4.5 to 6.0 percent annual returns after fees seems that this is still less than the 6.3% annual payouts from the CPF LIFE Standard Plan, risk free without needing to worry about market volatility, sleepless nights etc. That is why insurance or annuity products in the market cannot beat the payout rates provided by CPF LIFE.
Hi @winstontoh6346 , thanks for leaving a comment! CPF LIFE is a great, however just take note that the extra 2% is only applicable for the first $60k. Also, considering flexibility, that will be the trade off since savings contributed to the Retirement Account is irreversible.
Hi. Useful content. The ERS has its benefits as it is a hedge against longevity and it provides a "guaranteed" life time payout. However, as you indicate, it may not be suitable for all groups. For high net worth individuals, where the ERS is a small fraction of total wealth, it would probably be worth putting the monies into ERS. Also, it would be helpful, rather than indicating consultation with a fee based "expert", to provide available avenues for consideration. However, I do agree that insurance linked products are probably not recommended. The lock in period together with the management fees can make these products poor when compared with the ERS. Anyway, just some suggestions. Keep up the good work.
Hi @sivadasmakesan9745 , thanks for taking time to leave a comment. Let’s break it down: 1. While the ERS has its benefits to provide a lifelong income, a well-designed retirement portfolio, can do the same without having one to lock in their savings. This way, one can enjoy both the flexibility and a lifetime income. 2. >$400k is a lot of money, for HNWI or not. Most people take years to save up that kind of money. In my experience, HNWI prefer not to opt for ERS since they have access to good financial advice and for the reasons I have stated, to retain control and lifelong income. 3. I do think if one is not proficient in DIY, should consider fee-based + evidence-based advisor. There is great value to outsource your financial planning to save time for more important things in life and a peace of mind. 4. As a licensed advisor, I am limited by what can be shared as content and am not able to comment on financial products online. It’s very nice to have a dialogue. See u around! 🤍🙃
Gr8 that you reminded the audience about the logic of not investing their money into insurance related products like annuity and retirement income products as they typically have long, if not equally long lock in same as putting into CPF Life, and yet with lower returns than CPF Life. However, the suggestions you provided to invest into a 60/40 or 50/50 portfolio is better than insurance related, but not the best alternative someone can adopt. Im not sure what product you are referring to which gives 4.5 to 6% p.a., i hope its not 101 ILP which has equally if not as long a lock in as CPF Life and yet comes with significantly higher fees (CPF Life is free) but idoesnt gaurantee returns when CPF Life is technically risk free. Even if the product you are referring to that these fee based advisors will suggest is not ILP, i wonder why wouldnt you suggest and teach the aduience how to DIY. Start an account with Endowus and lump sum / RSP into an index unit trust at the lowest fee possible such as Amundi US Prime Fund. I doubt theres any other UTs or active UT accessible to retail investors has outperformed the S&P 500 index. So why dont minimise cost and invest into Amundi US Prime which tracks the index?
Hi @jasonkee100, I appreciate your comment. Let’s break it down: 1. Yup, not an ILP. It is a pure retirement investment portfolio where u should be able to access to your savings whenever u need. Though not without risk, but when properly designed, the risks are low and u will be able to make your 4% withdrawal without touching the capital so that it can continue to generate income for u. 2. CPF LIFE will be great for people who are uncomfortable to work with an advisor, no interest/not proficient in DIY-ing and don’t mind having their savings locked-in after 55. 3. In fact, I try to dissuade people from DIY-ing. In my professional experience and based on empirical data, most people cannot DIY well. See “Quantitative Analysis of Investor Behaviour (QAIB) study” by Dalbar. Behavioural finance is a big component to investment success. How much money we make from an investment depends much more on how we behave than how the investment does. Because of these reasons, most people will be better off working with a good advisor who will keep them in check, they will have better outcomes in spite of fees. 4. As a licensed advisor, I am limited by what can be shared as content and am not able to comment on financial products online. Again, thanks for the comment. See u around! 🤍🙃
Thank you. Very helpful!
Subscribed! Good video explaining the options after 55 years old
Hi @youfay, thanks for the sub! 🤍
Sound advice and constructive content ❤
Nice breakdown.
4.5 to 6.0 percent annual returns after fees seems that this is still less than the 6.3% annual payouts from the CPF LIFE Standard Plan, risk free without needing to worry about market volatility, sleepless nights etc. That is why insurance or annuity products in the market cannot beat the payout rates provided by CPF LIFE.
Hi @winstontoh6346 , thanks for leaving a comment! CPF LIFE is a great, however just take note that the extra 2% is only applicable for the first $60k. Also, considering flexibility, that will be the trade off since savings contributed to the Retirement Account is irreversible.
Hi. Useful content. The ERS has its benefits as it is a hedge against longevity and it provides a "guaranteed" life time payout. However, as you indicate, it may not be suitable for all groups. For high net worth individuals, where the ERS is a small fraction of total wealth, it would probably be worth putting the monies into ERS. Also, it would be helpful, rather than indicating consultation with a fee based "expert", to provide available avenues for consideration. However, I do agree that insurance linked products are probably not recommended. The lock in period together with the management fees can make these products poor when compared with the ERS. Anyway, just some suggestions. Keep up the good work.
Hi @sivadasmakesan9745 , thanks for taking time to leave a comment. Let’s break it down:
1. While the ERS has its benefits to provide a lifelong income, a well-designed retirement portfolio, can do the same without having one to lock in their savings. This way, one can enjoy both the flexibility and a lifetime income.
2. >$400k is a lot of money, for HNWI or not. Most people take years to save up that kind of money. In my experience, HNWI prefer not to opt for ERS since they have access to good financial advice and for the reasons I have stated, to retain control and lifelong income.
3. I do think if one is not proficient in DIY, should consider fee-based + evidence-based advisor. There is great value to outsource your financial planning to save time for more important things in life and a peace of mind.
4. As a licensed advisor, I am limited by what can be shared as content and am not able to comment on financial products online.
It’s very nice to have a dialogue. See u around! 🤍🙃
Gr8 that you reminded the audience about the logic of not investing their money into insurance related products like annuity and retirement income products as they typically have long, if not equally long lock in same as putting into CPF Life, and yet with lower returns than CPF Life.
However, the suggestions you provided to invest into a 60/40 or 50/50 portfolio is better than insurance related, but not the best alternative someone can adopt. Im not sure what product you are referring to which gives 4.5 to 6% p.a., i hope its not 101 ILP which has equally if not as long a lock in as CPF Life and yet comes with significantly higher fees (CPF Life is free) but idoesnt gaurantee returns when CPF Life is technically risk free.
Even if the product you are referring to that these fee based advisors will suggest is not ILP, i wonder why wouldnt you suggest and teach the aduience how to DIY. Start an account with Endowus and lump sum / RSP into an index unit trust at the lowest fee possible such as Amundi US Prime Fund. I doubt theres any other UTs or active UT accessible to retail investors has outperformed the S&P 500 index. So why dont minimise cost and invest into Amundi US Prime which tracks the index?
Hi @jasonkee100, I appreciate your comment. Let’s break it down:
1. Yup, not an ILP. It is a pure retirement investment portfolio where u should be able to access to your savings whenever u need. Though not without risk, but when properly designed, the risks are low and u will be able to make your 4% withdrawal without touching the capital so that it can continue to generate income for u.
2. CPF LIFE will be great for people who are uncomfortable to work with an advisor, no interest/not proficient in DIY-ing and don’t mind having their savings locked-in after 55.
3. In fact, I try to dissuade people from DIY-ing. In my professional experience and based on empirical data, most people cannot DIY well. See “Quantitative Analysis of Investor Behaviour (QAIB) study” by Dalbar.
Behavioural finance is a big component to investment success. How much money we make from an investment depends much more on how we behave than how the investment does. Because of these reasons, most people will be better off working with a good advisor who will keep them in check, they will have better outcomes in spite of fees.
4. As a licensed advisor, I am limited by what can be shared as content and am not able to comment on financial products online.
Again, thanks for the comment. See u around! 🤍🙃