Last week, we talk about why you should not buy endowment policy, let me now show you the alternative.
Now, let’s assume that the insured adopts a “Buy Term Invest the Difference” approach. From the same company P, the sum assured is still $100,000 upon death, with a yearly premium of only $266
Instead of paying $3,617 yearly to company P for an Endowment Policy, you pay only $266 per year for a Term Policy. You can invest the balance of $3,351 in the stock market. From many open literature, the average annual returns (inclusive of dividends) for Straits Times Index (STI) in general is about 9.5%.
If you invest $3,351 yearly in the STI, you could potentially gain $506,004 (round numbers) in returns after 30 years (not forgetting the power of compound interest)
At the end of 30 years, your Term Policy would be rendered useless and you would have lost $7,980 in total. Despite losing $7,980, with your gain of $506,004 from the stock market your ROI after 30 years would be 336%!
It is good to have insurance to protect you, which acts as a safety net for you and your family. Be a responsible person to yourself and your loved ones, by buying at least a term insurance.
As for investing the rest of your money, I would recommend that you attend my training to take control of your financial future. You can click on the link below to find out more about the program.
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