Investment Protection by Maybank2u

It takes money to achieve many of life's goals—whether we want to own a house, to retire comfortably or to provide a good education for our children. The only practical way to make sure we can achieve our goals is to have a financial plan, with specific strategies to meet specific objectives.

Let's start by sorting out the objectives into short, medium and long term. Some examples and typical strategies for achieving the objectives are given below:

Duration	Short term	Medium term	Long term	Protection objectives
Objectives	Holiday, car	House, children's education	Retirement	Asset protection (e.g. car, home), income protection
Financial strategies	Keep your assets liquid so that you have the cash needed for down-payment or full purchase	Invest more aggressively, to earn better returns in the medium term	Invest aggressively while you are young, then move into safer assets as you approach retirement	Buy insurance policies to complete your financial strategy
Examples of investments/ insurance	Savings account, fixed deposits	Shares in companies in both developed and emerging markets	(Earlier) Shares in companies in both developed and emerging markets (Later) Shares in established companies in matured markets	Personal accident, medical, motor, houseowner, Mortgage Reducing Term Assurance (MRTA)

As you can see, besides growing your wealth, you need to protect it to safeguard your family's future. Investment-linked insurance helps you do just this, without having to purchase insurance or invest your money separately.

Three key benefits of investment-linked insurance

1. Financial protection against Death and Total and Permanent Disability (TPD). Optional riders for Critical Illness and Accidental Death and Dismemberment (ADD) are available with some policies
2. Investment opportunities
   • A choice of investment funds with different investment objectives (i.e. to generate income or to generate capital growth)
   • Diversification (to reduce risk)
   • Professional fund managers
   • Dollar-cost averaging (DCA)*
3. Flexibility
   • To alter the sum assured to match your changing protection needs
   • To alter your premiums to match your changing investment needs
   • To make partial withdrawals, switch funds, top-up and fully redeem your investment

*DCA usually provides better returns and less hassle. You do this by investing a fixed amount of money regularly, regardless of market conditions, instead of investing all your money in one go. Regular investment means that you buy more shares/units when the prices are low and less when prices are high. This evens out the risk of buying high and selling low, and usually results in a lower average cost per share/unit over time. For instance, if the market is falling sharply, then DCA evens out the initial high cost of the investment, thereby allowing you to start "turning around" before the market does. In addition, DCA means that you do not need to guess what will happen next in the market, as it has no bearing on your decision to invest.