On the 28th of April 2016, I started a savings plan to save money for my daughter’s higher education fees.
As an independent financial advisor myself, I was faced with the decision of choosing between all the different providers of savings plans that are available in the market.
I used the following factors to evaluate and choose the best savings plan for me.
Fine print – This is subject to me contributing all the premiums over the full term.
This means that I have to ensure that I don’t miss any premium at all. While this may seem inflexible, I can pay future premiums in advance to avoid losing the guarantee.
I prefer this plan over other plans in the market, that provide no principle protection whatsoever. Moreover, with other savings plans, I could get back less than what I invested.
This product provides me with 100% market participation. This means that I get the actual performance of the market without any limits on the growth.
The advisor cannot make mistakes, causing you to lose money.
The S&P500 is simply a numerical index that gives the average performance of the top 500 stocks in the US stock market. I like the simplicity of this investment.
I don’t have to pick and choose anything where ‘mistakes could happen’.
Moreover, Warren Buffett himself advocates the S&P500 as the best investment to everyone including himself.
Not only that Warren Buffett has famously wagered a million dollars on the performance of the S&P500 over the best hedge funds in the world – Protege Partners.
This was a 10-year bet which is into its 8th year and Warren Buffett is right so far. The S&P500 has beaten the hedge fund in overall performance in the past 8 years.
Historical performance matters even though it may not be an indicator of future results. All I did was look at the 25-year performance of the S&P500, and my mind was made up.
The S&P500 has averaged 12.98% per year over the last 25-year period.
There is a saying in life that you get what you pay for. This product is slightly more expensive as compared to the other savings plans in the market. But there are three factors that made me choose this product over the others.
The S&P500 Index Savings plan is only available for a term of 15 years. While others might find this unsuitable for their savings and investment goals, I found this perfect for my goal of saving for my daughter’s education.
She is 3 years old and I have exactly 15 years before I have to shell out approximately USD 320,000 for her higher education fees.
My investment details are as below:
Amit is an Independent Financial Advisor, based in Dubai since 1997. He is part of the prestigious ‘Million Dollar Round Table’ (MDRT), which is an elite club of the best financial advisors worldwide.
He has authored the ‘6-Step Financial Success Guide’, and the book ‘Creating, Preserving, Distributing Wealth’.
He helps business owners and professionals ‘Create A Second Income’ through investments.
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Parents need around Dh1 million to cover lifetime education fees per child
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