Back in 2007, I bought an Investment Linked Policy from one of my NS friends. He was starting his career so I decided to support him! But I did not do my homework before I bought into it.
So I used $6100 of my CPF-OA to purchase the ILP then and now when I finally decided to cash it out, the value is $7323.23. On first glance, it seems like it wasn't such a bad deal after all. A sweet gain of $1223.23. However, if I calculate the CAGR, it is only a measly 2.65%! OMG even some fixed deposits can do better than that.
If I had left this money in my CPF-OA which earns 2.5% compounded annually, it would have been $7250.98 now. This means the amount of risk I took to invest in a non-guaranteed ILP for 7 years is only worth $72.25. This is such a miscalculation on my part.
All in all, I don't blame my friend because I was the one who made the decision and he did not force me in to. I only wish I had better financial knowledge back then and know better about investing wisely.
Now that the money is back in my CPF-OA. I can comfortably sleep at night and know that it still earns 2.5% annually =)
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