Saturday, April 05, 2008

Mobile phone and car model

Which popular mobilephone is the opposite of a car model?

Dollar Averaging

Hi Mr Tan,
I have an investment link policy. My advisor has advised me to invest on a yearly basis to enjoy better allocation rates (i.e. at the moment, I am doing regularly investment on a yearly basis).
My question is for dollar cost averaging to work best (i.e. for long term investment), it is advisable to invest on yearly or monthly basis? You advice is appreciated.


Both methods should produce neutral results. The effect of dollar averaging depends on the level of the market at the time of each investment

It is more important for you to buy an ILP that invest 100% of your annual or monthly premium. Do not buy an ILP that takes away two years of your savings.

Read this FAQ:

I have posted two cases in my blog of policyholders who were shocked to discover that after investing over $2000 for 2 years, they cash value is less than $400 today. You should not fall into the same trap.

ILP policy takes away most of the premiums

Dear Mr. Tan,

I've bought an ILP policy. My premiums are $1200 per year and have paid it for two years. I has cash value of about $310 now. The sum insured is 100k. It is a yearly premium and the third one is going to be due soon.

After reading about the charges and feasibility of ILPs, I'm sceptical that I should keep this policy. Would you advise me to give it up or continue with it?


I suggest that you ask the insurance company about the charges for the next three years, i.e. what percentage of your premium will be invested. If the charges are small, it is probably better for you to continue the policy, as you have already incurred most of the front end charges.

It is quite sad that an insurance company can take away so much of a person's savings. You should tell your family and friends to avoid this type of policy in the future.

I intend to get a new life insurance company to introduce an ILP that has no front end charge. 100% of the premium will be invested. Tentativelyly, this is called the Wealth Accumulator.

Read this FAQ:

Makeover of Orchard Road

I read about the $40 million makeover of Orchard Road.

Here are my wishes for this project:
a) Have a second level covered walkway to allow people to connect the whole stretch of Orchard Road. This can be linked to all the buildings.
b) Build a light monorail to run down Orchard Road connected to the walkway.
c) Have large multi-storey carparks on the fringe of Orchard Roads, connected to the monorail.

This will reduce the traffic congestion on Orchard Road. It will make shopping in Orchard Road more pleasant.

Change of address

The authority now requires a resident to provide documentary proof for a change of address in the NRIC records. The documents could be a bill sent to the resident in the new address. This can caused timing problem.

I wish to suggest a practical solution. The new resident can ask two neighbours to be witnesses to the residency. The neighbours particulars can be provided for the authority to make the verification.

This is simple and effective. It also encourges the new resident to knock on the doors of the neighbours.

Local Bus Services

I wish to introduce the concept of local bus services. I propose that it operates as follows:

a) Use light buses
b) Runs a specific route in a town
c) Uses the existing bus stops
d) Actively publicised through maps at bus stops
e) Operated by small operators
f) Licences to be given based on service level and commuter demand
g) Can be exempted from road tax and ERP, so as to bring down the cost for commuter
h) Fares to be controlled

Some taxi drivers may be interested to be operators of these light buses. This will reduce cost and create a more efficient public transport system.

Premium Bus Services

Is there a website that shows all the premium bus services that are available in Singapore?

It should show the pickup areas, drop off points, and the fares. Commuters can have an easy acces to the information instead of searching the many websites of the operators.

I hope that Land Transport Authority can be the central source of this information.

Friday, April 04, 2008

Loading for term insurance

If you are a smoker, or have an adverse family history of cancer or heart disease, you may have to pay a loading of up to 100% on the standard premium for term insurance. As the premium rate is quite low, this loading may be still quite affordable.

Read this article:

High unemployment among youths in S Korea

My friend in South Korea told me that there is a high rate of unemployment of youths. Employers are reluctant to increase employment as it is costly to downsize the workforce during economic slowdown. The trade unions are strong and impose high cost for termination of workers.

Some employers will recruit young workers as temporary employees and pay wages that are half the rate of permanent workers.

Lesson: If trade unions are too strong, employers are afraid to recruit more people. If trade unions are too weak, employers pay low wages. The soceity has to find the correct balance between what is good for business and fair wages for workers.


Leverage is the amount of loans compared to equity. If the leverage is 1 time, the amount of loan is the same as the amount of equity.

Some hedge funds are leveraged by 10 times. The borrowing is 10 times of the equity of the investors. This is risky.

I recalled that at the time of its collapse, Bear Stearns was leveraged 30 times. This is far, too high. To make matters worse, the borrowings are short term and their investments are long term. When the lenders refused to refinance the borrowings, Bear Stearns become insolvent. If they had to sell their investments, the markets would collapse. Bear Strearns had to be rescued by J P Morgan.

Lesson: It is very bad for hedge funds and investment banks to be highly leveraged. Leverage of 10 times is too high. Leverage of 30 times is madness.

Personal savings for retirement

Hi Mr. Tan Kin Lian
I enjoyed your blog. My friend told me that the savings in CPF is not sufficient for retirement needs. I have to supplement it with personal savings to be invested for my retirement. What is the amount that I should save? How is this computed?

I usually advice people to save 10% to 15% of their regular earnings for the future. This should be invested in a low cost fund, preferably an equity fund to obtain the best return.

This is explained in this FAQ:

Low cost funds

Dear Mr. Tan,
You referred to a low cost fund. What is the expense ratio that can be considered "low cost"? How do you find the expense ratio for a life insurance policy?

If you are investing for the future, you should look for a fund that have an expense ratio of less than 1%. If you earn 6% and deduct an expense ratio of 1%, you get a net yield of 5%.

For a life insurance policy, the front end and other charges will reduce your yield by about 2.5%. It is quite high.

Read this FAQ:

Difficult to find parking space

I visited a friend at his office in Bukit Merah. There is no parking space in his building or in the large building next to it. I had to park at a multi-story car park a few blocks away.

I concluded that it would have been more convenient to use public transport or to travel by taxi (in spite of the high fare). It is becoming quite inconvenient (and expensive) to use a private car.

Singapore and Global Equities

Hi Mr. Tan,
You advised many people to invest in the STI ETF. This is invested only in Singapore. Should they be more diversified and invest in global equities? What are your views?

It is all right for a Singapore resident to invest in Singapore equities. If you invest in the STI ETF, you are quite well diversified.

If you wish to take a global perspective, or you wish to reside abroad, it is all right to be invested in global equities.

This FAQ shows the past yields of the various asset classes, including Singapore and global equities:

Professionally managed funds

Dear Mr. Tan,
Is it better to buy a long term investment portfolio offered by banks or to buy company shares directly from a broker? What's your advise?

It is better to invest in a professionally managed fund, provided that the expense ratio is kept below 1%.

The advantages are:
a) Diversification. You are invested in a large number of shares, and not in a few shares
b) Stock picking. You do not have to worry about stock picking. It is done by the fund manager
c) Transaction. You do not have to take care of collecting dividends, subscribing to rights issues, paying for share purchases and other tedious tasks. They are done by the fund.

Let the professionals take care of the investments (if the fees are modest).

However, if you have a large sum to invest (say, more than $1 million) and you can afford to spend the time to take care of the investments, you can buy the shares through a stockbroker. You will save the fees charged by the fund, but you have to do the work on your own.

Hedge Funds

Someone asked me to explain a hedge fund. Here is an explanation from Wikipedia, accessed through Google.

A hedge fund is a private investment fund that charges a performance fee and is typically open to only a limited range of qualified investors.

Hedge fund activity in the public securities markets has grown substantially as it constitutes approximately 30% of all U.S. fixed-income security transactions, 55% of U.S. activity in derivatives with investment-grade ratings, 55% of the trading volume for emerging-market bonds, as well as 30% of equity trades.

Hedge Funds dominate certain specialty markets such as trading in derivatives with high-yield ratings, and distressed debt.

Alfred Winslow Jones is credited with inventing hedge funds in 1949.

In the United States, in order for an investment fund to be exempt from direct regulation, it must be open to accredited investors only and only a limited number of investors can belong to it.

While there is no legal definition of "hedge fund" under U.S. securities laws and regulations, typically they include any investment fund that, because of an exemption from the types of regulation that otherwise apply to mutual funds, brokerage firms or investment advisors, can invest in more complex and riskier investments than a public fund might.

Hedge funds managed from other countries have similar relationships with their national regulators. As a hedge fund's investment activities are therefore limited only by the contracts governing the particular fund, it can make greater use of complex investment strategies such as short selling, entering into futures, swaps and other derivative contracts and leverage.

As their name implies, hedge funds often seek to offset potential losses in the principal markets they invest in by hedging their investments using a variety of methods, most notably short selling.

However, the term "hedge fund" has come in modern parlance to be applied to many funds that do not actually hedge their investments, and in particular to funds using short selling and other "hedging" methods to increase risk, and therefore return, rather than reduce it.

Hedge funds have acquired a reputation for secrecy. Being outside the regulatory regime that applies to retail funds greatly reduces the information a hedge fund is legally required to make public. Additionally, divulging trading methods and positions would compromise the business interests of many types of hedge fund, tending to limit the information they want to release.

The assets under management of a hedge fund can run into many billions of dollars, and this will usually be multiplied by leverage. Their sway over markets, whether they succeed or fail, is therefore potentially substantial and there is a continuing debate over whether they should be more thoroughly regulated.

A big risk in hedge fund is that its investment is "multipled by leverage". They borrowed additional funds at the market rate of interest to increase their investments. During the market downturn, the borrowers refused to refinance the short term loans. This caused the liquidity crisis.

Delay in issuing a policy

Hi Mr. Tan,

Could I seek your advise on this issue. My husband and I went down to one of the Business Centre in NTUC and sign off and make premium payment for Living Benefit policy under the Family Policy.

Yesterday, we received a letter to ask us to go for routine checkup and that NTUC will decide if they will take on the policy with us. Is it right for the insurance company to receive premium payment and then 3 weeks later sent us a letter of such?

What if something happens during this period? After making the premium payment, I thought I am covered under the policy and was shocked when I received the letter yesterday..

The coverage will commence on the commencement date shown in the policy. This will be after the acceptance of your application, including medical checkup. In the meantime, the premium is received as an "advance premium" and is refunded in full if the application is rejected.

During my time, NTUC Income offered coverage against accident from the time of payment of the premium until acceptance of the application. I am not sure if this practice is still being continued. You can ask the business center about it.

Normally, there should not be a delay of 3 weeks. It should have been processed much earlier. It must have been an oversight.

What you may lose is the interest on the premium paid for a few days or weeks. As the interest rate is quite low, the lost interest is not significant. If you get accident coverage, it should make up for this lost interest.

6 digit postal code

The 6 digit postal code used in Singapore is organised as follows:

a) A specific code is given to each building or residential block, e.g. 560207 is block 207 in Ang Mo Kio. The individual units are identified by the unit number, e.g. #12-456 for level 12, house 456.

b) Each landed property has a separate 6 digit number, e.g. 8098xx is for xx Begonia Drive.

In my view, it is inefficient to allot a 6 digit number for each house. It is better to allocate a 6 digit code for each street, e.g. Cactus Crescent and to identify each house by the house number. All the houses in the street share the same 6 digit code.

This new method has the following advantages:

a) Reduce the size of the postal code directory by as much as 90% (my estimate)
b) Allows the use of 6 digit postal code and house number for mailing.

A letter can be sent to

Lee Kim Teck
Singapore 809001

809001 could be the name of a street, say Begonia Drive.

Letter with postal code only

I send a letter addressed to the following:

Tan Kin Lian
Singapore 809744

The letter finally arrived after 20 days. The post office searched for my house address and street address, using my postal code, and wrote it on the envelope. This is necessary for the postman to deliver the letter to my house (i.e. the "last mile").

Congratulations to Singapore Post. They did take the trouble!

Thursday, April 03, 2008

Investing in resource and commodity

Hi Mr. Tan,
What is your view about investing in resource and commodity sector? I understand that this sector has appreciated fast during turmoil in the financial market, caused by high price of oil, gold, and other commodities. However, there's also a recent correction, which might give a better opportunity to enter.

What is your view of this sector fund? Currently I am looking at First State Global Resource, which has 1.5% annual management charge, and 1.74% expense ratio. The United Global Resource Fund has 8.63% expense ratio (which I think it's too high).

I am not familiar with investing in the resource and commodity sector. I heard the comment of an analyst on CNBC. He said that commodities are bullish now, but investors should be ready to sell at short notice. He reminded investors about what happened on the bursting of the dotcom bubble.

I prefer to invest in a well diversified equity fund.

Investing in hedge funds

Hi Mr Tan,

Hope to seek your advice on my queries:
1) What is a hedge fund?
2) There are many investment portfolios offered by banks, are any of these considered as hedge fund?
3) Can you give an example of a hedge fund?
4) Is it safe to buy investment portfolios offered by banks such as UOB, OCBC?
5) Is it better off buying a long term investment portfolio offered by banks or is it better off buying company's shares directly from a broker? What's your advise? Note that I'm not one person who market watch.

I suggest that you search for "Hedge Funds" in Google. You will come across several references in the internet. You can read the articles on hedge funds there.

If you are picking a unit trust offered by a bank, you should look at the initial spread, the annual expense ratio and other factors. Most of these funds have high charges that reduce the return on your investments.

You should avoid investing in an investment that you are not familiar, such as a hedge fund. There are many types of hedge funds. They take money from the investors and borrow additional money (i.e. leveraged) to make risky investments. Many hedge funds performed badly during the past year, as their investments lost money.

I usually advice people to buy a low cost diversified fund, such as the STI ETF, as a long term investment. Read this FAQ:

Invest in a life annuity

Dear Mr. Tan,

I am 61 year old. I have around $100,000 to invest. I need your advise on a better investment compared to the low interest rate for fixed deposit.

I am thinking of putting the sum to a deferred anunity with NTUC Income. Am I able to withdraw the full amount from NTUC when I reach 65 years old. What are the likely return I will be getting in 4 year time?

I suggest that you call the business center of NTUC Income and ask them about the return on the deferred annuity.

Please read this FAQ

Poor return on ILP policy

Hi Mr. Tan,
Great to chance upon your website!

I have an issue with my ILP investment. My annual premium is $1200, and I have been paying it for 2 years and eight months, current cash value at only $600.

I'm aware it's too late to cancel the account. Even though my monthly premium is not high, I still don't like the idea of paying for mortality charges.

Do you think it's more worthwhile to cancel now, suffer some loss and start investing in better products for a longer term gain? Does this make sense?

As you have paid two years of premium, most of the upfront charges have already been incurred. I suggest that you keep the current investment account.

You can ask the insurance company for the mortality charges for the next five years and compare them with the benchmark rates shown on the attached.

If the mortality charges are too high, you can cancel the life insurance cover and buy a term insurance policy. You can still keep the investments.

If the mortality charges are reasonable, you can continue the policy for the next 5 to 10 years. You can cancel it when you reach age 60 or 65.

Public Tender

Singapore is used to the public tender system. The business is awarded to the tenderer who submitted the most competitive (lowest) bid. In some cases, the tenderer have to bid below cost, to win the tender. They find ways to cut corners to meet the low budget, leading to a poor quality of work.

Someone observed that the public tender system favours the large companies. They have the financial resources to spend money to submit the bid. The smaller companies are not able to compete.

I hope that there is another way for the principal to offer a reasonable price, and select the contractor based on their ability to deliver a better quality of work.

Walkways in Hong Kong

My friend worked in Hong Kong a few years back. When he arrived in Hong Kong, he was provided with a car. After two months, he sold off the car. He preferred to use the Hong Kong MTR (Mass Transit Railway).

It was possible to walk to a nearby MTR station from most parts of Hong Kong. He could walk through the underground or overhead walkways. It was quite comfortable during most months of the year, due to the congenial weather.

He observed that many people in Hong Kong and Japan were quite slim. The walking is good for their health and keep them fit.

I hope that all MRT stations in Singapore have underground or overlink walkways. If commuters can walk in these sheltered walkway at a different level from the road traffic, more people will be willing to take the train. This has been proven by the Hong Kong experience.

Wednesday, April 02, 2008

Interest rate on CPF savings

Mr. Tan,
From 1 January this year, interest rate for savings in the Special, Medisave and Retirement Accounts (SMRA) is pegged to the 12-month average yield of the 10-year Singapore Government Security (10YSGS) plus 1%. The average yield of the 10YSGS over one year, from 1 March 2007 to 29 February 2008, plus 1% works out to be 3.75%.

According to the news, CPF Board will only provide a floor of 4% for the Special, Medisave and Retirement Accounts rate for 2008 & 2009 only. The 4% will be lifted after 2 years, and the 2.5% floor rate will apply for all CPF accounts thereafter.

In view that the average yield of 10YSGS from Mar 07 to Feb 08 is only 2.75%, I'm kinda worry about this lower rate.

Furthermore, remember that last year, CPF Board encourage members to transfer their OA to SA and earn a 4% steady yearly compound interest seems to be no longer valid after 2010.

Care to share you comments?

I recommend the following:
1. Transfer your OA to SA to earn a higher rate of interest
2. Do not worry that the interest rate will drop below 4% as you still getting 1% higher than the market rate for govt bonds
3. I expect the interest rate to increase, due to higher inflation.
4. If you wish to earn a higher return on your OA, I suggest a low cost diversified fund.

See this FAQ:

CPF Life Annuity

Hello Mr. Tan
I am 59 years of age and am interested in participating in the CPF annuity scheme. As I have full faith in our government and when given the choice, I will always opt for a government managed program than a private company's.

However, I have been told by a CPF counter staff that the details are still being finalised and that this program will only start in 2013. I am not sure if the staff has given me the right information - why would the government take such a long time to start this program? I wouldn't know if 2013 will be too late for me.

The CPF Lfe Annuity scheme is intended for people who reach age 50 in a few years time. You exceed this age. So, it is not intended for you.

You can leave your money in the CPF retirement fund to be drawn down in installments. It will earn an attractive rate of interest, currently at 4% plus 1% bonus on $40,000.

You can buy a life annuity from a private insurance company with your personal savings.

Two layer upfront charge

If you invest in a regular premium investment linked product (which is commonly sold in the market), you are hit with a two layer upfront charge, namely:

a) Distribution charge
b) Spread

The distribution charge is the proportion of the premium that is taken away from your savings during the first few years. Typically, this proportion is about 80% during the first year, 50% in the second year and 25% in the third and fourth years. The total taken away is 180% of the annual premium.

If you invest $500 a month, the amount taken away during the first 4 years is 180% of $500 X 12 or more than $10,000. This is the money that is taken away from your savings to pay commisison to the agent and other marketing expenses.

The net amount that is invested is subject to another upfront charge, called the spread. This could be as high as 5% of the invested amount.

For example, if you invest $500 a month during the first year, only 20% or $100 is invested each month. This invested sum has to buy the units at a spread of 5%. This is another upfront charge. After taking away this charge, the actual amount that is invested is only $95. You pay $500 and only get units worth $95.

If you are buying a regular premium ILP, you should ask about these two layer upfront charge. It is too costly. I advise you to avoid this type of investment.

Low cost products

What are the low cost products?

They are:

a) Low cost insurance, i.e. term insurance
b) Low cost, diversified fund

Find out more from this FAQ:

Financial planning for the young

I recommends that a young person should save 15% of the earnings. This FAQ shows how this saving rate can contribute towards an income after retirement at age 65:

Tuesday, April 01, 2008

Alternative Investments

Alternative investments are hedge funds, managed futures and managed currency funds. The proponent of this asset class argues that it is not correlated to the traditional asset classes, for example, they can move in the opposite direction to equities.

This is suitable for short term investors, including professional fund managers, who are required to avoid showing a portfolio loss during a year.

For a long term investor, it is better to take the volatility and benefit from the average higher return over the long term. There is no point in investing in equities and than offsetting them by alternative investments. This strategy incurs high costs and reduces the return to the long term investor. It gives good fees to the professionals (i.e. fund managers).

If the investor wish to avoid volatility, it is better to invest in fixed income bonds, and accept a lower long term return. Do not invest in complicated structured products (including alternative investments) that gives you an even lower return.

Ku Li

Who is Ku Li?
Clue: He is a Malaysian politician, and not Chinese.

Monday, March 31, 2008

Benefit, insight, honesty

Dear Mr Tan,
I have been reading the articles on your site and found them to be of great benefit, insight and honesty. I wish to commend you on your efforts which many of us could certainly benefit from.

Amazing Numbers

Try this puzzle:

Do you want to know the secret behind the Amazing Numbers? Send an e-mail to me. If you know the secret, you can make the cards (using the numbers from my website) and amaze your friends!

Walk half of the distance

You are in a large hall. There is a pretty girl at the other end of the hall. You are old that it takes 10 seconds to walk half of the distance to the girl, another 10 seconds to walk half of the remaining distance, another 10 seconds to walk half of the remaining distance, and so on. How long will it take you to reach the girl?

Most people will say that you will never reach the girl. No matter where you are, it will take 10 seconds to walk half of the remaining distance.

What is the practical answer?

Asset Allocation

Dear Mr. Tan,
I read a comment in the blog from someone who said that a long term investor should look at asset allocation, which accounts for most of the yield. Can you explain this concept?

Asset allocation means choosing the class of assets to invest in. The main classes are:
a) Equity
b) Bonds
c) Property
d) Cash

Within each class, there are sub-classes to choose from, e.g. different markets or sectors.

If you are focusing on asset allocation, you are giving less emphasis on stock selection, i.e. choosing the specific shares or bonds within the sub-class. You can invest in a fund that is invested in many shares or bonds within the sub-class. This is called diversification.

For a long term investor, the yield on equity is higher than bonds. I advice long term investors to invest in equities and ride out the volatility, i.e. average out the good and bad years.

Read this FAQ to get some information about the long term yield on various asset classes:

For my long term investments, I prefer to invest in Singapore equities, e.g STI ETF or in global equities, e.g. S&P 500. The S&P 500 are the largest US companies, which have global operations. I prefer indexed funds, as they have low charges.

Sunday, March 30, 2008

Investing at a low level

Hi Mr. Tan,
I read your comment about two weeks ago, when someone asked you if it is all safe to invest in the stockmarket. You said that for a long term investor, the market represents good value as it is 30% below its recent peak.

I decided to take the plunge and invest my cash at that level over a few days. My investments have shown an appreciation of over 5%. Thank you for your good advice.

Congratulations on making a good investment decision. The market is still quite uncertain and volatile, so you should be prepared in case there are some negative surprises over the next few weeks.

Do not be worried about the volatility, provided that you are well diversified. I hope that you have invested in a low cost, diversified fund, such as the STI ETF. If you are investing for the long term, you will ride over the current downturn.

Intramuros, Manila

Intramuros means "inside the wall". It is the old walled city of Manila. The buildings are old, in Spanish style. I find them to be quite enchanting. Here are some pictures.

Invest in a diversified fund for the long term

Dear Mr. Tan,
I have just opened an investment account with fund supermart. I wish to begin my first investment in unit trust. I am an moderate aggressive player and high returns are important to me. I am willing to take higher risks for significantly higher returns over time (above 10% p.a.). I am willing to take the risk of downside around 20% in 1 year. Can you please provide me with some suggestion on what fund to invest in the year 2008?

My advise is to invest in low cost, diversified funds. You can aim for a more modest target of 6% to 8% p.a. for the long term. You have to deduct about 1% to cover the expenses.

Read this FAQ:

Diplomat and the lady

This story is told by a diplomat.

If you ask a favour from a diplomat and he says "yes", he means "maybe". If he says "maybe", he means "no". If he says "no", he is not a diplomat.

If you ask a favour from a lady and she says "no", she means "maybe". If she says "maybe", she means "yes". If she says "yes", she is not a lady.

Quotes on History

George Bernard Shaw:
We learn from history that we learn nothing from history.

George Bernard Shaw:
We are made wise not by the recollection of our past, but by the responsibility for our future.

George Santayana:
Those who cannot learn from history are doomed to repeat it.

George Wilhelm Hegel:
What experience and history teach is this -- that people and governments never have learned anything from history, or acted on principles.

Gerda Lerner:
We can learn from history how past generations thought and acted, how they responded to the demands of their time and how they solved their problems. We can learn by analogy, not by example, for our circumstances will always be different than theirs were. The main thing history can teach us is that human actions have consequences and that certain choices, once made, cannot be undone. They foreclose the possibility of making other choices and thus they determine future events.

Karl Marx:
It is not "history" which uses men as a means of achieving -- as if it were an individual person -- its own ends. History is nothing but the activity of men in pursuit of their ends.

Kurt Vonnegut:
History is merely a list of surprises. It can only prepare us to be surprised yet again.

Mark Twain:
To arrive at a just estimate of a renowned man's character one must judge it by the standards of his time, not ours.

Oscar Wilde:
Anybody can make history. Only a great man can write it.

Pearl S. Buck:
One faces the future with one's past.

Percy Bysshe Shelley:
Fear not for the future, weep not for the past.

Ralph Waldo Emerson:
All history becomes subjective; in other words there is properly no history, only biography.

Winston Churchill:
History will be kind to me for I intend to write it.

Medical insurance and large bills

An insurance agent said that a good medical insurance policy will cover the large bill of $150,000.

This may not be the case. Some of the expensive treatments exceed the limits in the policy or are excluded from the policy.

Before you incur expensive treatment, it is necessary to consult your insurance company and check on the items that are covered. This is to avoid the shock of being landed with a bill that you cannot afford.

I have come across many cases of unhappy customers who find that only a small part of the bill is covered by insurance, in spite of what they were told by the insurance agent!

Most importantly, you should spend your money wisely. Do what is best for your loved one, but do not waste money on expensive treatment with a slim chance of recovery.

Escalation of medical bills

Someone asked the question, "Why was the original estimate of $50,000 allowed to escalate to a bill of $150,000?

This is the real, commercial world. This is how some private sector doctors can make millions of dollars in income.

I have high respect for many doctors who earn a modest income and practice medicine in the best interest of their patients.

Evaluate your options

Someone asked me what I would do, if I were in my friend's situation and expensive medical treatment is needed for a loved one.

Here is my approach:
a) I will evaluate various alternatives, from various doctors
b) I seek advice from independent and knowledgeable people
c) I will not depend on the advice of an adviser (doctor) who has a conflict of interest

I wish to share this story.

A few years ago, Dr. Ee Peng Liang, the "father of charity" in Singapore, told me, "Kin Lian, my doctor told me that I had stomach cancer. But I have decided not to be treated as I am already over 80 years. I will leave this matter in the hands of God". Dr. Ee passed away peacefully after a year or two.

There are many ways to "do the best" for a loved one. Spending money on expensive medical treatment, with a slim chance of recovery, is only one way.

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