Are Life Policies Really Worth It and How Compound Interest Works in ETF Investments

Today Warren Ingram answers your questions about life policies and the benefits in terms of monthly installments, interest rates, and whether it’s better to contribute to an RA instead.  Warren also explains how compound interest works in investments like the Satrix Top 40.

Questions/ Topics: 

  1. My dad is 57yrs old and has a costly life insurance policy which he contributes to monthly (13% of his net income) with a monthly contribution increase of 12% p.a. The policy lumpsum payout only gains 3-4% interest p.a. Does my dad still need this life policy, my thinking would be to stop this life policy and invest the same amount monthly into his R.A so he gets a greater tax deduction and higher interest p.a?
  2. How does compound interest work with shares? With Satrix Top 40 you’re not earning interest but you’re earning growth so how does compound interest work with that type of thing?

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