Saturday, October 27, 2007

Hassle in writing a cheque

I had a lot of trouble in writing a cheque payable to the share registrar. I had to issue 4 separate cheques and mail them to the registrar. They were caused by minor mistakes on my part, but the banking system and the share registrar refused to be flexible.

The mistakes were:

Cheque 1: I write 15 cents in the "words" section instead of 50 cents.
Cheque 2: I write Lim + Associates intead of Lim Associates
Cheque 3: I overwrite the month 09 over 07

The amount of the cheque was only $270.50.

For these minor mistakes, the front line staff refused to accept the cheque or to call me to correct the mistake over the telephone. They were very firm in rejecting the cheque and asked to send a new cheque to replace it.

Nowadays, people can transact millions of dollars by a telephone call. Yet, our archaic banking practices refused to accept a minor mistake of less than $1 on a cheque. They act inflexibly, and disregard the expense and trouble to their customer.

If I find a bank that is willing to be flexible, they can get my business.

Friday, October 26, 2007

Registering my share certificate

I hold 1,000 shares of a company and has been receiving dividends for more than 10 years. As I lost of certificate many years ago, the shares were not registerd in the Central Depository.

To transfer my shares to the Central Depository, the share registrar required me to:

1. Sign a statement before a commission of oath
2. Sign an indemnity
3. Get the indemnity counter signed by a bank or insurance company
4. Pay a fee of $270

I have to make several trips and spend a lot of expenses and fees.

The new certificate is issued by the share registrar after a few weeks.

I had to go to Singapore Exchange to register the shares. At the counter, the staff was told to go to another office in Bugis Junction to get a certain form, pay stamp duty and bring it back to Singapore Exchange.

I lost my temper. I asked to speak to the manager. He was not available.

Is there a better way? Of course! The share registrar could register my shares with the Central Depository after I have signed the declaration and paid the fees.

These two parties, namely the share registrar and the Singapore Exchange, made me spend so much unnecessary time and expenses over a simple matter. They do not seem to care about how much trouble they cause to me.

Protection under a ILP policy

Dear Mr Tan,

I bought ILP 1 year ago. I heard the charges will be getting higher as growing older. I plan to use it as a investment. When I get old, I will withdraw all the amount and left a minimum of 1k inside. I heard from my agent the protection will value will will be there if I don't draw out all the money. Any advice regarding this matters?


It depends on your ILP contract. You have to confirm this matter with the insurance company, in case the agent is mistaken (which I believe is the case). The insurance company is unlikely to leave this type of loophole for the benefit of the customer.

Unncessary trouble and expenses

I lost a share certificate 10 years ago. I was registered as the shareholder in the company's books. As I did not have the certificate, I could not transfer the share to the Central Depository of the Singapore Exchange.

Recently, I decided to apply for a new certificate to be issued, so that it can be tranferred to the Central Depository.

I faced a lot of trouble, time and expenses in handling this simple matter. It is so wasteful and quite uncecessary.

It is due to the inconsiderate procedures and requirements of the banks, share registrar and the Singapore Exchange. I shall describe my experience in more detail in later postings.

My experience shows the ugly side of Singapore behaviour. Many organisations are so keen to reduce their cost and make more profits, that they add a lot of trouble and expenses to the consumer. Nobody seems to care!

My first ride on LRT (Light Rail Transport)

I took my first ride on the LRT today. I took the MRT (NE line) to Sengkang Station and changed to the LRT. I took the East Loop and the West Loop.

It was a pleasant ride, and allowed me to view the entire Sengkang estate from an elevated level.

The LRT is a good system. I hope that it will be built in more towns in Singapore, including the old towns.

With a good public transport system, more people can do without a private car. This will reduce congestion on the roads and reduce the need for more car parks. It is a hassle to drive on congested roads and to find a parking space.

Question on Financial Advice from Indonesia

Dear Mr. Tan,

Since you have good knowledge about insurance and investment, especially mutual fund, i'd like to ask for you advise related to insurance and investment.

Let's say I have only a free Rp500,000 per month and I don't have any insurance nor investment. I want to buy an insurance to cover me from death, critical illness and accident. I also want to buy an investment. What would you say for my case?

I am a single male aged X working for a private company. I have parents already retired, and 3 brothers and sisters (1 working and 2 studying).


You can read this FAQ

I hope that it gives you guidance to make a decision.

Infinity Funds

Someone sent the following facts to me, about the there Infinity funds available from Fundsupermart.

I understand that these funds are managed by Vanguard and that charges are less than 0.3%. The local distributor add other charges that bring the expense ratio to about 1.1%.

In my view, an expense ratio of more than 1% is high for an indexed fund. I hope that the distributor can bring down the expense ratio.

Fundsupermart's Discounted Initial Sales Charge: 1.0 %
Annual Management Charge: 0.48 %
Annual Management Charge (Mother Fund): 0.29 %
Annual Expense Ratio * 1.17%

Fundsupermart's Discounted Initial Sales Charge: 1.0 %
Annual Management Charge: 0.48 %
Annual Management Charge (Mother Fund): 0.29 %
Transaction Fee: 0.2%
Annual Expense Ratio: 1.13%

Fundsupermart's Discounted Initial Sales Charge: 1.0 %
Annual Management Charge: 0.48 %
Annual Management Charge (Mother Fund): 0.23 %
Annual Expense Ratio: 1.09%

Negative return over 10 years?

Dear Mr Tan,

When you say long term, what is the time-frame? Is it possible, say after 10 years, the value drops below than the current value?


It is possible, but extremely unlikely.

If you look at any period of 10 years in the past, I do not think that you will this situation. Even if the unlikely event happens, you can wait for a few more years for the market to recover.

Remember, if the market continues to go down over 10 years, it will be spell disaster for the economic and financial system. In that case, other investments will perform poorly as well.


In Singapore, since 1980, there has never been a 10-year period when the stock market has realised negative returns.

Thursday, October 25, 2007

Avoid being judgemental

Many people have the habit of being judgemental. They like to declare another person's view to be right, wrong, good or bad.

I avoid being judgemental. I recognise that there are many views. Each view is suitable for its set of circumstances.

I can express my views, without having to pass judgement on other people's views. I state my views and explain my reasons. I leave it to other people to decide if they wish to accept or ignore my view.

I hope that more people can express their views without being judgemental or critical. They should avoid being engaged in personal attacks.

Shower system for a hotel room

I had stayed in many hotels around the world. Most of them have hot and cold water system in the bathroom that are not easy to use. They forget that the hotel guests are usually visiting their hotel for the first time.

One frequent problem is that, if you have just used the soap, you are not able to turn the knob of the taps.

Recently, I visited the Conrad Hotel in Brussels. It has a user-friendly system for hot and cold water. You use one control to decide on the temperature of the water and a separate control for the volume of the water, i.e. to turn on and off.

Photos of Huangshan, China

Earlier this year, I visited Huangshan in China. I took some photos. They were lying in my digital camera, as I did not have the software to transfer them into my computer.

I learned later, that I could remove the SD card (which contains the photos) and copy them into my notebook computer (which has a SD card reader). It is as easy as using a thumb drive.

What makes a great school?

Read Dr Lee Kum Tatt's views in his blog.

Wednesday, October 24, 2007

Balance flexibility and security

In a TV interview, an elderly person said that a life annuity locks up his money. He prefers to keep the money in an account, so that he has the flexibility to use it to meet special needs.

Here are my views.

1. You can aim for flexibility, if you have more than adequate funds to last beyond your lifetime.

2. If you have limited savings, it is important that your limited funds be spread throughout your lifetime. This can be done through a life annuity.

3. If you spend your lifetime savings too quickly or make some bad investments, you may deplete your savings and have nothing left to live on.

4. With limited savings, you should use 80% to buy a life annuity and keep the remaining 20% as a flexible source of money to drawn down for your special needs.

Low Cost Funds

Dear Mr Tan

What low cost funds do you recommend? How do I invest in them?


I suggest the following:

1. STI Exchange Traded Fund - through the Singapore Exchange
2. Combined Fund from NTUC Income - through an adviser or the business center
3. Money market fund from NTUC Income - through an adviser or the business center
4. BIGe from Aviva

NTUC Income Business Center ... see Link 9 on the right


If I know of other low cost funds, I shall put them in this blog. So far, the choice is rather limited.

Tuesday, October 23, 2007

Life annuity or money market fund?

Hi Mr Tan,

Currently, which offer better investment yield ? Money market fund or annuity (lifetime with
immediate drawdown and no refund). Please give the name of the fund or annuity.


The life annuity provides a higher return as it is invested in long term investments, which give a higher return than short term investments innvested by the money market fund.

You can read this FAQ

I suggest that you talk to an insurance adviser (call an adviser listed in my blog) or talk to a salaried consultant at the NTUC Income Business Center.

Prompt and fair settlement of claims

Hi Mr Tan

I have some question need to ask u regarding making a claim at NTUC insurance. I have heard my friend said NTUC income making a claim is quite troublesome and have a lot of procedue taking sometimes. I mean those policy which family member is dead. Isit true?


This statement is not true. The insurance agents from other companies spread these lies, so that the customers will pay a higher premium to buy the insurance policy from their company. This has been happening for 30 years.

NTUC Income has a policy on prompt and fair settlement of claims. There were many claims that were paid without hassle by NTUC Income. Similar claims from other companies took much longer to settle.

When should I sell?

Dear Mr Tan

I had bought a Greatlink Growth Plan using my S10K cpf money in 2000. Today, it is valued at 26k. Now, the question is when should I sell it?


If you are investing for the long term, you can keep the investment. If you are investing for the short time, now is a good time to sell.

Excessive charge by bank on credit card


The bank did the right thing by informing customers early and proper disclosures.

Consumers also have their own responsibility in managing their own cash flow. What the banks did was to create convenience for consumers so that they do not have to carry large amounts of cash and at some places, enjoy discounts and rebates.

If they did not set up the framework, consumers would still be carrying large bundles of cash with them all the time.

If you are expecting everything to come without cost, then you have to carry your own bank with you all the time.

Banks do not owe consumers a living. If consumers make use of their services, please expect to pay.

I have never been late in my credit card payment - even with banks where I do not have a GIRO arrangement. Why? It is simple - I make sure honour the rules, and am not tardy nor procrastinate my payment.

Perhaps consumers can consider practicing not delaying payment and avoid unnecessary penalties.


It is all right for the bank to incur a charge to cover its actual cost of handling the late payment. I believe that the cost should be less than $5. It is not correct for the bank to levy an excessive charge (just like imposing a fine) and make a profit on it.

Already, the bank is making a profit on the following:

1. Charge paid by the merchant
2. Annual fee for the credit card (although it is usually waived)
3. Interet on late payment.

I am worried that many businesses are aiming to increase their profit all the time, and they adopt are willing to business practices that are unfair to consumers. I urge consumers to reject these types of business practices.

Guarantee of 4% per annum?

Dear Mr Tan,

Does the insurance company guarantee at least 4% long term? It may not be realised even after waiting for the long term, right? Or do you based the 4% on past performance and think future will be the same?


The fund or insurance company does not provide this guarantee of 4% return.

If you are investing over a period of 10 years or longer in equities, you are likely to get an average of more than 4% per year, based on past records.

For some periods, the average return can be higher, e.g. close to 8% per year. For other periods, it may be lower, i.e. closer to 4% per year.

Take the investment risk and get a better return. Invest for 10 years or more, so that you can average out the good and bad years.

Invest in a large, well diversified, low cost fund, so that most of the return are given to you (and not taken away as expenses and charges).

I am quite confident that the return in the future will be higher than other types of investments. I am making most of my personal investment in this type of fund.

Monday, October 22, 2007

How to avoid over-insurance

Mr Tan,

Can you give some tips on how to avoid over-insurance? How much is adequate? How much is excessive?


You have to distinguish between the following:

* insurance - to protect against loss of earnings or to pay for expenses
* investment - to get an attractive return on your savings

If it is for insurance only, you should spend not more than 2% of your income. If you annual income is $40,000, you should spend not more than $800 to cover for the insurance of your life, medical expenses and your home and for your family members. (You may have to pay more, if you wish to insure your car).

If you buy insurance as a form of investment, you must look at the return. For long term investment, you must aim for a return of at least 4%.

If you are paying 10% of your earnings as insurance premium (and many people are), and you get a return of les than 2% per annum on your insurance policy, then you are getting a poor deal.

This is why I advise to buy term and invest the difference. Read this FAQ:

Letter from Lawyer Claiming for the Other Party

Dear Mr Tan,

I receive a threatening letter from a lawyer acting for the other driver involved in an accident a few months ago. I have reported the accident to my insurance company. It is a minor accident.

Why did the insurance company fail to settle this claim with the other party? What should I do?


You can give a reply to the lawyer to tell them to make their claim directly against your insurance company. At the same time, you can pass the lawyer's letter to your insurance company to handle.

It is wrong for the lawyer to sent the letter to you, especially as they can lodge it with your insurance company. Some lawyers, acting on a third party claim, use this approach to intimidate the public.

Perhaps you should make a complaint to the Law Society against this type of behaviour.

Learning Powerpoint

In the past, I send the key points of my paper to a colleague to create a powerpoint.

Recently, I had to create some powerpoint myself, as my former colleague was not available. I had to learn how to use Powerpoint.

I asked an expert to show me how to create my powerpoint slides. It was quite easy to use. After a few minutes, I am able to create the slides. But they are just basic slides with words (in different sizes, fonts and colours).

I will still use an artist to do the touch-ups, add the effects and nice pictures.

Lesson: There are still many interesting things to learn, even for someone of my age.

Search for information from the internet

I use the Google search to access information through the internet. It is easy to use and works extremely well.

Here are some examples of my search:

* CPF Minimum Sum
* La Vie En Rose (title of a song)
* O Sole Mio (title of a song)
* Euthanasia
* CPF contribution
* Transit Link (name of company)

The Google search return a list of title that matches the search. If all the words match, the item appears at the time. If some words match, it appear lower down.

I use this to search for information that is needed to research for my articles in my blog or to send to newspapers.

High cost of borrowing

Here are some tips, which I hope will be helpful to the young people.

Many people are not aware about the high cost of borrowing. They may not be aware that they are borrowing at all.

Buying a product on 12 or 24 months of "interest free" installments is actually borrowing. If you pay cash, you can easily a 5% or 10% discount on the price.

What is the borrowing cost, over a 24 month period?

If you pay interest at 1% per month, the total payment over 24 months is an additional 12%. If you pay interest at 2% per month (i.e. the rate the credit cards normally charged on rolled over balances), you will pay an additional 27%.

If the merchant that gives you "interest free installment" incurs an interest cost of 1% per month (i.e. the cost of funds provided by the financing company), this merchant will give you a cash discount of up to 12% on the product.

You can negotiate for this cash discount. The merchant has probably added this financing cost to the cost of the product.

Suppose you like something now, and does not have the cash to pay for it?

My advice. Start to save now for the things that you may need in the future. By paying cash, you can save up to 12% to 24% on the financing cost of the product. It is a lot of money to save.

Here is another option. Ask yourself? Do you really need to buy that product now? Can you save first and buy it 2 years later?

By that time, the product will come down in price and you save on the financing cost as well. You will get double benefit! You may also get a better product, as products are being improved all the time.

Sunday, October 21, 2007

Tips on how to play Sudoku (Logic9)

90% of people in Singapore are still not familiar with Sudoku, although it has appeared in the newspapers for two years.

Those who are familiar with this puzzle work on it every day. It keeps the mind alert.

I have four tips to help you solve Sudoku puzzles at all levels, including the difficult (four star) puzzles.

It can be found in this webpage:

It takes only TEN minutes to learn the four tips. You can practice on the puzzles. You will be an expert within 2 weeks.

Try it.

Individual Home Delivery

The retail cooperatives in Japan has successfully operated a system of individual home delivery of groceries for more than 20 years.

It operates as follows:

* the customer places an order
* the groceries are delivered to their homes at specified times

It works well for the following:

* special products (e.g. organic) not available from the supermarkets
* heavy items
* for busy customers

Several businesses have tried to provide this service in Singapore. It does not seem to work well. What are the reasons?

Monthly withdrawals from Growth Combined Fund

A policyholder had about 47,500 units units of the Growth Combined Fund with a value of $87,700.

She wished to make monthly withdrawal of $400 opr $500 from this fund. Assuming that the investment grows at 5% per annum, the money will last as follows

monthly withdrawal $400 - total of 45.7 years
monthly withdrawal $500 - total of 25.6 years

By increasing the payount by 25% (from $400 to $500), the payout period is reduced by 44%. It could be due to the effect of a shorter period of compounding.

The policyholder was happy with the return on the Growth Combined Fund, and the long period for which the payout is projected to be available. She thinks that this scheme is suitable for retirees.

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