Let's talk about investment-linked insurance

We all know it is good to start an insurance at early age. I found out an interesting point about investment-linked insurance this morning that I would like to share with all of you.

First of all, the example I am going to give is Prudential PruFirst Gift, this is actually a PruLink Protection, it is like an investment-linked insurance. You have to tell them which funds you want to park your money , and in what percentage. For me, I channel 50% monthly premium to PruLink Emerging Markets Fund and 50% monthly premium to PruLink Singapore Growth Fund and these are medium to high risk funds.

With monthly premium of S$200, you actually can get your kid sum assured to S$200,000.
Here is the interesting point, when your kid reaches age 19 (that's when he needs to go to college or university), you need a sum of money for his education fees, this fund now comes handy. Assuming the funds performance is 9% (it is possible if Singapore and Emerging countries are doing well in the next 20 years).

Let say it achieves S$71,100 as what Prudential has projected for 9% , you can actually withdrawn cash S$70,100, and leave just S$1,000 in the insurance, and this insurance is still valid with sum assured S$200,000 to your kid...

My opinion is, you never need to cancel this investment-linked insurance, you can just treat this as your kid "whole life insurance", the only draw back is you or he himself (when he starts to work) has to keep paying monthly premium of $200 per month, but then, remember this monthly premium is the money you buy funds, you can take it back anytime, but don't surrender the policy as this insurance has sum assured with S$200,000, it is good to treat it like a traditional insurance plan, and this is good for your kids generation to benefit.

I am not an insurance agent, I don't sell insurance, but I think this is good plan, and now I have to find out more about my current AIA Arcons of Asia investment-linked insurance. I am still learning.

How much interest you pay for your housing loan ? (Revision 02)

Revision 02 (last paragraph): updated on November 5, 2014

I took 80% housing loan 2 years back for my new home with 3-Year Fixed Rate Package from Maybank Singapore (1.6%, 2.6% & 2.9%) in June 2009 with loan tenure of 20 years and it turns out to be a bad bet. I paid S$18,800.96 interest (until June 2012) for the loan amount of $284,000 , and that's effective interest of 6.62%!

It is my mistake to extend my original loan tenure of 10 years to 20 years. My intention is to bet on the equities market and additional investment at real estate in Singapore. It is not a good bet as for now. I have reviewed carefully and decided to change some of my strategies next year, especially housing loan.

It is easy to look back 2 years ago of what you should have done:
(1) I should have sticked to my original housing loan tenure of 10 years
(2) I should have selected the 3-months SIBOR pegged housing loan packages
(3) Even with equities investment, I should have followed my original plan of Starhub single investment at S$1.91 andd keep it with dividend yield of 10.47%.

It is time to look forward! I have done the survey on the home loan rates available at Singapore. I will place a certain lump sum downpayment next year June (re-finance) to reduce the housing loan to S$169,447. With this amount, here are the big picture.

CIMB 3-Year Fixed Rate Package stands out among the peers, with fixed rate of 0.98%, 1.38% and 1.98%, the total interested paid for 3 years is only $3,235.49, and that's a mere 1.91% effective interest that you pay for the loan amount. I will be out of debt at age 35, sound like a good plan.

By then, year 2015, I hope the equities market is on the bull cycle, and that will be really double bonus for me. :) Let's plan and God will take care the rest.








Take note, the lump sum down payment during re-finance next year is about 32% of the remaining loan balance.

If I refinance with another 20 years, the total interest will be $106,016 (42.5% of loan balance). If I refinance with 10 years, the total interest will be $37,019 (14.8% of loan balance). That is one of the reason why I want to reduce the remaining loan and the interest is then greatly reduced to only 1.91% !

Take note, due to CPF OA contribution rate change, the monthly OA contribution has now increased from $1,035.51 to $1,150.20 , you can wipe them off for housing loan monthly payment.

Typical Singaporean (in my case) who takes CPF 2.6% loan will enjoy much lower interst in the long run due to the low interest rate of fix 2.6% throughout entire 20 years, but it is still a big amount of money. We are talking about 30% of interest.

If they take 80% loan and spread 20 years (which many Singaporen did that or even 30, 35 years), the total interest is $80,511 (28.3% of loan amount).

Updated on November 5, 2014

======================

Looking back at the blog written 3 years ago, I am happy to say we have fully paid our HDB housing loan in June, 2014.

Once you have cleared your HDB housing loan, you will receive this important document - The Land Titles Act Lease document. 

You have to pay S$450 lawyer fees while you do the HDB housing loan redemption.

September 2011 actions ...

BUY ARCELOR MITTAL (ADR)

August 2011 actions ...

BUY MEWAH

SELL RAFFLES EDUCATION @ S$0.61, profits 11.7% (include dividends)

BUY CAPITAMALLASIA (INCREASE STAKES)

BUY CSC HOLDINGS (INCREASE STAKES)

BUY MEWAH (INCREASE STAKES)

BUY HOTEL PROPERTIES (INCREASE STAKES)
CONTRA SELL HOTEL PROPERTIES @ S$2.09, profits 4.0%

BUY SABANA SHARI'AH COMPLIANT INDUSTRIAL REIT

July 2011 actions...

BUY HEALTHWAY

SELL GOLDEN AGRICULTURE @ S$0.725, profits 10.5% (include dividends)

BUY CAPITAMALLASIA (INCREASE STAKES)