Guys,
If you look at the benefit illustration, it is based on 'nominal interest rate of 5%'. You might as well go read a fantasy novel.
U.S. 10-year notes yield is less than 2%. Singapore Govt bonds less than 3%. How to get 5% ? Depend on the equity funds ?
Many people who buy insurance products kenna conned by the benefit illustration because they never look at the interest rate on which the calculations are based.
the best rate of return on a hedge fund that i know is around 5%. and there's no guarantee year after year. anyone who claims better than 5%, better watch out. if hedge fund manager makes better than 5% based on signed agreement, he pockets the surplus. if he makes less than 5%, he is not liable for the shortfall. if he loses a bunch and principal is reduced, he's protected from waivers in the agreement. heads he wins, tails you lose.
anyone who claims an insurance policy can return 5% has gotta be smoking weed.
real estate is so far one of the best investments. i can illustrate with 3 examples.
case 1. my friend liquidated property and stock options and gave usd2m net to a hedge fund manager to invest. at first fund manager declined due to paltry sum but later relented. for the last 6 years, my friend has been earning 5% p.a. which comes up to usd100k per year without touching principal. he pays rent, goes on vacations, spends on food and auto. single, no gf, retired but provide software consultancy.
case 2. my brother has 5 properties in sg. lives in 1, rents out 4. he's a doctor and owns a clinic. bought properties during the last downturn over a decade earlier. he paid for all when they were an average sgd500k per property valuation, and all 4 are earning rent of sgd2.5k per month, the rate of return is around 6% p.a. based on sgd120k rental income. unlike case 1, his properties have appreciated in value by more than 100%. his total roi today makes more wealth than his medical income.
case 3. i have 4 properties in the u.s. rent out 3, live in 1. bought them when they were valued at usd500k. earning rental income of usd2.5k per month. almost similar to brother except that i'm less one property. 6% p.a. rate of return. the only problem is that the asset value enhancement is not as great as that in sg. the market is returning to healthy numbers, but the appreciation is around 15 to 20%.
case 2 wins out as my brother can cash out all and pay zero capital gains tax. moreover, the sing dollar is strong. my capital gains tax is 20%, and i'm not cashing out. conclusion: sg is the best if you invest early and make good decisions with guts.