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Are savings plans worth it in Asia?

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There are pros and cons to saving money. One way is to put your money in a bank. But the interest rate you get on your savings isn’t very high. On the other hand, if you invest your money in shares or buy a property with capital, there’s a big chance that you’ll make a loss.

Many people turn towards insurance and investment-linked savings plans (ILPPs) to grow their wealth.

Here, we look at ILPPs from the point of view of certain people. They wish to maintain their wealth by regularly investing in these plans and those shady companies and agents. In the latter part, we’ve provided information on what Singaporeans should do. And tips for finding out more about insurance and investment-linked savings plans.

The pros of ILPPs

  • Investments made into property and shares may earn you a lot of profits. But they also come with high amounts of downside risks. However, for individuals who are not financially literate or informed enough who wish to invest their income for the future, these investments can cause them significant problems if they do not know what they are getting themselves into.
  • On the other hand, putting your money in savings strategies such as insurance policies offers little returns on growing your wealth, but it can also be seen as ‘riskless’ since there is no chance the value will go down. For those who want to build up savings for the future, these plans are safe options to go with.

The cons of ILPPs

  • However, if you do not know what you’re doing and invest your money into these savings plans without any help or guidance from financial experts/brokers, then there’s a big chance that you’ll lose all of your money. These plans are complicated, and due to their complexity, it is hard to find out whether they are suitable for you or not. When signing up for ILPPs, many agents try to sell them off to consumers by taking advantage of their lack of knowledge on how these plans work. The problem is that even though the investors may end up losing money, there is no proper way for them to take recourse actions against the organizations since most insurance companies include clauses in theirT& C which makes it difficult for their customers to file complaints or claims when they do not know what they are signing up.
  • In addition, Singaporeans have been cheated by agents who sell them ILPPs without disclosing all the fine details about the plans to them and ending up taking away a large amount of money from their accounts.

The three main ways in which these agents swindle people are through “Misrepresentation”, “Unlicensed Agents”, and “Non-Disclosure”. All these 3 leads to the investors losing a lot of money which adds up over time.

As such, here’s some information on how you can avoid falling into these traps that dishonest brokers have set out:

Misrepresentation

If an agent or salesperson makes false or misleading claims regarding the ILPP, this is misrepresentation. Since insurance policies are very complex, there are many different types of plans to choose from that have high costs.

Unlicensed Agent

Singapore does require companies who employ agents to register them before allowing them access into the public, but it’s hard for these companies since there’s a large number of brokers in the Singapore Exchange, which makes it difficult for them to weed out people who are not fit to do their jobs responsibly.

Non-Disclosure

If agents or salespeople fail to disclose crucial information such as the commissions and fees they will be receiving when selling the policy, this is considered Non-Disclosure.

In Conclusion

Although insurance policies offer low returns on investments and may come with high up-front costs, which you need to pay. They also carry little risk compared to other financial products and do not expose the individual to market volatility.

For a save no investment savings plan, check out Saxo regular savings plan today!

savings plans:Blogrind.com

Read more:What Are The Benefits Of Payroll Services By A Tax Accountant?

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