Saturday, August 23, 2008

How to become an Automatic Millionaire?

My Economics Lecturer said CPF savings can make a person a millionaire by retirement! It is forced savings or automatic savings made monthly, and with the power of compound interest, we will be automatically millionaires by retirement! At that time, the CPF rate was at the highest.

After I started working, I made a few automatic savings plans to force myself to save for retirement. These are my Life & Health insurance plans. Not forgetting the primary purpose of buying insurance, I also wanted a second objective which is to ensure I get my money back. Since automatic or forced savings is a secondary purpose, I cannot expect my insurance plans to give me high returns. So long I can get my money back with interest, I'm happy. So long it is an asset and not an expense to me, I'm happy! Then I should be on my way to retiring rich!

Nowadays, people have more knowledge and seems to be spoilt with so many choices that they compare, analyse and analyse until they become paralyse, ie don't know what insurance to buy. I feel that we should not forget the primary purpose of a Life & Health insurance plan, and savings/returns are secondary!

Even if one try to save or reduce the cost of a Life & Health insurance plan (ie not a savings with returns plan), can one expect to be able invest the cost saved to get consistent returns over the long term? And not forgetting that one had already lost money by having an insurance plan which is an expense and not an asset in the first place. Oops, I'm not an insurance expert, I just want to make my life simple.

Just thinking out loud!

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