Basically, we forced ourselves to put aside a sum of money so that at the end of duration, we got some money saved up.
Buying university insurance plan is one of the most commonly utilized "forced saving" which is through an endowment plan.
Recently, my wife ask my sis for endowment plan, I ask her why is there a need to do that, since she is investing under my advice. I told her I am confident of beating the 2% guaranteed rate and the project rate is 4%, which is not a tall order for me too.
She thinks it is more secure and it is a form of risk spreading. I am fine with that, and she ended off with saying "forced saving" ma.
Case number 3, I had a close friendwho stayed with in-laws, rented out their HDB, and hoot a 1.5 mio private property at a prime place.
He is very capable, and already communicated with her wife that the unit will be sold in 10-15 years time (depending on market) and they will downgrade to HDB resale again to free up the cash. This is their mid-life crisis plan, an option to downgrade, and having lived in a nice private property in their lifetime.
He believed the odds for capital appreciation in 10-15 years time is very high, but if the sale value just break even, so be it, take it as forced saving lor. I do think he is plan is rather sound, but I have issue with the loose use of "forced savings"
It seems "forced savings" is becoming more and more like an koyo to sell something ... And people actually buy that.
Hmm... For my wife case, if she is so afraid of risk, just do VC to CPF and transfer it to SA. Same same what, paid 10, roll over 10 years. Almost 55. The excess of MS can be taken out. 4% guaranteed some more, no need projection.
Wonder why dun believe me... LOL