Tan Kin Lian's Blog: Questions from a Young Person

Sunday, February 10, 2008

Questions from a Young Person

Hi Mr. Tan,

1) I joined the workforce recently. I plan to start saving $100 a month. Can you recommend any cash value insurance, unit trust or bonds?

Reply:
It is better to buy Term insurance and to invest your savings in a diversified, low cost fund. Read this FAQ: http://www.tankinlian.com/faq/savings.html
You should avoid a cash value policy, as the cost is high and takes away too much of your savings.

2) I currently hold two life term insurance policy, i.e. the Dependent Protection policy and a Term policy bought while under National Service. Can a person claim under two or more life term insurance if a mishap occurs?

Reply:
You can claim on all of your life insurance policies, including the two Term policy that you mentioned above. Life insurance is a valued policy and is not subject to the principle of indemnity (which applies to motor and medical insurance). The principle of indemnity limit your claims to the actual expenses that you have incurred.

3) Can a person invest in shares without a stock broker?

Reply:
You have to buy shares through a stockbroker. The commission is low, i.e. 0.3% only.

7 comments:

Anonymous said...: As far as possible, buy shares through low-cost online platforms like POEMS, DBS Vickers Online etc. Signing up and using these are simple. If you prefer to buy shares through a (human) stock broker, make sure he/she provides you value-added services; February 10, 2008 3:47 PM
Anonymous said...: You either invest in an RSP by banks or FA firms. If you are not familiar then visit the NTUC business centre and ask for the ID7 regular investing plan. You can invest as low as $100 monthly. Don't be talked into investing into their ID2 plan. Remember, if agents try to persuade you to invest in ID2 lodge a complaint for conflict of interest.ID2 pays a lot of commission whereas ID7 is zero. Another thing to remember is to shut your ears when they try to introduce you revosave, vivolife or any rip off plan. Focus, focus and don't stray from your goals.; February 11, 2008 12:02 AM
Anonymous said...: It is always good for the technologically savvy to invest on their own rather than through a stockbroker. There is an inherent conflict of interest between you and the stockbroker.

Another thing to note is that for online platforms, we are not just limited to the local stockbrokers. For example, there is this SaxoTrader platform from Saxo Bank where the commission rates are even lower than POEMS / Vickers Online.; February 11, 2008 12:42 PM
Anonymous said...: Any number to call for this Saxo trading platform? I am sick and tired of the POEMS platform as the data given by them are often inaccurate and the service is very poor. Even complaints to their hotline is often ignored and even the manager, a Mr. Moo, does not believe in giving a basic level of service. I guess they thought that there are no viable alternatives around so anymore information on these alternative platforms will be much appreciated.; February 11, 2008 10:29 PM
Anonymous said...: Hi 12.42pm,

How much cheaper pls? Seems like minimum fee for SGX stocks is SGD25
http://www.saxomarkets.com.sg/private/stocks/rates.aspx; February 12, 2008 8:58 PM
Anonymous said...: 12.42pm, just realised one needs SGD15K to open a private account
http://www.saxomarkets.com.sg/openaccount/default.aspx

I don't qualify then :-); February 12, 2008 9:08 PM
Anonymous said...: For SGX trades on POEMS, the commission is 0.28% or min S$25. For SGX trades on SAXO, the commision is 0.18% or min S$25.

In other words for a small contract size, there is no difference in the commission payable as the min comm of S$25 is applied. However, for investors who trade in larger contract sizes, the SAXO commission of 0.18% is unbeatable by any of the local stockbrokers.

The other thing to note is that SAXO requires 15000 SGD to open a SAXOtrader account and SGD3000 for the SAXOmini-trader account. Thus they probably do not provide contra facilities like the local stockbrokers do. But then again, contra trading is not a good thing.; February 15, 2008 12:23 AM