Feedback: Financial Tips for the Young

E-MAIL FROM SOMEONE WHO ATTENDED MY TALK: FINANCIAL TIPS FOR THE YOUNG.

Many thank for your interesting talk on financial tip for the young . I enjoy your talk. Due to time constraint, I was not able to get some queries answered. I hope to get the answer through e-mail .

1) You mention that the combined fund charges 1% annual fee. May I know the expense ratio of combined fund?

Reply: I am not clear what is being used to compute the expense ratio. Anyway, you can look at the comparison in this webpage by Dr Money:

http://www.askdrmoney.com/Ins_ILP_SP.htm

It shows NTUC Income's expense ratio to be 1% and other funds to be 1.5% to 2.5% per annum.

2) Other than through an insurance plan, can I invest in the combined fund directly through other distributers, such as Fundsupermart, DollarDex, etc

Reply: You can only invest through our insurance plan (Flexi-Link). Our fee is quite low. You only pay a 3.5% upfront spread. If you invest a large sum during our promotion, you give you bonus unit of up to 2%. So, this reduces the upfront fee to only 1.5%. You get some life insurance cover for free. So, the Flexi-Link plan is almost as good as any unit trust.

3) You mention that the return of combined fund since 2003 have exceed the target 6% return per year. Where can I see the information on NTUC income funds, such as benchmark, annual return since inception, turnover ratio, etc.

Reply: you can get the information from this webpage: http://www.income.coop/insurance/flexilink/

4) I understand from the talk that we shall invest in a fund that offer low cost. There is an asset class like ETF exchange traded fund, where the annual charges is only 0.3%, which is lower than 1% for the combined fund. What is your comment?

Reply: Yes, it is good for you to invest in ETF. It comes with low charges.

Actually, a portion of our Singapore Equity fund is invested in ETF. So, we are reducing our annual charge for the Singapore Equity fund to about 0.6% In my view, it is easier to invest through the FlexiLink from NTUC Income.

5) You mention that an investor should be wary of muliple layer of charges when investing in unit trust. Are you referring to a feeder fund that pass the money to mother fund? How can a retail investor find out about these charges? Most of the charges of unit trust are hidden and are not transparent to investor.

Reply: Yes, most of the funds hide this fact. It is quite difficult for you to find out. I am not able to find out myself.

6) You recommended iYoung plan. If I buy iYoung at age 27, can I still remain cover after age 30. If not, what is the alternative cheap term insurance ?

Reply: I suggest that you buy our low cost term assurance now, rather than i-Young (which is intended for someone in the early 20s.

You should make a financial plan now and invest in the Ideal plan with low cost term assurance.

7) Thank you for providing your time, effort and resource to educate the public like me. I enjoyed your talk .

Reply: Please encourage your friends and colleagues to attend my educational talks. A list of talks is given in our website:
http://www.income.coop/seminar/