors and claimants? Of course this is not restricted to endowment policies only. However, if the policyowner is your child, they can use the money be it cash dividend, survival benefit or maturity value.
3. Discipline saving habit
If you don't pay premium, your policy lapse. Once lapse, you lose your earlier saving. There are other better saving tools that give you better return in the long run and flexible enough to see you through difficult time. However, this is good for those who want to force themselves to put aside saving or else be punished.
As what I mentioned in earlier blog, I shall not buy endowment plan for its return, because its return is as low as putting money at FD. Furthermore, once committed, you have a long wait for maturity. The waiting period is at least 20 years depending on the type of plan you have chosen.
Then, why endowment?
1. Endowment can be used to protect family wealth against spendthrift and immature beneficiaries.
e.g. A rich grandfather wants to show his love to his grandchild whom he may not live long enough to see till his tertiary education. Instead of leaving behind the money for the son to keep for the grandchild, Grandfather can pay a lump sum upfront to buy an endowment plan for his grandchild that gives yearly cash benefits. This can be used as grandchild's school and tuition fee. When the child is ready for his tertiary education at 20 years old, the policy will mature and thus let the child has a lump sum to continue his study.
2. To protect family assets from creditors and claimants.
When a person is declared bankruptcy, his creditors and claimants can claim from his bank account and other belonging. This is really heart broken when a middle aged person who has accumulated his wealth painstakingly suddenly facing the blow due to business failure. What will happen to his children? Do you know that money in the policy cannot be claimed by creditors and claimants? Of course this is not restricted to endowment policies only. However, if the policyowner is your child, they can use the money be it cash dividend, survival benefit or maturity value.
3. Discipline saving habit
If you don't pay premium, your policy lapse. Once lapse, you lose your earlier saving. There are other better saving tools that give you better return in the long run and flexible enough to see you through difficult time. However, this is good for those who want to force themselves to put aside saving or else be punished.
Endowment Policies
I met a client to make medical claim for him 3 weeks ago. In a hurry after passing me the medical receipts, he asked me to check on the Hong Leong Bank Endowment Saving Plan which his friend said giving 15% return annually!
What went straight to my mind was how a bank can make 15% return for endowment plan? A bank is a financial institution. The bank must abide by law of how they do investment. For non-linked policies, investment are focus on bonds and securities. The return is almost always around 2.5% to below 4% compounded. Simply, the return for non-linked policies will no more than what the unit trust bonds are giving!
Insurance companies and banks are very clever at marketing tactics. For those who are lazy to do maths calculation are the main customers of these plans. In fact, many insurance agents and bank staff are also quite ignorant about the returns of the endowment plan. These are the front-end sales force that push the products to reach their sales target!
Endowment plans are packaged in many different ways. Policy term can be 20years to whole life. Premium term can be as short as 5 years or a lump sum at beginning of the policy term. Then it can gives guaranteed annual or alternate year survival benefits, not guaranteed cash dividends, terminal dividend, reversionary bonus etc. No matter how they package the products, the return is always more or less the same across the board.
Buying Endowment for return is the last thing I would do. The sum assured is low but the premium is high. In today's market, there are so many varieties of investment tools. Before committing into anything, understand your needs and your affordability. Look for alternative and compare the pros and cons.
I have come up with a simple worksheet to calculate return for endowment plan. Keep in touch with me and I shall email you.
What went straight to my mind was how a bank can make 15% return for endowment plan? A bank is a financial institution. The bank must abide by law of how they do investment. For non-linked policies, investment are focus on bonds and securities. The return is almost always around 2.5% to below 4% compounded. Simply, the return for non-linked policies will no more than what the unit trust bonds are giving!
Insurance companies and banks are very clever at marketing tactics. For those who are lazy to do maths calculation are the main customers of these plans. In fact, many insurance agents and bank staff are also quite ignorant about the returns of the endowment plan. These are the front-end sales force that push the products to reach their sales target!
Endowment plans are packaged in many different ways. Policy term can be 20years to whole life. Premium term can be as short as 5 years or a lump sum at beginning of the policy term. Then it can gives guaranteed annual or alternate year survival benefits, not guaranteed cash dividends, terminal dividend, reversionary bonus etc. No matter how they package the products, the return is always more or less the same across the board.
Buying Endowment for return is the last thing I would do. The sum assured is low but the premium is high. In today's market, there are so many varieties of investment tools. Before committing into anything, understand your needs and your affordability. Look for alternative and compare the pros and cons.
I have come up with a simple worksheet to calculate return for endowment plan. Keep in touch with me and I shall email you.
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