Saturday, August 09, 2008

Opening of Beijing Olympics

The Beijing Olympics opening ceremony started at 8:08:08 pm on 8 August 2008. How creative!

The opening ceremony is a combination of:

> modern technology
> art and culture
> discipline and focus of the people.

China can be proud of its remarkable achievements during the past two decades. Many people now forget that China is a Communist controlled country. China has shown that a Communist system can deliver peace, progress and prosperity for its people. I am amazed at the pride and loyalty of the people towards China.

Gracehaven Children's Home

The Salvation Army, Gracehaven Children's Home would like to cordially invite you to join us for a day of fun at our Carnival on 6 September 2008, Saturday, from 10am-6pm. This day has been set aside by the Home to raise funds for the children and young persons residing with us.

The proceeds from the Carnival's targeted amount of $150,000 will go into providing for their educational needs, social and rehabilitative programs.

Your support in every way would be most valuable to us. To join us in this partnership of care, you may support us in any of the following areas below:

1) Sponsorship in cash for the food and drinks for sale, logistical items such as power generators, tentage, fans, tables, games and food stalls, etc.

2) Purchase of carnival coupons. Each coupon is priced at $10 per piece, and it has 5 portions of $2, and a special redemption coupon for your free gift.

Tax exemption receipts can be issued for your donation upon request.

For any enquiries and donation in cash or kind, please feel free to contact our Program Co-ordinators,

- Ms. Goh Kailin at 64881531, email -
- Mr. Liu Minjie at 64881700, email -

Help the low income people

Dear Mr. Tan,
I see many poor people in Singapore. In your opinion, what is the best way to help them? In some countries, certain essential goods are subsidised, but they tend to be abused. Is there a better way to give the help, and prevent abuse?

Here are some ways to help the low income people:
1. Pay them an adequate wage
2. Encourage them to save, and help them to get a higher return
3. Help them to avoid debts and paying high interest
4. Keep down the cost of essential goods (but not through a subsidy)
5. Help them to get access to eduation and health care, paid through taxation

Friday, August 08, 2008

Transfer savings into CPF special account

Hi Mr. Tan,

I am contemplating transferring my CPF-OA funds over to CPF-SA to earn more interest.
However, I am concerned that if I transferred too much over, I may not have the minimum OA amount at retirement for withdrawal. Besides this, what other withdrawal restrictions is likely to happen for such a case of large OA-to-SA funds transfer?


It is better to transfer to SA to earn higher interest rate. The SA can be withdrawn during your lifetime. If you have excess amount in SA over the minimum sum, the balance can be withdrawn at that time.

Personal insurance

Dear Mr. Tan,

I read that it is important to get a H&S plan althought our employer do cover us ? Since we may not work for the same employer next time. Plus, a H&S plan is more important than a Critical Illness plan ?


Read this FAQ:

Agent prefer to sell ILP

A, an American living in Singapore, recently bought some properties and was looking for insurance. He turned to his friend, B, who works in the insurance industry, to help him out.

B recommended that A purchases term insurance, either level term or mortgage protection, as the insurance need was to just cover off the mortgages. B drafted a letter up on behalf of A, requesting term quotes to the top 10 insurance companies in Singapore.

A received quotes for unit linked investment plans from all the companies, and some companies stated they didn't sell term, or that they didn't know what "level term" was. A & B decided to follow up with company X, as they had the cheapest quote so far. They were told that "X doesn't offer level term", to which B replied "Yes you do, it's called x-Term". They requested that a senior agent come out and meet with them.

At the meeting, the agent pulled out his laptop and started to show ILP's. Again, A said that he is looking for term. The agent replied that term was not worth his time to do. This would have been the easiest sale in the world, as A was ready to sign on the dotted line right there, no hard sale to do, just fill out the paper work.

They also requested a meeting with company Y. They never showed up, and when they called, they said sorry and never arranged another meeting.

So, A & B decided to get some quotes from the USA, since he's American. The term quotes coming in from the USA, where about 50% cheaper than the quotes from Singapore. Even taking into account that they were for preferred underwriting, and underwriting tests are cheaper in the US, this is a large markup in Singapore. Particularly since Singapore mortality is better than the US!

So the morale of the tale, even if you want to buy term, it is very difficult to do.

Joke: Hazel Wood

After going into Hazel Wood with his girl friend, Fred wrote below the sign which said "Hazel Wood" the words "But Janice wouldn't".

Auction Rate Securities

Citigroup sold auction rate securities to retail investors on the representation that these securities are "cash alternatives". It implies that they are liquid and can be converted to cash at any time. During the credit crisis, there is no liquidity for these securities.

The District Attorney office of New York took up a case on behalf of the retail investors. It negotiated a settlement that require Citigroup to buy back the securities from the retail investors and compensate those who have suffered a loss. Citigroup had to buy back USD $8 billion of these securities.

I wish that our similar action is taken in Singapore on behalf of retail investors that were misled into investing in structured financial products and life insurance products that offer poor value to the investors.

Benefit illustration

Hi Mr. Tan,

I am 20 this year. I had just graduated from diploma and had just starting my first career. Being the breadwinner of the house, I think having a insurance/policy will be safer. I am currently thinking which type of policy should I take. However I am kind of confused. After reading through your website and blog, I get exposed to more information which I neglect previously. However there are still several question which i will like to clarify with you.

Is cash value equivalent to surrender value Where can I fine the cash value in my benefit illustration ? What is gross yield and net yield? Where can I find the gross yield and net yield in my benefit illustration ?

Cash value is the same as surrender value. The gross yield is the yield that the insurance company expects to earn by investing your premium. This yield is not guaranteed. The net yield is the yield that you can earn (not guaranteed) after the charges have been deducted by the insurance company.

You should ask the insurance agent to show you these figures in the benefit illustration.

Due to the high charges, a life insurance policy gives a poor yield. It is better to buy a Term insurance and invest the difference in a low cost fund. This is explained in this FAQ:

Thursday, August 07, 2008

Insurance for a child

Dear Mr. Tan

I would appreciate if you could advise me on what insurance package/company should I take up for my new born son. I'm overwhelmed by the different insurance packages and companies in the market.


Read this FAQ

Joke: The wife wanted to tell it herself

The posh dinner party has been a great success until, over coffee, one of the guest decided to tell a detailed blue joke.

The host was appalled, "This is an outrageious joke. How do you tell this story before my wife!"

The guest replied, "I's sorry. I did not know that you wife wanted to tell this joke herself.

Business ethics

I write about honesty and business ethics in this article:

posted in


Source: Wikipedia

Profiteering is a pejorative term for the act of making a profit by methods considered unethical. Business owners may be accused of profiteering when they raise prices during an emergency (especially a war). The term is also applied to businesses that play on political corruption to obtain government contracts.

Some types of profiteering are illegal, such as price fixing syndicates and other anti-competitive behaviour, for example on fuel subsidies (see British Airways price-fixing allegations), or restricted by industry codes of conduct such as aggressive marketing of products in the third world such as baby milk (see Nestlé boycott).


Source: Wikipedia

Overcharge is an economic term that refers to the difference between an observed market price and a price that would have been observed in the absence of collusion. The latter is often called a "but-for price" or a competitive "benchmark price".

When collusion is not in use, such as by privately-owned businesses, overcharge is considered as a markup of the observed market price for the sole profit of the business and in some states is considered illegal, similar to profiteering and price gouging.

An overcharge may be expressed as a mark-up on the benchmark price, or it may be divided by the observed market price. When the benchmark price is equal to the marginal cost of production, as it is in perfect competition, then ratio of the overcharge to market price is the Lerner Index of market power.

When the overcharge is multiplied by the quantity purchased, it becomes the monetary injury or damages incurred by a buyer of goods sold by a cartel.


Source: Wikipedia

In British English, a tout is any person who solicits business or employment in an importune manner (generally equivalent to a solicitor in American English).

A ticket tout is someone who engages in ticket resale for more than the face value of the ticket. In recent years some British ticket touts have moved into Internet ticket fraud.

According to the American Bar Association, touting is where a person advertises, promotes, or otherwise describes a security for sale without disclosing that the person is being paid to do so.

An example would be a person who frequents heavily touristed areas and presents himself as a tour guide (particularly towards those who do not speak the local language), but operates in on behalf of local bars, restaurant or hotels, being paid to direct tourists towards certain establishments.

In a similar fashion a tout could be someone who, acting upon his own initiative, loads or unloads the baggage from a bus, then demands payment for his services from the passengers.

In gambling parlance, a tout is a person who sells sports betting information to bettors.

Illegal to tout and overcharge

I read a newspaper report that taxis now put up a sign "It is illegal for electronic stores and tailors to tout and overcharge".

What is touting? Are financial products being marketing at MRT stations considered as touting?

What is over-charging? Many financial products have excessive charges that give poor value to consumers.

Will it be illegal for financial institutions (i.e banks and insurance companies) to tout and over-charge for their financial products?

Why only go after electronic stores and tailors, when the overcharging in financial products is 10 times or more?

Investing in Foreign Currency

A few readers have asked my views about investing in AUD due to its recent drop. It is difficult to make a judgement on the trend, due to its volatiity. Even foreign currency traders find it difficult.

Here are some general tips about investing in foreign currencies:

Wednesday, August 06, 2008

Premium buses

Some people are willing to pay a higher fare to get a better seat in an airplane. They are called first class and business class. We can have the same arrangement for a bus.

Read more about this concept in:

Joke: Passed by the manager

Notice in a foreign hotel: The water in this hotel is hygienic. It has been passed by the manager.

Freely negotiated fees

To: Consumer Association

The Competition Competition has mandated that fees should be freely negotiable. The apply this requirement to doctors and property agents.

The Commission think that this is to the benefit of consumers. It is likely to work the other way. If fees are freely negotiated, and the standard and scope of service is not clearly defined, consumers can be put to a disadvantage. The industry players (i.e. doctors and property agents) are more knowledgeable about the playing field and will be able get away with higher charges, as consumers are not aware about the market.

A better approach is for the Commission to get the industry association to define a few standard services and require the providers to advertise their fees for these services.

I hope that the Consumer Association can look into this matter.

Tuesday, August 05, 2008

Taxi without driver

Imagine that you can board a taxi that is driven automatically (i.e. without a driver) and take you quickly to your destination, without any traffic congestion.

This is called a PRT. Read about this concept in

Joke: Black or white

The American from Alabama was in a coffee shop of an expensive hotel in London.
Waiter: How do you like your coffee
American: I like it like my woman, strong and sweet.
Waiter: Black or white?

Personal Accident Insurance

Hi Mr. Tan

I currently have SAFRA Essential Term ( ) and SAFRA Living Care ( ) policies.

Effectively, the two policies cover Death, TPD, the 30 major CI, and hospitalization.

In addition, as a employee of my company, I am covered for basic medical expenses incurred for seeing a doctor.

I have an agent from NTUC trying to sell me personal accident insurance. In your opinion, is there any further benefit to me for taking this up?


A personal accident policy is low cost and is useful to supplement the cover under your life policies. If the total sum assured under your life policies is not adequate, you can buy a personal accident policy to supplement the coverage. The annual premium to cover $100,000 should be less than $80 for most occupations.

Monday, August 04, 2008

Key man insurance

Dear Mr. Tan,

My friend bought a Prulink product for himself many years back. The company paid the premium. He is the one of two directors and shareholders of this company. This insurance is purchased under the keyman policy. He is the insured person and the company is named as the owner of the policy.

Unfortunately, my friend met with an accident and is paralysed. The insurance paid out S$800,000. Cheque was issued to the company.

Should this money belong to the company or should it be paid to the insuree? Can this money be held at the company since it was paid by the company and was purhcased as a key-man policy? Or, can this money be construed as gratitous payment to be paid to the family member immediately?

It depends on the agreement between your friend and the company. If the company took the policy and pays the premium, the company is the owner. The compnay has an insurable interest in the key man of the company, as the disability of the keyman can cause some loss of profit to the company.

If the company has an agreement with the keyman to pay the proceeds to the keyman or his family, then the payment should be made according to this agreement.

Rights Issue

Dear Mr. Tan

I would like to seek your invaluable adivce on the upcoming rights issue offered by X. Do you think it is a good investment? What actually is a rights issue?


If a company wishes to raise additional capital, it offers a rights issue to its existing shareholders. The price is usually lower than the current market price of the shares.

Let me give an example. A company has 10 million shares. It is now trading at $3. The company needs raise an additional $10 million in capital. It decides to issue 5 million shares at $2 to the existing shareholders. Each shareholder is allowed to buy 1 share for every 2 shares that they now own.

Many shareholders will take up the new shares because it is offered at a price ($2) lower than the current market price ($3). After the rights issue have been completed, the share price may drop below $3 due to the dilution of new shares issued at $2.

If the shareholder does not wish to invest in the new shares, the shareholder can sell the rights in the market. The value of the rights depend on supply and demand and is likely to be around $0.30.

I am not able to give an specific comment about the rights issue of X.

Joke: Ring bell with elbow

A: Would you like to come to my house-warming party on Saturday?
B: Where is it
A: 6 Chestnut Drive. Please ring the bell with your elbow.
B: Why can't I ring with my finger?
A: You're not coming empty handed, are you?

Double coverage under Medishield and private Shield

Dear Mr. Tan

Being a old timer with Income, I know that you are always helping the policy holders with your valuable knowledge. I have a problem now and hope that you could give me your advice.

I switched from CPF MediShield to IncomeShield Plan B in year 2002 with the payment deducted from my MediSave account annually.

In Year 2007 I subscribed to Enhanced IncomeShield Rider on top of the IncomeShield Plan B. The Rider's was cash payment as required. In view of saving the MediSave account fund with better interest rate, I changed the payment mode for my IncomeShield to cash payment as well in September 2007. As I was not free to make payment on the due date and Income had comfirmed via email that the payment due date has 30 days' grace period as usual. Hence, I made the payment about 1 or 2 weeks later.

To my surprise, when I got my CPF Statement of Account, I realised that my MediShield had reactivated with the deduction of MediShield payment from my Medisave account. I queried CPF on this and was told that this is the usual practice that when the payment was not made on the due date for IncomeShield the MediShield would be reactivated.

I wish to have your advice of whether this is double insured and whether there is any benefits of more coverage when I make a claim or this is totally overlapping of the same coverage. I heard that now CPF's MediShield has better coverage than other similar plans, hence I don't know whether I should terminate which one to save my unnecessary additional payment.

Could I appeal to Income for the reimbursement of the IncomeShield payment for not informing me this consequences which result to my additional incurred cost.


You can ask NTUC Income to help you to sort out this problem. You should NOT pay two premiums for the same coverage. NTUC Income should have notified CPF that you are covered under Incomeshield (by cash) and prevent the re-activation of Medishield.

If this is not possible, you should ask NTUC Income to refund your premium for Incomeshield, in full. It is all right to be insured on Medishield only.

All the best.

Vitamin Account

My friend invested SGD 40,000 in a Vitamin Account offered by a bank. This is a structured product. The total payout for the past 3 years is 4.1%. The current value is 89.5%. The investor lost 6.4% for the past 3 years. During this time, the stockmarket showed a positive gain.

Lesson: Avoid all types of structured product, even if it is capital guaranteed. They are likely to give a poor yield if you keep it to maturity (5 years). If you terminate it before maturity, you are likely to suffer a loss.

Read this FAQ:

Cyber Defamation Law

South Korea plans to introduce a Cyber Defamation Law to regulate Internet freedom.

The new law is intended to deal with harmful Internet messages and to improve security and stem false information. It will bring the online medium in line with its tradtional counterparts.

Some measures being proposed are:
1. Suspend sites that go beyond limits
2. Require people posting their comments to use their real names

I believe that these measures are necessary. I have always used my personal name, in posting views on the Internet.

Financial advice

My blog aims to educate the public about financial matters.

I do not give specific advice to any person. If you want advice, you have to find a financial adviser.

You can get information on the list of FAs regulated by MAS by visiting the MAS website at under "Financial Institutions Directory".

Here is the specific list:

What is a financial planner?

Q4: Does MAS regulate all financial planners? What is the difference between a financial planner and a financial adviser?

A: MAS regulates firms and persons that give advice on investment products to consumers. MAS does not regulate tax and estate planning activities.

Under the FAA, only firms licensed as a FA and firms that are exempt FAs can use the term "financial adviser". This helps you identify whether you are receiving financial advice from an entity regulated by MAS. MAS does not restrict the use of titles such as "financial planner", "financial analyst" or "financial consultant". You should be aware that persons who use such titles may or may not be regulated by MAS. You can get information on the list of FAs regulated by MAS by visiting the MAS website at under "Financial Institutions Directory".

This advice, and other useful tips, can be found in this webpage:

Sunday, August 03, 2008

Comparing yields on policies taken from two insurers

Dear Mr. Tan

I wish to seek your advice as to whether I am getting a fair share of the maturity sums I obtained from two policies maturing with two different companies.

For a 25 year term endowment policy with sum assured of $15,000 with AIA, I was paid the maturity sum of $30,271.95 which was $5,233.05 short of the projected amount in their original quotation when the policy was first taken up in 1983. On my appeal, they paid a further $2,469.63 making it a total of $32,741.58.

As for the NTUC Income Education Policy with a sum assured of $10,000 for a 20 year term, I was paid the maturity sum of $19,432.50 which was $2,137.50 short of the projected amount in their original quotation first taken up in 1988.

I have appealed to NTUC Income to pay the sum as projected originally but they have rejected this. They did not exercise understanding and flexibility as did AIA.

What I cannot understand is its agents have been telling Singaporeans that they charge lower premium and makes higher payout mainly becaused NTUC Income is a co-operative as against commercial Insurance companies like AIA, Prudential and Great Eastern. Instead, I now find AIA to be more compassionate, understanding and flexible while NTUC Income does not even bother to consider my appeal.

I seek your kind understanding and assistance on this matter. Hope you can advise whether what NTUC Income claims about giving me a better yield as compared to AIA is true.


The yield on the AIA policy is 4.69% p.a. (25 years) and the yield on the Income policy s 5.44% (20 years). The yield from Income is better than AIA, although the policy was taken for a shorter period. In both cases, the yield has been satisfactory, as you get more thn 4.5% p.a.

25 year policy,
Premium: $57 monthly
Maturity benefit: $32,742
Yield 4.69% p.a.

20 year polcy
Premium: $44.30
Maturity benefit: $19433
Yield 5.44% p.a.

Joke: Record your gossip

Frank Smith bought his wife an answerphone. His wife recorded this message, "This is the Smith residence. Unfortunately, Mrs. Smith is out, but you can leave a message. Please start your rumour or gossip after the tone. "

Change in business culture of banks

Dear Mr. Tan,

I witnessed the changes in the banking industry first hand. When I joined a bank in 1989, bankers were well regarded even though our salaries were not as high as today. Integrity was the most important quality, as we are given the responsibility to look after depositors' money.

Banking is a business where the product is easy to sell, as we are giving out money and many people need a loan from the bank. Bankers must put the depositors' interest above sales.

The bank will assess your character and your technical skill sets. Once you are selected to join the bank, it is a privilege. If you are selected to be a credit manager you have arrived as the bank has empowered you to give loans. You have a long term career with the bank.

Foreign exchange dealers were there to support the lending business and not there to gamble or speculate on the bank's balance sheet.

Investment bankers are not allowed to take in public deposits. They start with a clean page every day. In essence, they were brokers, they have to hustle to make a living. No qualms about misleading investors. However they were highly paid but they put their money back into the firm as they were partnerships. That acts as a check to their excesses.

Later when they became listed companies, they took even more risk with other peoples money. Inevitably, all the commercial bankers wanted to be investment bankers as they are so well paid.

Allowing commercial banks to become investment banks is a recipe for disaster, as they have the balance sheet and public deposits to gamble with and have access to a large retail franchise to exploit. I never thought I will live to see the day when banks are selling their credit cards in Raffles Place like tourist touts. We sink to a new low when we out sourced it to a third party.

Where is the bank culture now ? Greed is acceptable. Well paid, short term careers is the order of the day because someone else can pick up your mess. Any way you are paid more than if you have worked longer with the institution.

Continue life policy after migration?

Hi Mr. Tan,

My mother is a big fan of your blog and she's been nudging me to seek your advice on my NTUC Income Life Policy Insurance.

I would be going to look for work in Sydney and looking to stay there. Should I terminate my policy and get back my money? Should I continue feeding this policy?


In the globalised world, it is quite easy to continue your existing policy in Singapore, even if you live overseas.

You should decide on your existing life policy based on the future yield. Generally, I advise a person to continue an existing life policy, as they have already incurred the upfront charges. Going forward, the policy should be able to give a fairly satisfactory return.

You can ask your insurer to quote you the cash value now and in 5 years time for you to make a decision.

Read this FAQ:

For your future financial planning, you should read this FAQ:

All the best.

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