It is still amazing to see how marketing from big companies remain unchanged despite the prominence of social media. No matter how good your marketing is, as long as your product doesn’t stand up to scrutiny, people will talk about it. When that happens, all your marketing dollars go down the drain. Have a great product first, then your marketing becomes easier.

This rant was inspired by a new ad that I saw on Youtube. It is called Aviva myretirement and is a product targeted at Singaporeans who want to plan for their retirement. The marketing is great but the product fails to impress me. Let’s take a detail look at what Aviva myretirement is all about.

(Note: you can also check out my dbs myretirement review. In summary, it is all crap.)

Rule number when reading brochures of financai products: READ ALL FINE PRINTS!

In fact, that is what I did and I discovered a whole can of worms.

How doe Aviva myretirement works

First, let’s see what Aviva Myretirement promises:

• Guranteed returns of 2.38%
• Monthly payment for 10 years, starting from your desired age after 50
• Capital guranteed

Seesm attractive but it is not. Let me explain point by point

Guranteed return of 2.38%:

This is what the fine print reads:

“Guaranteed returns of up to 2.38% per annum is only upon policy maturity. This is based on the assumption that a male, aged 17 (ANB), took up an 8-year limited premium payment option for the MyRetirement plan based on annual payment mode and has opted for the Retirement Age of 75 years old (ANB) to receive a monthly Guaranteed Retirement Income of S$1,000, per month for 10 years.”

In layman terms, it means you need to put your money with them from age 17 and wait until age 75 to enjoy the returns. That is almost 60 years! Do you know that inflation is likely to wipe out the nicely stated 2.38% during this long period. With the current inflation climate, if you are not getting 4-5% returns, you are not even beating inflation, which means the purchasing power of your money will decrease with time.

Monthly payment for 10 years

Do you think 10 years is enough? What if you lived 5 more years? Where is your cashflow going to come? The fact that there is a time limit of your monthly payment is just non practical. My advice is to create your own portfolio of monthly passive income. These can be your rental, your dividends or the revenue from websites. As long as you have full control on the cash flows, you don’t have to depend on silly things like a 10 year payout.

Capital guaranteed

This is the only nice thing but the price to pay is too high. In exchange for a peace of mind, you are getting the short stick of a 2.38% and a 10 year payout. What is the point? So what if your captial is guaranteed? At a young age, we should be worried about our cash not working for us, rather than be too conservative. As long as you have set aside a nice stash of emergency funds, the rest should go into investments that can help you achieve your early retirement plan.

Worst thing about Aviva myretirement

The worst thing about these ads is the nice example they gave you which will likely not to be realised. Let’s see this graph contained in Aviva’s brochure.

Wow, check out that big “476% of premiums”. Looks attractive doesn’t it?

There is a big clause to that. Specifically, out of the 630K that you can get, $390k is non guaranteed. You know what that means? It means they can bullshit any number and not claim any responsibility because it is non guaranteed. I have rant about this before but every financial institutions play this game that it makes me sick.

Let’s recalculate the numbers if we assume only the guaranteed return, which is $240k.

With a total investment of $132k, the annual return is only about 3% per year from age 42 to age 65. That is the real guaranteed return, no the 476% that they put so nicely in their brochure.

For those reading this, there are resource online that teach you how to construct a much better retirement portfolio on your own. Don’t fall for Aviva Myretirement just because it is more hands off. You will not be getting the best of your retirement investments!