The GREAT Wealth Advantage 3 is a 101-wrapper investment-linked policy offering affordable minimum investments, flexible features, and comprehensive coverage. However, it comes with high fees and moderate returns.
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Here’s an in-depth analysis of the GREAT Wealth Advantage 3’s features.
Moderate returns with a projected ROI of 330.55% over 30 years.
High fees during and after the Minimum Investment Period.
Offers affordable minimum investments, flexible premium holidays, and comprehensive coverage options.
- Affordable minimum investment of $200/month
- Flexible premium holidays
- Comprehensive coverage options
- Partial withdrawals and top-up options
- High fees during the Minimum Investment Period and beyond
- Limited fund selection with potential additional hidden fees
- Moderate returns compared to other ILPs
- Less flexibility in premium adjustments, with reductions only after 10 years
VERDICT:
The GREAT Wealth Advantage 3 is a suitable option for budget-conscious investors looking for flexibility and comprehensive coverage. Its affordable entry point and flexible premium holidays make it appealing for those starting out or needing adaptable financial plans.
However, the high fees and moderate growth prospects may not be ideal for those seeking the highest returns. It’s crucial to weigh these factors against your financial goals and consider whether the benefits align with your investment strategy.
What we like about the GREAT Wealth Advantage 3
Affordable Minimum Investment
One of the standout features of the GREAT Wealth Advantage 3 policy is its affordable minimum investment.
At just $200 per month, it’s accessible to a wide range of investors, from those just starting out to those looking to diversify their portfolios without committing a large sum upfront.
- Low Entry Barrier: The $200/month minimum investment makes this policy one of the most accessible ILPs on the market.
- Ideal for Beginners: New investors can start small and gradually increase their contributions as they become more comfortable with the investment process.
- Budget-Friendly: For those on a tighter budget, this low minimum investment allows for participation without financial strain.
Relatively Short Investment Period
Another attractive feature is the relatively short investment period.
With a minimum investment period of just 10 years, it provides a balance between commitment and flexibility, which is perfect for those who prefer not to lock their funds for too long.
- Manageable Commitment: A 10-year minimum investment period strikes a good balance, making it easier for investors to commit without feeling overwhelmed.
- Flexibility in Planning: This period is long enough to potentially see significant returns but short enough to maintain financial flexibility.
- Less Financial Strain: Compared to longer-term ILPs, the 10-year period is less likely to impact your financial plans adversely.
Flexibility
Flexibility is crucial when choosing an investment plan, and the GREAT Wealth Advantage 3 does not disappoint.
It offers a range of options that allow you to tailor the policy to your specific needs and financial goals.
- Top-Ups: You can make additional contributions whenever you have extra funds, allowing you to boost your investment returns.
- Partial Withdrawals: Need access to your money? You can make partial withdrawals with a minimum of $500, offering liquidity when needed.
- Varying Premiums: Adjust your premium payments based on your financial situation. This is particularly useful during times of financial uncertainty.
- Premium Holidays: Take a break from premium payments while keeping your policy active, as long as there are sufficient funds to cover the fees.
What we think the GREAT Wealth Advantage 3 could do better
High Fees & Charges
One of the major downsides of the GREAT Wealth Advantage 3 policy is its high fees and charges.
While the policy offers several attractive features, the cost associated with maintaining it can significantly impact your overall returns.
- Initial High Fees: During the Minimum Investment Period (MIP), the fees can go up to 7.25% per annum, which is quite steep compared to other options.
- Post-MIP Fees: Even after the MIP, the fees remain high at up to 5.35% per annum, continuing to eat into your returns.
- Complex Fee Structure: The policy includes various fees such as fund management charges, initial charges, and policy charges, making it difficult to understand the true cost of the investment.
Fund Selection
Another aspect that falls short is the fund selection.
The types of funds available for investment can significantly affect your returns, and the options provided by this policy are not the most compelling.
- Limited Options: The policy does not offer as wide a range of funds compared to other ILPs, which limits your ability to diversify and optimise your investment portfolio.
- Insurer Subfunds: Investments are made through the insurer’s subfunds rather than directly into unit trusts, leading to potential additional hidden fees.
Fund Potential Returns
The potential returns from the funds available in the GREAT Wealth Advantage 3 policy are not as high as those offered by other investment-linked policies.
This limitation can be a significant drawback for investors seeking higher growth.
- Performance Concerns: The performance of the available funds might not match up to the expectations set by other competitive ILPs, affecting your overall investment growth.
- Risk vs. Reward: Given the high fees, the risk-reward balance is less favourable, making it harder to justify the investment.
Less Flexibility in Premium Adjustments
Flexibility in adjusting premiums is crucial for adapting to changing financial circumstances.
Unfortunately, the GREAT Wealth Advantage 3 policy does not provide sufficient flexibility in this area.
- Premium Reductions: The policy allows reductions in premiums only after 10 years, which is a long wait for those needing to adjust their financial commitments sooner.
- Rigid Adjustment Terms: The terms and conditions for varying premiums are not as flexible as other policies, limiting your ability to manage your investment in line with your financial situation.
This rigidity can be particularly challenging during times of financial difficulty or unexpected expenses, where adjusting premiums could help maintain your investment strategy without undue strain.
Better alternatives to the GREAT Wealth Advantage 3
FWD Invest First Plus
FWD Invest First Plus is considered one of the best ILPs in Singapore, particularly for its exceptional potential returns and innovative fee structure.
This policy ranks first in potential returns, offering a staggering 542% over 30 years, which is significantly higher than most other ILPs.
- Lowest Fees Structure: The policy’s fee structure is based on annualised premiums rather than total account value, which drastically reduces the cost over time. This approach ensures that a larger portion of your investment goes towards growth rather than fees.
- Direct Investment in Unit Trusts: This policy invests directly into unit trusts, bypassing the additional layer of fees associated with insurer subfunds.
- Access to High-Performing Funds: The policy provides access to both retail and accredited investor funds, which are expected to perform better due to lower fees and higher returns.
- Flexibility: Despite its high returns, the policy also offers features like premium holidays and partial withdrawals, ensuring that you have the flexibility to manage your investment according to your financial needs.
Manulife InvestReady III
The Manulife InvestReady III policy stands out as a superior alternative to the GREAT Wealth Advantage 3 for several compelling reasons.
One of the key advantages is its highly flexible investment periods.
With up to nine combinations for structuring your investment plan, you can tailor the Minimum Investment Period (MIP) and Minimum Payment Period to fit your financial goals and circumstances.
This flexibility ensures that you are not locked into a rigid structure, making it easier to adapt to changing financial situations.
- Low Fees: The fees associated with this policy are among the lowest in the market. During the MIP, the fees start at 1.4% per annum plus $5 per month, and drop to 0.7% per annum plus $5 per month after the MIP. This significantly reduces the cost of maintaining the policy and enhances your net returns.
- High ROI: Manulife InvestReady III provides a robust return on investment, calculated at 499.25% over 30 years. This high ROI is a testament to the policy’s efficiency in growing your investment.
- Dividend-Paying Funds: For those looking to generate income, this policy includes dividend-paying funds that allow you to either cash out or reinvest dividends, offering both liquidity and growth potential.
Singlife Savvy Invest
Singlife Savvy Invest is another excellent alternative that offers distinct benefits, particularly in terms of flexibility and cost-effectiveness.
One of the main attractions of this policy is its short minimum investment period.
Starting at just three years, it offers a flexible commitment that is suitable for those who prefer shorter-term investments or wish to retain greater financial flexibility.
- Lower Fees Over Time: This policy is designed to be cost-effective, charging only 2.5% of your account value per year for the first 10 years, and reducing to 0.65% per annum thereafter. This significant reduction in fees over time makes it an attractive option for long-term investors.
- Access to Accredited Investor Funds: Singlife Savvy Invest provides access to accredited investor funds, which typically offer higher returns than retail funds. This access can potentially boost your investment performance.
- Flexible Premium Adjustments: You can start with a low minimum investment amount of $200 per month and increase or decrease your premiums after the first three years, providing flexibility to align your investments with your financial situation.
- Direct Investment in Unit Trusts: By investing directly in unit trusts instead of subfunds, the policy avoids additional hidden fees, ensuring that more of your money is working for you.
Let Us Compare Policies For You
Since ILPs are long-term investments, it’s crucial to look at the overall flexibility offered by the features, the total fees involved, and the growth potential of the funds.
Overall Flexibility: As ILPs are long-term commitments, the ability to adjust premiums, take premium holidays, and make partial withdrawals can greatly affect your financial flexibility over time.
Total Fees: Be aware of both fund-level and ILP-level fees. Some funds report returns without including these fees, while others do. Understanding the full fee structure is essential to avoid unexpected costs that can eat into your returns.
Growth Potential: Evaluate the funds’ growth potential by considering the net returns after all fees are deducted. It’s important to choose funds that align with your financial goals and risk tolerance.
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