NTUC Income Ideal Plan: Just Some Questions And Answers :)

Thu, Sep 27, 2007


Some may have queries on NTUC INCOME Ideal Plan.

I have included the common questions here.

If you have more questions, do email me at helmihakim (at) hotmail.com

1) What is Ideal Plan?

It is an investment linked plan for investing your regular savings, e.g. from your monthly earnings.

You can earn an attractive return (not guaranteed) from an investment fund.

2) What are the key features of the Ideal Plan?

The attractive features are:
– The regular savings are invested in a large, well diversified fund
– 85% of the savings are invested during the first 3 years, 100% thereafter
– The charges are among the lowest in the market
– You are insured for 60 months of your savings, at no additional charge

3) What is the projected return for Ideal Plan?

The future return on your investment is not guaranteed. It will depend on the actual return from the investments of the fund over the period that you have invested.

Over the past ten years, the average return from investing in global equities is about 8% per annum.

4) Is it risky to invest in a fund?

By investing in an equity or balanced fund, you can earn a higher return.

You can minimise your risk by investing in a large, well diversified fund that is benchmarked against the market.

The large fund is well diversified in many investments. If a few investments turn bad, they are likely to be offset by the good performance of other investments.

If you invest for 10 years or longer, you will be able to average out the performance in good and bad years and earn an average long term return.

This return should be much higher than safe investments, such as bank deposits or the Central Provident Fund.

5) Will NTUC Income give a better return, compared to similar funds in the market?

All large, well diversified funds should earn a similar return over the long term, provided that they are well managed and are invested in the same risk category.

The advantage of investing in a fund managed by NTUC Income is our low upfront and annual fee. We have among the lowest charges in the market.

Our upfront fee (i.e. spread) is only 3.5%, compared to 5% charged by most other funds.

Our annual fee is about 1%, compared to 1.5% to 2% charged by other funds.

We invest a larger proportion of your savings, compared to similar plans in the market. The difference is nearly 1 year of your savings. This is due to the lower commission rate that is paid to our adviser.

The difference in fees can amount to 20% over an investment period of 30 years.

If you invest $200 over 30 years to get a return of (say) $150,000 on maturity, the difference in fees can amount to $30,000.

You can get $30,000 more from NTUC Income, due to our low charges.

The other funds will take an additional $1,000 a year from you to pay higher commission to their agent or to give higher profit to their shareholders.

The total in 30 years could amount to $30,000.

6) What funds are available from NTUC Income?

NTUC Income offers several funds.
A popular fund is the Combined Growth Fund.

It has a fund size of $3,800 million and is invested in 900 equity and bond instruments. They are managed by 9 top fund managers globally.

The benchmark return during the past ten years was 6.5% per annum. The actual return during the first three years (2003 to 2005) was an average of 16% per annum.

– The future return is not guaranteed.
– Past performance is not indicative of future return.

7) Is there any life insurance cover?

In the event of death of before age 60, the policy pays a sum assured of 60 months of your regular savings, or the value of your investments, whichever is higher.

This insurance cover is provided as part of the upfront fee.

There is no additional charge.

If you wish to have additional insurance, you can purchase our low cost term assurance. Our premium rates are about 30% lower than the market.

For example, a male aged 30 can insure for $150,000 on a 30 year decreasing term assurance, at an additional monthly premium of only $13.05.

8) What are the other important features?

This plan allows you to:
– make a monthly savings of $50 or more
– change your monthly savings at any time
– stop your savings temporarily (i.e. no penalty)
– make partial withdrawal at any time


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This post was written by:

- who has written 440 posts on The Official Helmi Hakim Website.

A certified financial consultant, Helmi Hakim has won praise for his patience, perseverance and practicality when solving his clients' financial concerns. For more information on how you can manage your finances better, contact Helmi Hakim at 96520134.

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