Stocks vs Mutual Funds vs VUL vs UITFS

[dcph172]

^ the assured amount is 125% of the initial investment right? Is there a clause that says current value at event of death whichever is higher vs the initial investment?


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[jut703]

^ the assured amount is 125% of the initial investment right? Is there a clause that says current value at event of death whichever is higher vs the initial investment?


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Mine is 200% of premium amount. And yes there's a clause that says either face value or insured amount will be paid out upon death, whichever is higher.


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[MoneyNoobie]

New member here... I am just about to get a VUL from BPI-Philam Life Insurance Corp. Gusto ko lang sana humingi ng advice. I am new to investing... Actually my plan was to open an account at COL and do my investing directly sa stock market. Pero nung napunta ako ng BPI I was talked into getting a VUL instead because the agent said it is also an investment with insurance. Gusto ko lang po sana humingi ng payo kung ano ang advisable, kung kumuha ako ng VUL at mag open parin ako ng COL account or di ko na tuloy yung VUL ko instead kuha ng term insurance and do investing at COL.

Thank you.

P.S. the VUL that they were proposing nga pala is BPI-Philam Equity Index Fund. 56k Annual Premiums and yung sa insurance nya 650k life insurance and 650k heath insurance. And the maturity is 5 years.

[jut703]

New member here... I am just about to get a VUL from BPI-Philam Life Insurance Corp. Gusto ko lang sana humingi ng advice. I am new to investing... Actually my plan was to open an account at COL and do my investing directly sa stock market. Pero nung napunta ako ng BPI I was talked into getting a VUL instead because the agent said it is also an investment with insurance. Gusto ko lang po sana humingi ng payo kung ano ang advisable, kung kumuha ako ng VUL at mag open parin ako ng COL account or di ko na tuloy yung VUL ko instead kuha ng term insurance and do investing at COL.

Thank you.

P.S. the VUL that they were proposing nga pala is BPI-Philam Equity Index Fund. 56k Annual Premiums and yung sa insurance nya 650k life insurance and 650k heath insurance. And the maturity is 5 years.

There are two schools of thought for people under your circumstances - VUL or BTID (Buy Term and Invest the Difference).

1. VUL - as your agent says, VULs combine insurance and investment so they're convenient. What they don't tell you is that a significant amount of your premium goes to management fees, so your investments don't get as much returns as dedicated UITFs or stocks. Basically that's the price you pay for convenience.

2. Buy Term and Invest the Difference - when we say Term Insurance, this is the insurance that you renew annually. The good part of it is that your premiums are much, much lower than VULs. For 650k coverage, you only pay about 3k a year. Even for 20 years (and increasing premiums as you age), it still comes out cheaper than VULs. And since it's cheaper, you can invest the difference in stocks or UITFs. These instruments have much lower management fees than VULs so effectively, your returns are higher. The drawback is that you have to be more disciplined - you should ensure that you really invest the savings; many people end up just spending it.

Personally I also invested in VULs, but in hindsight I think I would've been better off buying term insurance and investing the difference. Oh well, the difference over the long term (over 20 years) isn't as significant as compared to if I withdraw within 10 years, so I'll just finish paying off the VUL and forget about it until I'm in my 50s or something.


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[MoneyNoobie]

There are two schools of thought for people under your circumstances - VUL or BTID (Buy Term and Invest the Difference).

1. VUL - as your agent says, VULs combine insurance and investment so they're convenient. What they don't tell you is that a significant amount of your premium goes to management fees, so your investments don't get as much returns as dedicated UITFs or stocks. Basically that's the price you pay for convenience.

2. Buy Term and Invest the Difference - when we say Term Insurance, this is the insurance that you renew annually. The good part of it is that your premiums are much, much lower than VULs. For 650k coverage, you only pay about 3k a year. Even for 20 years (and increasing premiums as you age), it still comes out cheaper than VULs. And since it's cheaper, you can invest the difference in stocks or UITFs. These instruments have much lower management fees than VULs so effectively, your returns are higher. The drawback is that you have to be more disciplined - you should ensure that you really invest the savings; many people end up just spending it.

Personally I also invested in VULs, but in hindsight I think I would've been better off buying term insurance and investing the difference. Oh well, the difference over the long term (over 20 years) isn't as significant as compared to if I withdraw within 10 years, so I'll just finish paying off the VUL and forget about it until I'm in my 50s or something.


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Thank you for your insights Jut. They really help me a lot. I think I would go on with VUL. I think I can manage paying the premiums off and just forget about it for 10 to 20 years just to make sure to get the best out of it. At the same time I would also try to open up an account at COL just to test if I can do investing in stocks directly.

Thank God for these forums where I can find people that I can go run to, especially for people who are new in investing and need advise.

[dreamur]

See jut's advice above. If you don't intend to hold the VUL long (at least 5 years), then dont invest in it. Remember you will be paying the annual premium in the next 5 years.

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[MoneyNoobie]

See jut's advice above. If you don't intend to hold the VUL long (at least 5 years), then dont invest in it. Remember you will be paying the annual premium in the next 5 years.

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I think I have no choice but to finish paying the premium. I am new to investing and buying things that I can't touch maybe that's the reason I am having second thoughts. I think I get a VUL and open a COL Financial Account just to see if I can invest directly in stocks.

[jut703]

Instead of mutual funds, why not just go for BPI index UITFs instead?

Try comparing the performance of all mutual funds vs the performance of the PSEi over 10 or 15 years. More often than not, mutual funds do not consistently beat the index and are instead lower.

With an index fund, you don't try to beat the market, you just ride it.


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[unmarked]

Instead of mutual funds, why not just go for BPI index UITFs instead?

Try comparing the performance of all mutual funds vs the performance of the PSEi over 10 or 15 years. More often than not, mutual funds do not consistently beat the index and are instead lower.

With an index fund, you don't try to beat the market, you just ride it.


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Hi Chief, thanks for the suggestion. everytime nag e-exam ako nung risk profile lagi ako pumapatak dun sa moderate or slightly below aggressive. I am not sure if its smart on my part na aggressive na agad for a beginner. But I am seriously considering your suggestion, I am also in this for the long term, thanks!!

[badkuk]

Not an investment expert, but typically, as you grow older, and your sources of income dry up, you tend to get more averse to risk. The hope is(this is my hope as well) that you've made a big enough pile of cash while you are young and earning/saving well, so that when you get old, the interest you get from the low risk/low reward investments will be enough.

What's more, it's generally easier to recover from investment blunders when you're younger; you probably still have disposable cash(esp. for singles), you still have relatives that can back you up, etc. etc. Me buffer ka kumbaga.


That said, when you're just starting out, prioritize learning the ropes over immediate gains. Understand how each investment vehicle works, and how and when you make money; make small bets, monitor its progress, analyze what you did right/wrong. Seek guidance from reliable mentors(seems madami dito sa Tsikot), broker, etc., but make your own decisions based on their advice. This will give you a bit more confidence for the next step.

[jut703]

While the rule is generally "younger = higher risk appetite", it's not always the case.

Take the case of a 30 year old who's paying for a home mortgage, car amortization, and milk and vaccines for his 6 month old baby. Now, compare that to a 60 year old man who's already finished paying off all his loans and all his kids have graduated school. Which of the two can accommodate more risk and afford to lose it all in equities?


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[shearts]

let me share you my experience in investments. i initially had UITF Equity with BDO. left it to grow for around 2 years then redeemed it. my gain was around Php7,000.

then after a few months into researching about the stock market, i finally took the leap recently & invested in our stock market. an important note intended to those who still have limited knowledge in the stock market: investing & trading in the stock market are two different subjects.

if you want to trade, you must have excellent knowledge in either fundamental or technical analysis & that takes some time studying. if you have the passion & drive, then go for it. but if you're like me who has other things in mind, then investing in the stock market is a viable choice for you.

the main disadvantage for UITF, mutual funds, etc. for me is that you can't redeem your investment anytime, there has to be some set of holding period & the NAVPU that you want to redeem will not be the same rate you wanted to get. It could be higher or it could be lower.

Aside from the holding period, there are also loads of charges like management fee, exit fee, withholding tax, etc. Loads & loads of charges & you might end up getting less money because of it. UITF & mutual funds in a nutshell is the bank or company using your money to earn profits by trading in the stock market as well & you as the investor will most likely get only a portion of what you should be earning.

UITF & mutual funds are forms of indirect investment in the stock market. So why would you go for the indirect approach when you can very well go for the direct approach by opening an account with a stock broker? There are several stock brokers today but I chose COL Financial.

It suits me fine since I'm working abroad & I can only manage my stocks online. Like I said, I just started investing in the stock market so here's a screenshot of my humble investments.


the initial capital or principal in investing in the stock market is only at Php5,000. if you want to know more, you can read how to apply for an account with COL here,
Open a COL account

and the good thing is, you don't even have to be an expert before you can invest in the stock market. ever heard of Bo Sanchez? he is not only preaching the word of God but he is also advocating Pinoys to invest in the stock market. he has a group called The Truly Rich Club(TRC).

they have a method that when strictly followed, can have the highest potential of earnings. if you want to know more about TRC, you can click here,
The Truly Rich Club

there is a monthly membership fee but it's been all worth it.

do you want to know just how effective the method is from TRC? Bo Sanchez's maid, yes his household worker's portfolio is now worth over one million Pesos as of July 7, 2016. That's only 6 years into investing in the stock market. That's how good the method is if followed strictly with proper self discipline & positive mindset.

[shearts]

i would also like to share some videos I found while I was still doing research on investing in our stock market. i'm in no way in connection with this guy, but what i like about his videos is he's able to simplify things about investment & the stock market so a lot of people can understand how it works. so here they are.

let me start with this video. it's about the forgotten laws in saving money.


this is for those who spouses or partners in life, you can also watch this video,


due to restrictions on the forum, i'll share the rest of the videos later. these videos are intended to those who are not as financially stable as some of you guys here.

i really found his videos very enlightening so I hope it can help you somehow.

[cutedoc]

to cut the discussion shorter, these instruments are all of the same, money are pooled and the fund managers are the ones who does the technical tasks.

which one is good which one is better is it VUL, UITF or mutual fund?

well it depends on your personal goals and what you aim to achieve and when you want to have it done.

know what you need and start from there.

and if you need to know more question ask me=)

im an executive financial advisor of AXA =)

[1D4LV]

to cut the discussion shorter, these instruments are all of the same, money are pooled and the fund managers are the ones who does the technical tasks.

which one is good which one is better is it VUL, UITF or mutual fund?

well it depends on your personal goals and what you aim to achieve and when you want to have it done.

know what you need and start from there.

and if you need to know more question ask me=)

im an executive financial advisor of AXA =)

salient differences:

VUL : with life insurance factor (percentage of your total placed amount is allocated for protection and death benefits). some insurance companies require you to pay premium on this, while some companies allocation portion of your earnings from the investment part to the premium part.

UITF : straight forward. offered by banks. invest on a per unit basis.
MF : same as above. however, this is also offered by smaller investment companies.

but all of them are invested in the same channels (equities, stocks, bonds, etc.)

[its showtime]

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[unmarked]

I heard the popular MFs are available in COL financial. Question is, may front end fees din ba when opening via COL? Mag open palang kasi ko ng account. May nabasa ako pag via COL walang front end fees.

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[jut703]

I heard the popular MFs are available in COL financial. Question is, may front end fees din ba when opening via COL? Mag open palang kasi ko ng account. May nabasa ako pag via COL walang front end fees.

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No front-end fees. Just the usual management fees of around 1.5%.

The MFs in COL function a lot like the UITFs which you can subscribe to from your BPI Express Online account. I think the Philequity Index Fund is a great MF to invest in.


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