Friday, January 05, 2007

Invest in the Growth plan to earn about 4% p.a.

Dear Mr Tan,

I read in your blog that you have parked your fund into Money market to earn 3% interest, as you feel that the stock market is too high and will wait for the correction in 1 to 2 years time before you reinvest.

Does this mean that the Ideal Plan is considered risky in the next 12 months?

Besides the Flexicash, what other form of investment using SRS account would you recommend while waiting for the stock market to correct? 3% interest is pretty good actually!



Dear W

The Ideal plan takes in monthly investments over a period of many years. So, it does not matter that the market is too high at any point of time. The investments will be averaged out over the years.

If you are investing a lump sum (through FlexiLink), then you will to be careful not to commit all the money at a time when the market is too high. This is why I wish to wait for a better time.

If you are keen to earn a return of about 4% to 4.5% over 10 to 15 years, you can consider the Growth plan. A part of the return (about 2%) is guaranteed and the remaining return is variable (ie in the form of bonus declared by the NTUC Income).

The plan is locked in for 10 to 15 years, so you cannot withdraw it early. Please read:


Tan Kin Lian

Comparison of Motor Insurance Premiums

My colleague carries out a comparison of motor insurance premiums among the top insurers in Singapore. Here is the latest findings.

10 models of vehicles are compared. The premiums charge by the competitors can be up to 50% higher than NTUC Income.

New Cars 3 Years 6 Years
NTUC Income $519 100% $504 100% $475 100%
Company A $782 151% $712 141% $721 152%
Company B $641 124% $591 117% $586 124%
Company C $546 105% $589 117% $618 130%

Exit interviews of maids


I refer to the letter from Lim Song Joo entitled "Exit reviews will improve maid quality" (Today, 5 January 2007).

Mr Lim suggested that the Ministry of Manpower should carry out exit interviews of maids and make the information available for future employers who may employ these maids on their return to Singapore. This allows a maid with a good record to earn a better salary from the next employer.

I agree with this suggestion. It is a useful service.

If the Ministry does not wish to be involved in this new activity, I suggest that the Ministry can appoint a private organisation to carry out the work. This organisation can manage a database and perform the work according to the standards specified by the Ministry.

There is also a need to assess the suitability of maids who are coming to Singapore for the first time. I suggest that the employer try out the maid and provide information to the central database. This information will be useful to place the maid with a suitable household. Some maids may be not suitable for certain households but may be acceptable for other households.

As many people in Singapore depend on maids, it is timely for us to use database technology to improve the recruitment process.

Tan Kin Lian

Should I pay off my loan?

Dear Mr Tan,

I have been reading your blog for quite sometimes. Very interesting and I really admire, person on high position like you still want to share and actively update your blog... I hope you will still do it although you have left Income.

I have one case study, on how do you going to invest your money. If you have 100K on hand now, base on current market condition. What would you do? How are you going to invest that money?

You are employed and your salary is more then enough to cover your expense. You have remaining liability which is your housing loan. Would you pay off some of your housing loan? Would you buy blue chip stock? Would you invest in Growth Fund or Fixed Deposit?



Dear RK

Recently, I withdrew $500,000 from my CPF. I decided to invest it in the Money Market Fund to earn about 3% interest. The interest rate varies with the market.

I did not want to invest in the stock market, as I felt that it was rather high. Actually, the stock market went up another 5% since, so I missed this part of the appreciation.

My intention is to wait for the market to correct within the next 1 or 2 years, before I invest in the market.

I have passed investments which I am still keeping in the funds, i.e. I am not withdrawing them now. So, I am partly invested and partly in cash.

In your case, if you are paying interest at 4% or more from your housing loan, it may be better to repay your housing loan. If it is lower than 4%, then you can keep the loan and invest in the money market fund (to wait for a better time to invest in the stock market.

I hope that this suggesion is useful to you.

Tan Kin Lian


Dear Mr Tan

Thanks for your suggestion. Really realy usefull...


Thursday, January 04, 2007

Should I re-invest my money in India?

Dear Mr Tan

I had worked in Singapore (acquired PR and am still retaining it as of now) for 2.5 years but have now relocated to India and am working in India.

While in Singapore, I had subscribed for three united liked policies from Company X to plan for my children's education needs. The initial load is high 100% for yr-1 and 50% each in yr-2 and 3. It is nearly three years now.

Though I have moved to India, I continued servicing these policies regularly.

There is a lot of opportunity in India to get a relatively larger return compared to the returns from my insurance policies.

Should I continue servicing these policies OR should I terminate them and reinvest in India? Servicing these policies is bit difficult as I have to remit foreign currency each month and expensive (forex exchange costs etc.)

While India give a higher nominal return, the possible devaluation of Indian Rupee against the Singapore Dollar could change the scenario a bit.



Dear VR

i enclose a FAQ on the Ideal plan from NTUC Income. I think that this plan is similar to the plan that you have bought from Company X.


You can see that the upfront charge for our Ideal plan is 45% of the annual premium, compared to 200% charged by Company X. Our annual charge is also quite low, compared to most other funds.

Apart from the difference in upfront charge, you should also consider the annual charge. A difference of 1% can work out to a lot of money over 15 to 20 years.

The options available to you are:

a) To continue the existing policies with Company X
b) To switch to other investment policies in Singapore with lower charges
c) To invest in India

You are correct in pointing out the higher return in India and the potential risk of devaluation. This is an area that I am not well versed in.

Generally, I encourage my policyholders to invest in a global equity fund, to enjoy diversification and a potentially higher return (compared to investing in a specific country).

You also mentioned the trouble of remitting money to Singapore. Perhaps you can take an annual premium policy, to avoid the need for frequent remittance.

I hope that you find my comments to be helpful. I wish you all the best for 2007.

Tan Kin Lian

Should I get out of these structured products?

Dear Mr Tan,

Two years ago, I put my SRS savings into 2 principle protected 6-years structured deposit with X Bank.

The value has dropped since day 1, despite of the strong equity market in the last two years.

I chose the structured deposit to get a better return than bank interest and to avoid the risk of investing in unit trusts.

Looking back I realised that this was a mistake. I would have got a better return if I had invested in the NTUC Income's Combined Fund, for example.

I am thinking of redeeming the structured deposit now. I will lose between 9% to 12% after taking into account the guaranteed payout received during the first year. Is this a wise move?


Dear WF

Can you give me some details about the structured deposit. What is it invested in? What are the charges?

I suggest that you write to Bank X and ask them to give you an explanation in writing about its poor performance to date. They owe it to you.

You can check this website, www.askdrmoney, to see if there is any information about this structured deposit.

As the equity market is now quite high, I do not advise you to make a switch into the Combined Fund now. Maybe, you should wait for the market to correct.


Dear Mr Tan,

The structured deposits are the Vitamin and Harvest accounts. Here are the fact sheets. This is a classic example of bad investment products that small investors should be aware of.


Dear WF

I suggest that you ask Bank X to tell you the following:

1. What is the payout for each year that you have invested up to now?
2. How much has the underlying shares appreciated during the same period?
3. What is the likelihood of early redemption (for the Vitamin account)?
4. What is the amount that you will get, if you decide to encash now (compared to the amount that you have invested.

I find these products to be quite complicated. I am not clear if the structuring is fair to the consumer. I hope that the answers to the 4 questions will shed some l light. You may be able to make a better decision, after you got these facts.

Let me wish you all the best for 2007.

Wednesday, January 03, 2007

Questions about Financial Products

Did you invest in a financial product, such as a structured deposit, unit trust or insurance product, that is not working well for you?

You can enter the details here. I will try to give my views about the product.

Questions for Mr Tan.

Tan Kin Lian

Tuesday, January 02, 2007

Will my savings be safe after you leave?

Dear Mr Tan Kin Lian,

In 2005, I put in $111,000 in Flexi Link. I convinced my husband to put his savings in NTUC INCOME - Flexi-Cash. The first amount was $120,000, then subsequently another $124,000, in total $351,000.

The news of your ending your career at NTUC INCOME was a shock to me - quite upsetting in fact. What was your reason for resigning, was it a good reason?

Mr Tan, I have not met you but i feel that you are a man of integrity and foresight.

NTUC INCOME has done extremely well under your leadership. Would you advise me will our money be safe under both Flexilink and Flexicash? Can NTUC Income ensure safe returns in 10 years time?

Both my husband and I are 58 years old and these are our life-savings. Thank you.



Dear CA

Thank you for your kind words.

NTUC Income will continue to be well managed after I leave. I will be keeping most of my personal savings with NTUC Income in the Flexi-link plan, invested in the various funds. I am 58 years old. My family will also be keeping their savings with NTUC Income.

You can read about my future plans in my personal website, I intend to work in Middle East and Indonesia to help my partners to develop their insurance business.

I wish you and your family all the best in health and happiness.

Tan Kin Lian

What is permanent and total disability?

Hi Mr Tan,

I came across your blog while surfing and read through some of your postings. I am grateful that though being the CEO, you have not been baised on your comments.

I wish to seek your clarification on this clause.

"Totally and Permanently Disabled" means the complete and continuous inability of the Life Assured at that time and at all times thereafter to engage in any business or occupation or perform any work of any kind for remuneration or profit.

The total and irrecoverable loss of sight of both eyes or the loss by complete severance of both limbs at or above the wrist or ankle or the total and irrecoverable loss of sight of 1 eye and the loss by complete severance of 1 limb at or above the wrist or ankle will also be regarded as constituting Total and Permanent

If a person has no control over both limbs but choose not to amputate them, can it be regarded as constituting Total and Permanent Disability?



Dear C

If it can be medically proven that the life assured cannot use two limbs totally and permanently, then it should qualify as a total disability claim. Perhaps the difficulty is to establish this fact, if the limbs are not amputated. Perhaps you can tell me more about the medical condition, and I can ask a doctor for his opinion.


Hi Mr Tan,

The reason I'm asking that specific clause is because an agent claims that his company does not require the life assured to amputate the limbs in order to claim for total disability whereas other companies including Income required the limbs to be
amputated and must be at or above the wrist or ankle as specified in the clause.


Dear C

Although the clause states that amputation is one condition of proof of total disability, there is also another condition and that is the inability to carry out any occupation. If two limbs are totally useless, it is easy to prove the inability to perform any occupation.

Anyway, it is NTUC Income's policy to interpret the clause fairly. I am sure that they will not insist on imputation under the circumstances that you have describe.

It is important for you to buy a product that gives you better value. Do not be swayed by minor differences such as this type of condition, which affect maybe 1 in a million people.

Best wishes for 2007

I send best wishes for 2007, to all readers of my blog. Best wishes for your good health and success.

Tan Kin Lian

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