GREAT220: Short-Term Endowment Plan Versus Singapore Savings Bond (SSB)
Great Eastern has yet again released their another short-term endowment plan this time for their 110th Birthday AGAIN – Great Eastern GREAT220.
Okay, I am not sure how long Great Eastern wishes to celebrate their 110th birthday but they remind me of the popular kids in school where they hold extravagant birthday parties and give out big goodies.
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Your Financial Advisor will say this time it is different. They are not wrong, it is 3 years this time instead of 5 years from GREAT 270. But how many of these short-term endowment plans would they like to release in a year?
An Ever-Growing List of GREAT220’s Predecessors
|GREAT 205||Sept 2017||3 years||2.05% p.a.|
|GREAT 205||Mar 2018||3 years||2.05% p.a.|
|GREAT 270||May 2018||5 years||2.70% p.a.|
|GREAT 220||Aug 2018||3 years||2.20% p.a.|
Note: Only GREAT220 is available on 1st August 2018, the rest are no longer available.
Soon enough, they will be able to soon join Singapore’s Savings Bond in their rate of issuance, however, their risk level is still debatable (whether or not it is comparable to SSB).
Things To Take Note – The Consumer Mentality
Adopting the right mentality for consumers are very important to not fall prey into purchasing something that you don’t really need.
- “Limited Time Only” or “While Stocks Last”
Do not feel pressured to take policies up simply because of marketing gimmicky words. In other words, DO NOT FOMO.
We have already witnessed the rate of release of short-term endowment plans by Great Eastern, even if you missed this, maybe they might launch a better one in the next quarter or in the next year celebrating their 111th birthday. So never buy in into something thinking that you will lose out if you don’t.
- There is an abundance of good financial products around as long as one does their research.
Just like every financial product and on financial planning, there is no one-size-fits-all solution to your personal finance journey. However, with careful research and continuous learning, you will be able to better plan your finances.
- Read all the terms and conditions for any policy and investment instrument.
Do not be afraid to ask your financial advisor if there are any clause or conditions that you might have missed out.
Assuming we successfully adopted the above mindset, let’s take a look at the GREAT220 objectively.
Key features of GREAT220
- Releases on 1st August 2018
- 3-year single premium – consumers will invest a lump sum (one-time premium payment) into the policy which lasts for 3 years.
- Pays out a guaranteed interest of 2.20% every year.
- The minimum investment is $10K (under 65 years old)
It is to be confirmed if you can use the Supplementary Retirement Scheme (SRS) for this.
A Quick Glance at GREAT220’s Returns
In this case of GREAT220, their pros are cons are as such:
Pros of GREAT220
- IT IS GUARANTEED
- You get back 106.6% of your principal sum in total
- Relatively low risk given that they are products of reputable insurance companies
Cons of GREAT220
- A large sum of money required – from S$10,000
- There are early-termination charges – you may lose money if you surrender early
Singapore Savings Bond
Choosing Singapore Savings Bond Over GREAT220
- You do not have $10,000 to put aside (SSB minimum vested amount is $500); or
- You are not a fan of insurance products; or
- You would prefer the security backing that comes along with SSB; or
- All of the above!
Your opportunity cost would only be 0.1% p.a. which amounts to $30 in total. I guess it is just an additional $1 a day to get back that $30 in a month.
It’s okay if this short-term endowment is not your cup of tea, there are many different kinds of investments available like I have mentioned earlier. There are no one-size-fits-all financial products, so remember to continuously do your research and find out how each product is able to suit your financial portfolio.
And remember to not FOMO aka Fear Of Missing Out! I will see you at the next one!
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