Letting my money grow
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let say for the next five years I save up $2187.96 per year or $182.33 per month for a policy running at 5.25% interest p/a compounded yearly.
at the end of five years.
First Year - P: $2187.96, I: 5.25%, End Sum: $2302.8279, Interest Earned: $114.8679
Second year - P: $2187.96 + $2302.8279 = $4490.1879 , I: 5.25%, ES: $4725.9227, IE: $235.7348
Third year - P: $2187.96 + $4725.9227 = $6913.8827, I: 5.25%, ES: $7276.8615, IE: $362.9788
Fourth year - P: $2187.96 + $7276.8615 = $9464.8215 , I: 5.25%, ES: $9961.724629, IE: $496.9031
Fifth year - P: $2187.96 + $9961.724629 = $12,149.6846 , I: 5.25%, ES: $12,787.5430, IE: $637.8584
At the end of the five years, I would already saved $12,787.54. And earned $1848.343. That is if market rate do not fall, any rise would result in more money. However, the downside is the possible inability to pay the monthly premium during the third and fourth year due to NS liability. But if I'm not clamped down by a contract and run everything from a 0.25% interest rate. The total interest earned should be about $27. If I run a 0.6% for 3 years. with the same lump sum of $10,939.80. I get about $65 which is still lower than the $1.8k.
Weighing the pros and cons
Contract-Tied - Possible inability to pay premium and be imposed penalty, Almost financially crippled during NS years, high pay-outs at the end of policy with option to continue running for another 20 years hence getting almost $30,000 back.
Non-Tied - Financial freedom, low interest pay-out.
Which do you think if beneficial? I think signing the policy is good for long term but for short term, it's better to not get tied down financially without a stable income. My main aim is to be able to pay for my Uni fees in future and definitely $12,787.54 is not enough however, the policy allows you to change your monthly premium thus allowing more pay-outs. Hmm...
P = Principle
I = Interest Rate
ES = End Sum
IE = Interest Earned
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Huh???
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Putting your money in bank gaining fixed deposits (FD) is never better than investing the money. The fixed deposits is pathetic considering the amount of money that you currently have.
Investing your money in that policy that you have mentioned is a good alternative but you have to consider a few points too. Can you meet the premiums payment for the policy durations? How much can you gain from investing in this policy? What company? What did the policy states, besides the fact that you have a higher interest rate payout compared to a FD route? And most importantly of all, what are your current financial status?
Like you mentioned in your post. You will be entering NS soon. In the course of NS period, you will not have any other income beside your pay from the government. So by defaulting on the premiums payment, I am not sure what are the consequences (you might not be able to take back your money that you saved before you entered NS). Also, a thing to note is that with the contract of this (savings?) policy, you are entitled to a "commitment". Which means, you will be able to save up to this expected amount after 5 years. Thats a plus point considering how fickle minded our brain works..
Bad point would be mainly what you described in your post, financially crippled. By investing in this policy, I am assuming that you will not be able to withdraw the money should the need arise. On the reason about university fees, there are a few options too. (1) Since you are using your own money to pay for uni, I am assuming that you are not from some rich family. By that, you can considering some of the education financial aids scheme that the university provides. (2) If your family is rich, borrow from them and discuss a payment to them on a 0% interest rate =D (3) If you are planning a overseas education, 12k will be barely enough. But still, you can considering taking a bank loan or some sort.
Its a good thing that you are thinking early. The ultimate decision is still dependent on how much cash on hand can you spare when the need arises. Policies or investment is best considered as a long-term basis.
I created an account just for this reply. =))
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aim to be officer. you can earn more.
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If u got the money invest in stocks that tracks Strait Index which is currently compounding at the rate of 16.25% per year BUT BUT must lock in for at least 5 years to see this effect.
Short-term oriented person shouldn't take this investment approach.
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Originally posted by Uncertain:
If u got the money invest in stocks that tracks Strait Index which is currently compounding at the rate of 16.25% per year BUT BUT must lock in for at least 5 years to see this effect.
Short-term oriented person shouldn't take this investment approach.
now stock really jia lat.... hmm invest is like taking a risk can up can down also.... -
u can try stock if you got money,unit trust. hmm be a boss of your own company you got control of your income but not easy you have to do whatever it take. buy insurance also see how much u earn 1 month etc...
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Originally posted by guaiboiboi:
now stock really jia lat.... hmm invest is like taking a risk can up can down also....
noob, now stock is jialat so its the best time to buy stocks because it is at a low price now. In the future, stock prices will keep going up till it reach a new height, then sell. -
LOL. stock can go even furthur down right.
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BUY USD.... sell at high price later.... sure earn!
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Hmm I guess they might be on par with King Kong's height a few years later
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Use the money and bet on football win more la.
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Saving plan in which financial coy?
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Until now me still dun understand wad u all toking.
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Originally posted by BangHong:
BUY USD.... sell at high price later.... sure earn!
US market is heavily in debt and this problem may prevail. Sure earn may not happen -
Originally posted by guaiboiboi:
now stock really jia lat.... hmm invest is like taking a risk can up can down also....
U hold 5 years, u c will drop a not for STI - tracked stock. If ur initial investment becomes a loss, tell me. I go shot Adam Khoo.It is a sure-win situation if u can HOLD HOLD HOLD.
HOLD = 5 years lock in. Not keep one week then sell, like that u can go die liao.
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Originally posted by cApitaland:
LOL. stock can go even furthur down right.
now is considered "low-period" so as long as you are investing longterm and the stock is reputable, it will eventually go up.