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The following guest blog is contributed by a reader, Jean:
I have done some search from internet and see whether got any way to get return slightly more than FD and also receive some amount of return in the future.
Here's what I have done and for sharing purposes:-
First, I open an 360 saving account at OCBC.
If I qualify, I will get 3.05%pa for 50K saving.
2nd, I just need to change my current giro payroll to this 360 saving a/c
3rd, I also applied a credit card called OCBC Cashflo (with Great Eastern logo at the top right), which would be useful for my 4th point below.
4th, I bought an insurance plan called Family Three from GELA for three of my children. I just need to pay for 10 years and the return will run till my children pass away and still got a lump sum for my grandchild, if any. I make use of the credit card above to make the payment by instalments to enjoy the yearly rate for the premium, which is cheaper if compare to monthly premium. As I bought three policies thus my monthly instalments is more than $400, which make me qualify for the 3rd criteria of the 360 saving a/c.
In order to fully enjoy the 3.05% interest of 360 saving a/c, I need to meet one more requirement, ie pay any three bills using OCBC online or Giro. So, I use this a/c to pay the above credit card bill, tel co bill and utility bill.
Good point for the 360 saving a/c is.....I can withdraw any amount any time freely which FD cannot. But.... ceiling is 50K. :(
Pertaining to the insurance......I have bought the similar type in Malaysia, which introduce this plan few years earlier than Singapore, and now I enjoy the return...... use for travelling and service other present policies. If I rich enough, I may buy more so that can get more guarantee return in the future, provided GELA never got financial problem in the future. And in order to enjoy the lower premium...one must have CHILDREN.
Hmmm.....I am not insurance agent, not work in OCBC bank and also not a credit card promoter. This is just purely for sharing only.
In an email to me, Jean said, "I also hope to receive some comments that can improve my plan." So, please feel free to leave comments for Jean. Thank you.
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14 comments:
Where to start?
I gasped in horror at the steps this lady took.
firstly, some time back, you could only get 2% p.a. fixed deposit if you buy a savings plan. Yes! That was I was told!
With the new basel iii standards and mas call for increase of reserves and ocbc wing hang acquisition, getting the 3% has become possible. And who knows what the fed rate hike might bring.
so it has become unnecessary to buy a savings plan to get that 3%. By the way, spending $400 is easy. Connect your ezreload of your entire family ezlink. Voila! Groceries. Voila! Mobile bills. Voila! Subscriptions. Voila! Mcdonalds meals. Voila! No need to buy any savings plans.
yes. Your family 3 is categorised as savings plan. Is savings plan bad? Not going to trick me here. *Wag finger*
But you can't change your allocations. You can't change the maturity. You don't have a free market to quote prices for it.
Their guided rate ranges between 3.75% to 4.25% ( lia guide )
Take a corporate bond for example. You also get 3.5% sometimes 4% coupon rate. Just that you need to reinvest. But you can sell it. And buy it back at lower prices.
"but I don't have the money to buy the quantum of bonds or shares?"
There's always unit trusts.
"But I don't want to monitor. I love my lifestyle"
Ok. Ok. Buy lor. Good luck.
Jean,
I don't know you and you don't know me.
Since you ask for feedback, let's have some fun (please don't take it too seriously).
I'll ask some verification questions to you - don't answer them in public! Just in your mind will do :)
1) Are you grandchildren born yet?
2) Who are the beneficiary on the life insurances for your 3 children today?
3) How did you feel when your parents or in-laws tried deciding for you on how to raise your children (with all the love and good intentions of course)?
4) Are your 3 children adequately protected financially if you and your significant other are not around?
4a) If no, would this $400 per month help in buying more life insurance protection for you and your significant other to benefit your 3 children in the here and now?
4b) If yes, would this $400 per month be better served to take care of yourself as in H&S, critical illness, disability coverages? No shame in taking care of yourself first - you put on the oxygen mask on yourself first before helping your child in a air emergency ;)
Sometimes the WHYs can be more important than making a few % extra here, a few % there.
Use OCBC 365 card once hit $600 per month , doubly whammy ! Cash back + another 1% interest granted to the OCBC 360 account ( I know they only require S$400 but OCBC 365 requires $600 per month to have high up to 6% cash back ) . Ho la !
Hi SMK,
• Guaranteed annual cashback of 2% of sum assured from the end of premium payment term
• Projected annual cash bonus of between 0.8% and 2% of sum assured on top of annual cashback
• Option to accumulate annual cashback and cash bonus at attractive interest rates of 3% p.a.
The projected rate is actually capped at 4% (2% cashback + 2% non guaranteed) based on my limited understanding.
Reinvestment will only give 3%.
Rgds,
Matthew
I want to share my story. Be careful of those CSOs when opening your 360 Account.
I opened mine about 2 months ago and the guy tried to get me to sign up a 15 Years Endowment Plan using credit card monthly payment. His argument? To achieve the $400 limit criteria per month to qualify for additional 1% interest. Also the plan can help me save instead of spending my money away. Very cunning of him, can use the account opening process to earn himself a hefty commission from the proposed $4,800 per year premium.
I firmly rejected his suggestion as I know my monthly credit card recurring bill like telcos, town council, union membership can made up at least 40%. The rest can be made up of my groceries and petrol bill. The $400 limit is no problem to me at all.
I also rejected his suggestion of signing up a new credit card from OCBC as I have an existing credit card due to my union membership (OCBC NTUC Plus Card). That card is free for life as long as I remain a union member. All I need to do is to link up the card with my new 360 account and it is ready to go. I think that fella will earn some commission if I pick up new a credit card from him as well.
Guess he must be pretty disappointed at the end of the day as I did not let him earn any commission from me. Well too bad then. We have to protect ourselves as a consumer when comes to money matter.
Such a gentle and caring comment.
I am ashamed.
3% is not guaranteed. I would be surprised if it is. Annual cashback for savings plan are in actuality a drawdown on the cash value.
3.75% to 4.25% range is projected.
I repeated projected (guided by industry standards) it may go over or may be less. At least based on the documentations I have gone over in the past.
When I say reinvestment in my comment, I refer to reinvest coupons from bonds (not savings plans)
Bond coupons have to be reinvested if not, there is no compounding rate, just simple interest rate.
Just clearing up any misunderstanding on my earlier comment.
By the way, it is not useful to project returns in your manner of calculating for savings plans. In fact, I would go as far as saying that without knowing the various factors or components in a savings plan, you can't project it at all.
Measuring (call out to cw8888) is a different thing altogether.
But that's some good maths there. :)
Hi SMK,
I am a simple working mother. Not very high educated. I never invest in bond before, so I can't comment on this area. But I think it is good to diversity our money. I may spend some time on this matter.
Thank you.
Regards,
Jean
Hi SMOL,
Thanks for your concern. I am happy to reply all your questions here.
1) I don't have grandchildren. My elder is 14 years old only. So, you feel I am worrying too much?
2) I am the only beneficiary for all the insurances I bought for my children. Heheheh.....because all I paid de ma.
3) Hmmm.....so far, they never involve. I will be very happy if they willing to help/assist/give me some guidance.......
4) Hmmm.....this question hard to answer le. How to determine "adequately protected" financially? Ever, I very worry.....but my dad told me, each child have their own faith ....their own life....or luck, which parents only can give them guidance. We can't plan/do all for them.
4a) I have bought life insurance for three of them when they were one month old. Not sure enough or not.....at least not ZERO.
4b) I have bought H&S for my family including myself. ....use CPF to pay, no need cash de. (One of my friend's son got a "blockage of digestive system" problem. Each op cost him 20K. So, I dare not take the risk.....)
Think not many people understand this Family 3. I have bought the similar plan when my child one-year-old. I paid about RM6,000 per annum for each child for 10 years. Now, every year I take back RM2,000 for each policy from GELA. And will continue to take until my children reacg 87 years old (no age constraint for Family 3) ( still got balance of 73 years to collect.....).
Thanks SMOL...... very appreciate your "WHYs" .....
Regards,
Jean
The Banks will always find way to earn money from you back and more ! Disappointing but that's how they survive ...
Whole heartedly agree!
If my parents had took care if themselves better, children won't feel so stressful later on.
Jean,
Thanks for being so open and forthright on your answers!
I think our Q&A may benefit other readers out there:
1) Your answer point 4 pretty sums up most people - what we believe and what we actually do often "conflicts ;)
2) When I asked about adequate financial protection for your 3 children, I meant whether you and your significant other have adequate life insurance protection.
Your children are your dependents. Not the other way round.
3) Your last paragraph is especially telling for that is our last word in any sales argument (old snake-oil jedi trick).
Investment "returns" masquerading as "savings" sugar-coated with "care" for future generations that might have been.
This why I asked who is the beneficiary?
Investments and savings - beneficiary is us.
Life protection - beneficiary is who we care about most.
4) Life insurance is life insurance, savings is savings, and investment is investment.
Companies like to bundle them together so that consumers find it harder to do "price comparison over 3 shops".
That's normal in every trade.
Hi SMOL,
I have bought 1 life insurance and also 3 critical illnesses and all paid for more then 10 years already. I used my very first salary to buy insurance as I don't want my parents get nothing if i go to see GOD early then them. ;)
The beneficiaries are my mum, my sister and also my husband.....depend when I signed the form. None of my children are beneficiary as my agent told me they can't get the money until they reach certain age, if i die early.......So not serve the purpose to put their names as beneficiary yet.
Frankly, I did not know what I was done is the best way to secure some return in the future or not. (I may say, for me, these categories as my future passive income rather then a pure saving plan)
Eg, if i buy enough this type insurance until I can get at least 3k pm for 70 years (for example)...with rather small capital, if compare to a property cost, ....would it be a good investment? You got any good suggestions?
Hmmm..... Singapore share market is not a good investment for me at this point of time when only the three banks are played by themselves. I may say the risk is higher than the return. So, I chose to hold some cash......as AK said....there is nothing wrong to hold cash......wait for the opportunity and at the same time .....try to find ways to improve personal cash flow.
Thanks for your reply and hope to learn more .......
Cheers!
Regards,
Jean
Jean,
Most people when asking for feedback, don't really mean it.
You are the few and rare ones who really listens with an open mind.
You will do well in your journey.
There's no "best" decision. Just courage to CUT-LOSS on bad investment mistakes and ADD to good investments positions ;)
$3,000 per month now and $3,000 per month 70 years later is not the same.
Just have fun figuring out which assets can keep up with inflation ;)
You are from Malaysia so you already have an edge over Singaporeans.
Once upon a time, Ringgit and SGD were sama sama in th early 70s. Now? SGD is worth more than twice that of Ringgit.
For Indonesians and Malaysians, there's another dimension of figuring out what currency should their net worth be denominated ;)
You think why rich Indonesians like to buy Life policies in SGD or USD?
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