In Singapore, building wealth goes beyond simply saving money in a bank account. With rising cost of living and long-term financial goals such as home ownership, and children’s education, many individuals turn to structured financial tools known as wealth accumulation plans. 

Here are three common types of wealth accumulation plans available in Singapore.

1. Savings Plans

Savings plans are one of the most traditional types of wealth accumulation plans to help individuals grow their savings over time. These plans typically involve regular contributions and may come with a regular monthly income where you receive a monthly cash benefit to support daily expenses or supplement your savings, etc.

Once your savings plan matures, you receive a lump sum payout, which can be used for long-term goals such as education, travel or home renovation. 

Such plans are popular among parents who want to save for their children’s education or build a financial cushion for future needs. 

2. Retirement Plans

Retirement plans are designed to help individuals accumulate funds for a comfortable lifestyle after they stop working. In Singapore, these plans often offer regular payouts during retirement years, which can act as a source of passive income.

The accumulation phase typically involves making regular contributions over a fixed period. After this phase, the payout phase begins, where the plan provides monthly or yearly income for a set number of years or even for life, depending on the policy.

Retirement plans are useful for people who want a steady income stream in their later years and wish to plan their future in an organised manner.

3. Investment-Linked Plans (ILPs)

Investment-linked plans are unique wealth accumulation products that combine life insurance with investment opportunities. A portion of the premiums goes towards life insurance coverage, while the rest is invested in selected funds.

Investment-linked plans offer great flexibility to choose and switch between investment funds, and adjust investment amount based on one’s risk appetite and financial goals.

However, returns are not guaranteed and may fluctuate with market conditions. This makes ILPs suitable for those who are comfortable with taking some investment risks in exchange for higher potential returns. Selecting the right wealth accumulation plans depends on several factors - your financial goals (e.g. retirement, education, home purchase), age and life stage, and the level of flexibility and risk tolerance. Investment-linked plans cater to individuals seeking greater growth potential through market exposure, retirement plans help provide income security in later years, and savings insurance plans are better suited for conservative savers.

By understanding the features of each type, you can make informed decision that align with your long-term financial goals. With the right combination of these wealth accumulation plans, building a secure financial future becomes more achievable and structured.

Original source:- Types of Wealth Accumulation Plans in Singapore