Saturday, July 28, 2007

Protect consumers from high mobilephone bills

28 July 2007

Today paper

Many people are not aware about the high cost of using the mobilephone, such as:

* receiving incoming calls when they are away from Singapore (for which they are charged expensive roaming rates)
* chatting for a long time on the mobilephone
* when their phone is used by an unauthorised person

They learn about the high charges only after the bill arrives at the end of the month. By that time, it is too late. These bills can amount to a few hundred dollars, or several thousand dollars.

For low income earners and students, these unexpected bills can be a heavy burden and could lead to bankrupcy.

I suggest that the consumers should be protected from these risks. The authority should make it mandatory for the telephone company to place a reasonable limit of say $200 on the monthly bills. If this limit is exceeded, the telephone company should be required to contact the customer and get his or her specific request to extend the limit. This will ensure that the customer is aware about the charges.

Tan Kin Lian

Share an umbrella

I am involved in a community development council that arranged a job fair for mature workers.

I took the MRT train to attend this job fair. It was raining heavily. I had to cross the road in the heavy rain. I did not have an umbrella.

An elderly person spoke to me, "Are you Mr Tan Kin Lian?". He offered to share his umbrella with me. He was attending the job fair to look for job opportunities.

He told me that he reads my blog regularly. I wish to thank him for his kindness.

Build a good work record

An mature worker approached me at a job fair. He asked for my assistance to use my influence to get a certain taxi company to rent the Mercedes taxi for his use. Apparently, this type of taxi is in high demand.

I suggested the following approach:

* rent the ordinary taxi (which is easily available)
* produce a good work record over one or two years
* after that, approach the taxi company to allow him to rent the Mercedes taxi

I hope that people can make progress by building a good work record, rather than to approach people to use their influence.

Frankly, I do not have this type of influence. Even if I had, I will not use it inappropriately.

Friday, July 27, 2007

Free incoming calls

My mobilephone bill was around $50 a month. Last month, it shot up to $100. Half of this cost is for incoming calls.

I decided to change to a new service provider that offers free incoming calls. They also offer a discount for having my cable, internet and mobilephone on the same account.

I did not subscribe for the data services (for downloading from the internet) of the new provider, as it is quite expensive.

Subscribe to a call back service


If you are away in another country, subscribe to a call back service to avoid roaming charges and use the local mobile phone card with free incoming calls. I believe Mediaring's subsidiary and few others operate a service like that.

This is actually a VOIP in between. The other two ends are by telco carriers. The rates are very competitive because the service providers buy bulk airtime at wholesale price.

If you are away leave your mobile number with the service provider. Any incoming calls can be rerouted through a gateway server to your mobile any where in the world. Maybe Skype also provides this.

Expensive way to access the internet

I subscribed to a new mobilephone.

I learned that the charges for the data service (i.e. to access the internet) is 0.3 cents per kilobyte.

A webpage takes about 300k bytes. It will cost nearly $1 to access a webpage.

I decided NOT to take the data service. It is too costly.

IDD charges on mobilephone

When I am away from Singapore, I will not take calls on my mobilephone, unless it is from someone that I know.

If I take the call, I will tell them immediately, "I am in (name of country)". This is to tell them to keep the call short, and to the important matters. I want to avoid paying for international IDD roaming charges on my mobilephone.

Many people may not be aware about these charges - until it hits them.

Minimum wage increased in America

America has raised its minimum wage to USD 5.85 per hour (SGD 9).

America is a free market economy. Due to its large size, there are a wide range of choices and opportunities. Why is it necessary for America to have a minimum wage policy?

Maybe, the same reasons applies to Singapore?

Fair treatment of consumers

I find the behaviour of some businesses to be appalling. They want to increase their profits at the expense of the consumers. They impose high charges and unreasonable terms, that are not fair to consumers.

I hope that the Consumer Association can be more active in promoting the interest and fair treatment of consumers.

In America, the legislators are active in looking after the interest of consumers. I hope that our parlimentarians can also be active in this area, so that they can win the respect of the ordinary people.

Thursday, July 26, 2007

High mobilephone bill

An undergraduate went to India for one month of internship. His family and friends contacted him on his mobilephone. He was not aware that the incoming calls will be charged to his mobilephone as an international call, plus roaming charges. When he returned, he found the bill to be more than $1,000.

This is an expensive lesson. While the telephone company can make a lot of profits, I hope that they realise that the profit is made at the expense of poor customers who may not be aware about the charges.

i wish to share this experience, so that parents can tell their children to be careful about these charges.

I consider it a matter of fairness for the telephone company to alert the customer, if the bill exceeds a certain limit for each month. They should not take advantage of the ignorant customers.

Cancellation of Credit Card

I received a letter from my credit card company with the following announcement, effect from 1 May 2007:

* the late payment fee will be increased from $35 to $45
* the fee for each returned or failed GIRO arrrangement due to insufficient funds will be adjusted from $25 to $50.

I find these fees to be unconscionable. (I was not aware about the fees earlier). I called the credit card company to cancel my card. I also destroyed the card immediately.

The call center of this credit card company was most unfriendly to the customer. I have to hear a lot of irrelevant announcements, and to press many buttons before I could get through. This is another reason to cancel my credit card.

Agent plays a useful role

I use an agent actively to help me handle a transaction. The "agent" in this case, is:

* relationship manager assigned by the bank or my telco
* my stockbroker (remisier)

I have their personal contact number and e-mail address. I send my request to them by e-mail, SMS or a call. As they are familiar with the products and processes in their organisation, they can handle it easily for me.

The relationship manager earns a salary.

The stockbroker earns a modest rate of brokerage, maybe 0.15% of the value of the transaction. He earns a good income by having a high volume of business.

I hope, one day, that the insurance adviser can operate like a relationship manager or a stockbroker. They do not have to look for customers. The customers will contact them, if they need help.

The adviser can serve many customers, improve the productivity, and reduce the cost to the customer.

A better way to reward customers

I find the reward programs operated by many businesses, i.e. banks, telcos, to be wasteful:

* they cost a lot of money to operate
* is quite complicated
* incurs a lot of printing and mailing cost
* give little value to their customers

I prefer that these businesses reward their customers in a simpler way:

* accumulate the amount of credits
* give them a cash rebate, based on the credit, at the end of the year

I hope that they can reduce cost, and give better benefit to their customers.

Critical Illness Insurance

There is a news report that it may take several months for the insurance company to decide on a critical illness claim.

If you have to make a claim under different policies taken with several insurance companies, you have to complete a different claim form (with a medical report) for each company. They have not adopted a standard claim form.

Why is this the case?

For most of the 30 critical illnesses covered under the policy, it is quite difficult to define clearly the medical condition that is covered by the policy.

This uncertainly creates the following problems:

* delay in approving a claim
* dispute (if the claim is rejected)

This problem is made worse by the following:

* many people over-insure on the amount of critical illness cover
* the cost of this cover is much higher than life insurance
* insurance agents exaggerate the cost of treating these illness, and the frequency of these events
* the agents tend to over-sell on the amount of this cover (and enjoy a higher commission)
* the claim rate is not clear; so insurers charge a higher premium to cover the uncertainty

With this uncertainty and higher cost, it is not advisable for the policyholder to over-insure on critical illness. In my view, a cover of $50,000 or at most $100,000 is sufficient for most people. The remaining cover should be taken under a term insurance plan.

Wednesday, July 25, 2007

Keep your existing policy

Hi Mr Tan,

I'm 30 years old. I bought my ILP from X in 2002. I'm about to break even in approximately 6 months, if the investment portfolios perform as they are today.

The cost of this policy is very high, but I relized this fact too late. I'm thinking whether to stop this plan after I break even, and switch to a non-ILP life insurance instead. Could you give your opinion on this? Could you suggest other alternatives?


You have already incurred a heavy cost during the past five years. This cost has already been taken away from your policy. Going forward, the cost could be much lower.

I suggest that you talk to your insurance adviser and find out about the future cost. If it is quite small, it may be better for you to continue the existing policy.

Note: It is quite sad that the high charges have deprived you of the opportunity to earn a great return during the past five years. This kind of opportunity comes once in a decade!

For your future purchase, it is better to avoid any insurance policy that has a high cost during the initial years.

Limited premium policy

Many people like the concept of an insurance policy that provides cover for a lifetime, but require the premium to be paid for a limited period (say 20 years).

However, they find the premium to be quite high.

Here is an example of a 20 year limited payment policy that covers $100,000 for a lifetime. This policy earns bonus.

For a male aged 30, the annual premium is $2,948. The projected cash value at the end of 20 years (inclusive of bonus) is $82,510. The projected yield is 3.1%.

This is based on the current rate of bonus. If the bonus rate increases, the yield will be higher. If it reduces, the yield will be lower.

Most insurance companies offer a lower yield than the above example. Their limited payment policies is not attractive.

It is better for the policyholder to buy a term insurance and invest the difference in a low cost, well diversified equity fund. The yield should be much higher.

Energy saving bulb

I visited the Philips booth an an community event.

The booth had a demonstration of the energy saving bulb. It save on 80% of energy consumption. A 15 watt energy saving blub gives the same light as a 60 watt incandescant bulb.

An energy saving bulb cost about $7, as compared to 80 cents for an incandescent bulb. The higher cost can be recovered from the saving in electricity bill over 6 months of normal usage.

I was told that among the Asian countries, the highest sale of energy saving bulb was in Indonesia. Surprise!

The reason? Many Indonesia pays cash for their electricity. They feel the impact of the higher electricty bill, and opted for the energy saving bulb.

With the higher charges for electricity, it is worth while to see if it is wise to invest in energy saving bulbs. I have asked the Philips manager to send me the materials to verify the above statements.

Survey on Taxi Service

The Land Transport Authority is engaging a private consultant to carry out a survey of the standard of taxi service. This is a good move.

I suggest that the survey should also be extended to get the views of the taxi drivers.

I look forward to get the results of the survey. I hope that this will lead to new ideas on how to improve the taxi service, and to make life better for taxi drivers as well.

Work life balance

The civil service has appointed a senior officer in each ministry to be responsible for promoting work life balance. I welcome this move.

Many initiatives have been implemented in the work place in past years. They have achieved limited impact.

I like to suggest the following:

* allow employees to work on a part time basis, to be paid proportionately
* allow employees to work from home, based on the work that has been produced
* allow employees to work closer to their homes

These initiatives require the civil service to be more flexible in arranging their work, and be focused on the work done, rather than the time spent in the workplace.

Being a large organisation, the ministries have the opportunity to deploy their workforce in a more flexible manner. We require a change of mindset and willingness to be bold.

Tuesday, July 24, 2007

Limited payment plan

Mr Tan

Is there any need to buy a limited critical illness plan - which the premium is paid for 20 years only but protected for life.

The cost is quite high, as it includes guaranteed bonus. I am not able to buy a plan without the guaranteed bonus.

The agent told me to avoid buying i-term plan, as it does not have any return.

Please advise.


You should compare the following options:

1. critical illness plan to cover a lifetime, with premium payable for 20 years

2. 20 year term (including critical illness), invest the difference in a well diversified fund

You can read this FAQ.

At the end of 20 years, your accumulated savings (under option 2) should be more than sufficient to cover your financial needs (should you suffer a critical illness). You get a better return under this option, as the cost is low (compared to a limited payment plan).

You can talk to an insurance adviser or visit the business center.

Rider for Hospital Expenses

Mr Tan

I purchased a financial guardian plan, some 17 years ago. It includes a rider to cover the following:

* $65 a day for bed
* $1,200 to cover surgical
* $300 for other expenses
* $20,000 to cover total disability and a few critical illness

These covers extend up to 65 only.

What can I do with it now since it cannot meet present hospital expenses? Should I buy a enhanced Incomeshield and drop the current plan?


You should talk to an adviser or visit the business center of NTUC Income.

Your current rider provides cover up to age 65 only. It does not meet your needs beyond age 65. It is better for you to switch to a plan that offers lifetime coverage.

The premium rate for a rider is usually quite high. You may find it to be more affordable to buy a separate policy. But, as your are paying a level premium under the rider, it may be better for you to continue it (depending on the premium rate).

Monday, July 23, 2007

Quote of the Day

In April Dr. Lee Kum Tatt posted an article in his block on “How to be Creative”.

Someone took out a statement from this article and classified it “Quote of the Day”. The quote is "The greatness of a person can only emerge when he has shown his ability to create, passion to pursue, courage to commit and capability to achieve”.

He also made some comments. Here is Dr. Lee’s reply in his blog.

During the heydays of the dotcom, Li Ka Shing floated a company in Hong Kong called

I always wondered how he chose this name? My guess is that "Tom" is short for "Tomorrow".

I just searched this website. It is in Chinese, and is quite active. It appears to be a portal about China.

Poor return for 5 years

Dear Mr Tan,

Five years ago I placed $10,000 in the Fix-It Fund. On maturity, I received an interest of $433. I was disapointed.

To date this is the third investment made through a bank. This was the best returns so far. The other 2 funds performed much worse.


You received a return of 4.3% for 5 years on the Fix-It Fund. This is 0.8% per year.

If you have invested in secure government bonds for 5 years, you would have obtained about 15% for 5 years. The Fix-It Fund probably gave a poorer return, due to the high expenses (which are taken away from your return).

The other two funds performed worst, for the same reason.

Diversify your investments

Dear Mr Tan,

You have always advocated investing in a low cost widely diversified fund. My son and I have invested more than $X of our CPF funds in the Growth Fund and Balanced Fund managed by a local insurance company.

I favour this fund as it provides steady returns. Even if the market dips, I notice it bounces back again. I am of the opinion that it can safely let my money grow over the long term.

I wanted to invest another $X of my cash in these funds. My friend commented that with a new CEO, perhaps it is better to diversify and not "put all my eggs in one basket".

This falls in line with one of Dr Money's comments in his articles on the CPF website. What is your opinion?


It is a good idea to diversify your investment. Perhaps, you can spread your total investments into two or three financial institutions.

In my case, I have more than 50% of my investments with NTUC Income. I will try to diversify the invetments over the next few months.

If you wish to invest more of your savings in the stockmarket, take note that the stockmarket is now at a high level. I have decided to put my new savings in the money market and to wait for a better time to invest in the stockmarket.

Sunday, July 22, 2007

Advice on investing in CDO


Here's some advice from Guide to Investment Strategy (Peter Stanyer, The Economist, 2006) page 129-130.

Who should invest in CDOs?

No one needs to invest in CDOs, and no one should invest in any instrument unless they are sure that they, or a trusted adviser, understand and can monitor the risk and potential rewards involved. This means that they need to understand the complex issues involved in pricing CDOs and, in particular, different tranches of a CDO.

... Investors who have used CDO tranches as a means of getting around a prohibition on investing in sub-investment grade assets need to assess the likelihood of such a downgrade, and all investors need to be satisfied that these disappointment risks are sufficiently reflected in the investment return that the CDO tranche offers.

Message: Make sure you or your trusted adviser know the risk, the return, and if the complicated product is priced fairly.

Logic9 puzzles

Dear Mr Tan,

I like the Sudoku puzzles in your website. My children also enjoyed doing the puzzles with the flowers and animals.

However, I find that there are only a few puzzles at each level. Do you intend to add more puzzles?


There are already quite a number of variations, ie 5 puzzles X 6 levels X 4 sets of symbols. The total is 120 different variations.

I will consider your request. Meanwhile, you can try the 120 variations. Click here to access the puzzles or on the Logic9 at the right panel.

Diversify your investment

Dear Mr Tan

Recently I invested part of my CPF fund with AVIVA. It pays 3.5% interest.

I am now thinking of investing all of my CPF funds with it. Is it all right to invest my major savings with a single financial institution? Is there a guideline?


It is generally a good idea to diversify your investments. You should spread you investments, so that the chance of any one failure will not cause you any serious financial distress.

The chance of failure of a highly rated insurance company or bank is very small. It is still a good idea to spread your total savings in two or three of these institutions.

Dependent Protection Scheme

Dear Mr Tan

I am a single, middle age, and live with my parents. Our HDB flat is fully paid and belongs to my parents. I have no plan to buy a flat myself. Do I need to continue the DPS insurance? Is it relevant to me?


The cost of the Dependent Protection Scheme is quite low. It is a term insurance plan. It is useful to provide some cash to your parents, or as a fund for final expenses, in the event of premature death. It also pays on permanent disability. I suggest that you keep this insurance.

Cars under warranty

When you buy a new car, the distributor provides a 3-year warranty against manufacturing defects. To protect this warranty, you are required to have the car serviced and repaired at the distributor'z workshop.

The distributor charges a high price (compared to independent workshops) for work not covered by the warranty. You have to pay this price, in order to protect the warranty.

In several countries, this is considered to be unfair practice, and against free competition. Consumers are given a free choice of their workshops.

I hope that the consumers in Singapore will take a stand against this practice, which increases the cost of motoring.

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