Friday, September 26, 2014

Random thoughts: My take in Buy term invest the rest

I need to get this off my chest.

This is my personal view only. Here is my honest view.

BTITR, ( buy term invest the rest) works for some people and will work for almost everyone in the long run. Hence, this is the catch-- long term. I am not talking about ILP here. I seriously can't see much merits in this product. IMO

Why, personally, I think investing is fraught with risks and temptations, especially for beginners

If anyone read about my profile, I blow almost all my savings on CAO, I pick myself and have a go at investing again. You only considered passing PSLE when u have a plan that is tested through bull and bear market. Bull and bear if u are lucky, might be a 7 year period. How long u takes to formulae a core plan, is up to individual, but I can safely say it take years. So perhaps, a decade? 

For my case, my forced savings in terms of endowement plan ensure I do not touch my future money. Of course, if I terminate a endowment policy before 15 years, I get back less than what I bought.

In investing, when we make a wrong call, we could worsen it but average down with whatever we have. Let me say, I done that for a few losing S-chips like Fuxing, foreland and China fibre-tech. I average down to almost the last dollar. Thinking I can recoup my losses. I have not gone into leverage play yet, contra, margins, extended settlement and CFD for shorting.

I had a CFD account for a few months, I closed it down to focus on value investing. I might re open it when I think I am ready, but it will not be anytime soon. Even if I do, it will be part of a broader plan to hedge risk and not a profit spinner tool.

I have 2 endowment policies that are maturing in 7 years and a decade plus time. It could be my war chest now that I have a plan on investing, and it could be rolled over into another 10 year plan and settled the allowance part of my son university.  If he gets there ( sigh...)

In the meantime , whatever money I used for life plan, will be returned by the time I am old and in the meantime, insured against death and CI and the rest. If coverage is not high enough or premium too siong, a mixture of term and life works too.

Of course, there are some, who are savvy and can buy term, h& s and invest the rest at the beginning without giving big sums to Mr Market, but are those in the majority?

In the long run, everyone should get a shot at investing for better returns and will be better off doing BTITR. That is, if you don't get knock out by Mr market in the first 10 years. 

My honest thoughts only. I am not in the insurance line but my sister is, and I have many friends who are not unscrupulous in the insurance line. From what I read in the blog sphere, they are the minority? Most will paddle ILP for the maximum commission, just that I am lucky I did not meet them.

Hence my view might be tainted because I still have a lot of respect for my sister and my friends as well as those in the insurance line, BTITR or use more products of insurance, I believe they all have a place... ILP is the only one I cannot understand till now. Maybe MAS should just allow insurance companies to sell pure investment fund? With track records to see? 

Ok, think I ruffle enough feathers.


13 comments:

  1. Now you are really back!

    Sensitive new age guy ;)

    I myself has bought 30% Wholelife and 70% Term at age 27.

    Some of the best whiskeys are blended ones.

    Take a sip. After the chills I've given you, hope it warms you up ;)

    ReplyDelete
  2. SMOL,

    Thanks!! Welcome home dinner, your treat? LOL.

    I must decline politely your whiskey, I am allergy to alcohol. I will have rashes even when I drink beers. I tried a few times when I am younger so as to socialize better, I end up puking and giddy till I feel like puking...

    Tea? Can?

    Or cocktail super diluted with tonic water? The only one I can tahan

    ReplyDelete
  3. Sillyinvestor,

    Give you an inch you want a foot... Dinner my foot! But Chinese tea OK ;)

    Eh, this weekend you better watch out for welcome blanket parties from you know who!

    My instant noodle pot is still with the oat meal guy. You're on your own..

    Hope you got learn Golden Bell or Iron Vest.

    If not, it's" "Run! Run Forest run!" (Love that movie!)

    ReplyDelete
    Replies
    1. Aiyo is not like we will really meet up ma, virtual promise why so serious, I can promise u a car when I meet u, just don't me can Liao.

      Btw, u say 70-30 life - term, in terms of premium or coverage ?

      In terms of coverage is 50-50 for my case, but premium is 80-20.

      Delete
    2. Btw I no gold bell or iron vest, just have shameless skin that is thick...

      Delete
    3. Sillyinvestor,

      It's 30% Wholelife and 70% Term in coverage and premium is around 55% Wholelife and 45% Term.

      I've cancelled my Term some years back, and I'll be cancelling my Wholelife by end Nov this year on it's 20th anniversary - Wholelife breakeven after 20 years ;)

      I have no need for Life insurance anymore at this stage of my life.

      Delete
    4. Ok .. Thanks SMOL,

      There is a season for everything it seems, even for cancellation ..

      Congrats for your "windfall"... I am waiting for harvest time. 7 years later, when my matured I might become strong advocate of BTITR

      Delete
  4. Nice share.

    too often, we think we pick better than average but realistically not often enough above average. Yet due to our inherent bias towards doing research and self determination, believe our methods to be universal.

    ReplyDelete
  5. True true, in the end is our goal and our capability.

    U know, even those "shifu" at valuebuddies, they all have their misses. Just that overall, they are more right than wrong

    Even peterlynch says we need only to be right 6 out of 10

    ReplyDelete
  6. Ah, I have a fixed 15 year whole life insurance as well, fixed term still ok, some people are paying off their whole life for their insurance. Now that's a lot of money to consider.

    ReplyDelete
    Replies
    1. Even for those paying for whole life, say u think u had enough at 55 after paying for 20 over years, you can converted it to a paid up insurance. No more premium, but no more growth... Your coverage subjected to age limit still stay

      Delete
  7. For Whole Life, we need serious thinking to work out the numbers. I have two group insurance and three endowment up to 59 years old to fund children university education. Cut losses on ILP.

    ReplyDelete
    Replies
    1. I have even more:

      Some might think I siao:

      1) whole life with term coverage 100k death 100 K CI and TP ( AIA)

      2) H and S for whole family

      3) first endowment policy with AIA, loser policy. I took cash back for the first 2 terms because my instructions to plough it back not enforced, it has not break even now after 17 years...!

      Uni savings from NTUC

      1 more endowment from NTuC

      1 more for retirement, from Tokyo marine ( the best so far)

      Extra Early CI protection from prudential... Good plan but premium high ...

      So all my future money at least fr basic is squirrel awar for my retirement, my son ... I can invest without worry better...

      Delete