One third of Singaporeans, according to a recent study, do not invest. Despite the existence of simple-to-use and comprehend products like Investment-Linked Plans (ILPs), Singaporeans appear to favor traditional savings plans since they are thought to be safer and simpler for the average guy to begin his financial planning.
Investing, where one must comprehend the risks vs returns, how to diversify risk, or how to choose the appropriate funds, is more difficult to understand than committing to a savings or endowment plan, where possible returns are illustrated. To truly maximize your investment, you must also have the motivation and endurance to consistently check on the performance of the funds and make adjustments as necessary.
The advantages of a financial plan are not immediately apparent, unlike those of purchasing a smartphone. What if your situation changes in the middle of the payment period? What if you need your investment capital but are unable to access it?
You may think there is a lot to be terrified of, but this is certainly not the case
Let's discuss the most prevalent concerns people have with ILPs (both Single Premium ILPs and Regular Premium ILPs) and learn why including one into your financial masterpiece isn't as frightening as it might appear.
Fear 1: I won't be able to continue making the expensive monthly premium payments
Many people don't know that they can start saving with a Regular Premium ILP (RPILP) for as little as $100 a month!
It's a misconception to say that only high-earners in the workforce or those with sizable resources can gain from having a financial plan. RPILPs are made to fit any person's financial situation. You won't have to skip out on other financial commitments if you get one.
You also have the choice to pay quarterly, half-yearly, or yearly if monthly installments are too frequent for your tastes.
The most important thing is that you pay your premiums on time, regardless of the size or frequency of your payments. In the long run, your account worth will increase if you do this since you can profit from market volatility.
Most RPILPs allow you to temporarily skip your premium payment in the event that you incur an unforeseen expense and are unable to make your regular monthly installments. The best thing is that as long as the account value does not expire during this time, you will continue to get life insurance coverage, ensuring that you are always fully prepared for the unexpected. You simply take up where you left off when you're ready to resume paying your premiums.
If you're thinking about a Single Premium ILP (SPILP), you can use your annual bonus or money you've saved to cover the one-time payment, with amounts starting as little as $10,0001. Although you have a single premium plan, you can still increase your investment with a lump sum or switch to a different fund whenever you like.
Fear 2: I'll have to pay for insurance I don't need
ILPs allow you to invest for possibly better returns than other plans and provide insurance protection as well as wealth building. But what if you want to spend less on life insurance and more on accumulating wealth? Will an ILP mean being forced to keep insurance you don't think you need?
The majority of the insurance coverage for SPILPs is provided at no additional cost, but it is nevertheless sufficient to protect your investment in the event of the unexpected. In these circumstances, the dividend you will get will be equal to the higher of the premium deposited or the whole value of your fund investment.
A little-known fact is that the majority of RPILPs let you change your insurance coverage as necessary. You can select the riders and coverage at registration that best fit your needs. Later, you can modify your insurance policies so that more of your premium money goes toward accumulating wealth.
Fear 3: I won't be able to access my money until I'm old when my loan matures
You shouldn't treat investments and savings plans as an emergency fund. These strategies are made to maximize the growth of your money over a specific period of time. But what if your emergency savings are lost, leaving you with nothing but your RSP or ILP savings to fall back on?
It's easy to believe that an ILP will keep your savings locked up until retirement. However, with many plans out there, you don't have to wait till you're old or even until the term's maturity to begin reaping the benefits of your investments.
Fear 4: Investment in insurance savings plans requires a lifetime commitment
Because an ILP appears like such a rigid, lifelong commitment, many people are hesitant to have one. What if you want more freedom but don't want to continue paying premiums for the next 20 or 30 years?
There are options for SPILPs, a one-time commitment, as well as flexible RPILPs that allow you to change your premium commitment whenever you like.
Now that you are aware that there is nothing to worry about with ILPs, take action! Your money won't grow if you keep it all in the bank.
If you have any more concerns or questions, feel free to Whatsapp me at 96891153!
Comentarios