Where would you invest if you had extra money
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Posted on: 25-08-08 11:36:28
Quote:
Originally posted by lucky284
jonav--if you dont mind ---can you please give some details abt this $12000 scheme with ABN AMRO Bank. It appears to be very interesting scheme. Thanks in advance
Lucky, it’s called "Pension Plus" the link is attached, please note that this link is for Indians and is in INR but if you throw an inquiry with the bank they have same scheme in dollars and the min there is $12000 a year. I've pasted below the info the bank representative sent me, though to layman eyes it’s hard to interpret I’ll advise speaking to their representative is better. You can finalize it sitting here or on your next trip to India.
http://www.abnamro.co.in/consumer/insurance/pension_plus.html
Jona
PENSION PLUS
Pension Plus is a tax efficient, personal pension plan that is designed to help you earn a regular income, even after you stop working. Through this plan, you build a fund till you retire which provides you financial security after retirement.
KEY FEATURES:
• Entry Age: 18 – 65 years (as on last birthday)
• Policy Term: 10, 15, 20, 25 or 30 years with maximum age at maturity at 70 years
• 4 switches free of cost in a policy year
• Tax benefit as per Section 80C/ 80CCC (1) and Section 10(10A) (3) of the Income Tax Act, 1961
PRODUCT’S USP:
• Open Market Option (OMO) wherein you can choose to buy annuities from any Insurance Co.
• Guaranteed Loyalty additions upto 2%
• LOWEST FMC for NIFTY-50 INDEX Fund
• Option to pre-pone or post-pone Vesting Age
INVESTMENT OPTIONS:
Unit linked funds
INDEX FUND PROTECTOR FUND GROWTH FUND BALANCED FUND
Fund Objective
To generate returns in the line with the stock market Index- NIFTY Progressive returns on your investment by investing higher element of assets in debt securities, with a minimum exposure to equities High Capital growth by investing higher element of assets in the equity market Capital Growth by availing opportunities in debt and equity markets and providing you a good balance between risk and returns
Fund Composition (Range)
Debt Securities & Money market: 0–20%
Equities: 80–100%
Debt Securities: 60–100%
Equities: 0–20%
Money Mkt: 0–40% Debt Securities: 20–60%
Equities: 20–60%
Money Mkt: 0–40% Debt Securities: 50–90%
Equities: 0–45%
Money Mkt: 0-40%
PAST PERFORMANCE:
PENSION - INDEX Since Inception From Jan 15, 2008
Aviva Life Insurance- Index (Max 100% Equity) Available at Rs. 10 NAV
Benchmark
PENSION - PROTECTOR Last One Year (Absolute) Last Two Year (CAGR) Last Three year (CAGR) Since Inception (CAGR) (From March 03, 2005 to Dec 31, 2007)
Aviva Life Insurance- Protector Fund (Max 20% Equity) 10.4% 9.0% 8.55% 9.1%
Benchmark 8.9% 8.6% 6.43% 8.7%
PENSION - BALANCED Last One Year (Absolute) Last Two Year (CAGR) Last Three year ( CAGR) Since Inception (CAGR) (From Feb 11, 2003 to Dec 31, 2007 )
Aviva Life Insurance- Balanced (Max. Equity 45%) 20.0% 18.2% 19.2% 22.4%
Benchmark 21.1% 19.0% 18.0% 16.4%
PENSION - GROWTH Last One Year (Absolute) Last Two Year (CAGR) Last Three year (CAGR) Since Inception (CAGR) (From March 03, 2005 to Dec 31, 2007)
Aviva Life insurance- Growth Fund (Equity 60%) 24.2% 24.3% 24.0% 24.9%
Benchmark 26.5% 24.0% 23.8% 24.0%
Are there any ohter funds not for pension purpose but just to invest for 2-3 years and be able to cash out whenever needed? I started an account with TD waterhouse and would appreciate good mutual funds.
Quote:If you need this money after 2 - 3 years, simply get a GIC.
Originally posted by bc2on
Are there any ohter funds not for pension purpose but just to invest for 2-3 years and be able to cash out whenever needed? I started an account with TD waterhouse and would appreciate good mutual funds.
If the amount in question is large enough, you may be able to negotiate a rate higher than what is posted.
If the investment is only for 2 - 3 years, the stock market is not a good option.
If there is a market correction a few months before the end of your term, you could end up losing a lot of money.
If you really insist on mutual funds, then a bond index fun may be the only option.
OTOH, if you want to "play" with this money, then sure, invest in high-risk funds (like emerging markets or speculative mining/exploration companies) in hope of high returns.
All depends on what's the nature of money and your risk tolerance with this amount.
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
I just noticed the number of "if"s in my post above - which indicates the uncertainity around the information you have provided 
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
My mortgage is at 4.95%. My house appreciate at a rate of 5% lets say on average with no tax and no affect on my final income. I am thinking to put the money toward my mortgage slowly (to avoid penalty) or at the end of the term which is after 3 years. Now I would like to make more than 5% after tax to cover what I am paying on my mortgage.
I would rather be mortgage free than have stash of money elsewhere. Once I am mortgage free I can live on less money since I will not have rent to pay. Also I can sell and down size and get cash out when I need to (best case).
Just for discussion ease, assume the money is about 100K
Thanks,
Quote:You will need to make a lot more than 5% if you are not going to pay down your mortgage at the end of 3 years.
Originally posted by bc2on
My mortgage is at 4.95%. My house appreciate at a rate of 5% lets say on average with no tax and no affect on my final income. I am thinking to put the money toward my mortgage slowly (to avoid penalty) or at the end of the term which is after 3 years. Now I would like to make more than 5% after tax to cover what I am paying on my mortgage.
I would rather be mortgage free than have stash of money elsewhere. Once I am mortgage free I can live on less money since I will not have rent to pay. Also I can sell and down size and get cash out when I need to (best case).
Just for discussion ease, assume the money is about 100K
Keep in mind that mortgage payments are from after tax dollars, so you need to mark it up by your marginal tax rate when calculating how much you need to make out of any alternative investment.
Also, your assumption of 5% appreciation is probably not valid under these market circumstances.
If we are talking about a period of 3 years and you would like to make approx. 6% - 7% (to account for taxes and inflation), then it is going to be very hard to do this in a safe manner within 3 years.
Right now, there are almost no GICs or Govt. bonds that are paying that much for a 3 year term.
Some corporate bonds may be paying that much, but not for 3 years.
What about your RRSP and/or RESP?
Are you topped up on those?
If not, then that's the best place to invest extra cash.
To make that kind of return in the market, you have to take some significant risk, like emerging markets, metal/mining stocks, small cap stocks or IPOs.
If you are a seasoned investor and can do all the research yourself, then you can do that.
If not, you have to seek financial advice, which comes at a cost to you (either directly through a fee-based financial advisor or indirectly via mutual fund fees and commissions).
Either way, I don't think you can make 5% or more in 3 years without taking risk.
Bond index funds are currently returning about 4% and there are some Federal or Provincial bonds available at about 3.9%.
Those are secure and guaranteed investments.
Why not lower your returns expectations slightly and go with a guaranteed, secure investment (like Govt. bond) or a relatively low-risk one (like a bond index)?
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
BTW, ING Direct is issuing a 3 year GIC for 4% and Achieva is issuing the same term for 4.25%.
I think it's a pretty good deal given current market circumstances
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
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