There’s a saying that making money is hard, but keeping money is even harder. That’s especially true if you’re not into reading prospectuses, constantly switching between banks, and deep-diving into financial product descriptions that, quite frankly, could bore a cactus to death. Some of you want a safe place to park your money, and not have to think about it for years and years (and not in CPF either, before it would be nice to have a shot at taking it whenever you need it). For this batch of single digit millionaires, here are three such products to consider:
Important: The following post is not sponsored, nor is the content from the actual providers of the product. It reflects our views on existing products only, and you should seek a consultation with a qualified professional before purchasing any financial products or services.
First off, why don’t we just put everything into fixed deposits?
For the simple fact that it requires more work than you’d think. Fixed deposit products have different interest rates at the time you acquire them: from 2008 to around 2018, you would have gotten some pretty terrible rates; and we’re only seeing interest creep back to the four per cent level quite recently.
(Also, since the US Federal Reserve likes to cut interest rates in times of crisis, there’s a chance further rate hikes won’t happen, or existing ones may even be reversed; it depends on the subsequent outcome of a contentious US election and wars in Europe and the Middle East in the near future).
This all means that, once your fixed deposit matures, you’re left to choose another one to re-invest it in. And there is the risk that if you pick the wrong one, you might find yourself locked into a lower rate while the wider economy races past you.
So while there’s a use for fixed deposit products – perhaps for a portion of your portfolio – it’s worth looking at other products.
Chief among these are lifetime income plans
Lifetime income plans, sometimes also called annuities, provide a continual payout over the years. Besides payouts, there’s a safety factor in that, for most of these products, they’re capital guaranteed after a short period (see below). There’s also a surrender value if you want to cash out and give up the plan, and a guaranteed death benefit if you pass on.
Another benefit is that some of these plans can be passed on from one generation to the next, so future generations can benefit from aspects of the plan after you. Here are the top three in our opinion, as of 2024:
Note: The following is based on $250,000 paid in premiums (single payment). We’ve also assumed a maximum period of 45 years for the policies; because if you’re around 40 right now, it’s safe to project a life expectancy of up around 95.
The exact dollar value of your cash value, returns, etc. will vary based on the time of surrender, and is not exact due to the different protocols among insurers. Note that the following shows guaranteed payouts only; in practice, the figures are likely to be higher, as these plans accumulate cash value based on both guaranteed and non-guaranteed bonuses.
| FWD Life Income Plus | Etiqa Esteem Income II | SingLife Flexi Income II | |
| Cash value | Guaranteed cash value of around $262,500 by year 45. With a non guaranteed bonus, the value is around $288,803 | Guaranteed cash value of around $200,000 by year 45. With a non guaranteed bonus, the value is around $258,700 | Guaranteed cash value of around $275,863 by year 45. With a non guaranteed bonus, the value is around $287,379 |
| Surrender value | The surrender value is at least equal to the premiums you’ve paid by the third year. | The surrender value might be less than the premiums paid, as it decreases over time. | The surrender value is at least equal to the premiums you’ve paid by the third year. |
| Accumulated value of payouts (Reinvest of payouts) . | Guaranteed accumulated payouts of $156,950 by year 45. With a non guaranteed bonus, the value is around $384,975. | Guaranteed accumulated payouts of $53,750 by year 45. With a non guaranteed bonus, the value is around $365,500. | Guaranteed accumulated payouts of $148,522 by year 45. With a non guaranteed bonus, the value is around $369,107. |
| Death benefits | Guaranteed death benefit of $262,500 by year 45. With non guaranteed bonus, the value is around $288,803 | Guaranteed death benefit of $252,500 by year 45. With non guaranteed bonus, the value is around $285,825 | Guaranteed death benefit of $275,863 by year 45. With non guaranteed bonus, the value is around $287,379 |
Note that the dollar amount of the surrender value is personalised – it will be dependent on a range of factors such as when the policy is surrendered, and factors such as age, profession, etc.
What’s good about these three?
With regard to FWD Life Income and SingLife Flexi Income, the products are capital guaranteed by the third year. Unless you abruptly abort them (e.g., you suddenly stop paying within the first two years), you will always get back the same amount you initially put in.
The FWD Life Income plan also allows you to have a “secondary life insured,” so you can pass this plan on to even your grandchildren.
It’s worth securing your bases with these products first, and then looking at more active investments later. For help or clarity on these, do reach out to us at Single Digit Millionaire.
