Saturday, December 19, 2009


We use wi-fi to access the internet from hotspots. What does wi-fi stand for?

Scenaries of Jiuzhaigou, Sichuan, China

Above: Waterfall in Jiuzhaigou

 Below: the water in the lakes have different colors.

Keeping patients safe

Holding doctors accountable for medical errors.

Climate summit in Copenhagen

An agreement has been reached, although it has limited impact. Still, it is good progress and is an important step towards the long journey. Read this report.

Goldman Sachs to give up Life Settlement business?

Read this report. The financial institution will buy the life policies from the owners for a cash amount (which is usually higher than the cash value given by the insurer) and maintain them to collect the proceeds on death.

UK: High Court action to shut down five "Land Banking” companies

Dear Mr. Tan,

Watch out for these companies setiing up in Singapore soon !
High Court action to shut down five "Land Banking” companies. 

Action taken in the public interest

The Secretary of State for Business, Innovation & Skills has presented petitions in the High Court to wind-up, in the public interest, five companies involved in marketing plots of land as investment opportunities.

The application to appoint a provisional liquidator was first heard on 8 October 2009, but at this hearing the companies, through their directors (see notes below), offered to give undertakings to the Court as to their future conduct and to cease trading pending the determination of the petitions. The Court accepted that these undertakings were sufficient to protect the public interest pending trial of the petitions. 

The undertakings however were not fully complied with and accordingly the Secretary of State returned to Court on 17 December 2009 with a further application to appoint a provisional liquidator. The companies did not oppose this further application. The Court accepted there had been a failure to comply with the undertakings and ordered the appointment of the Official Receiver as provisional liquidator of the companies.

Friday, December 18, 2009

Challenges for global economies for 2010

This article in the Economist magazine said that the global economies was helped by the government stimulus spendings and bailouts in 2009. The challenges lie ahead in 2010 as many underlying problems are not solved and new problems are being created, e.g. asset bubbles in emerging economies.

Financial planning - buying a property for own occupation

Here is a financial planning tip that applies to most families. If you buy a property (for your own occupation) at age 30 and repay the  mortgage loan over 25 years with 25% of your monthly income, you can take a loan of up to 5 years of your income. If both spouses are working, you can use the combined income, but deduct $1,000 for the cost of employing a maid and other expenses.

If the family income is $5,000 a month, you can buy a property of up to $300,000. If you buy a more expensive property, the repayment will take up more than 25% of the income, leaving less to save for retirement or for current expenses, or the repayment will take more than 25 years.

Although most people expect a working career to be 35 years, it is useful to plan for 25 years of repayment, to allow for some disruptions in the income stream during your working career, caused by unexpected events, such as unemployment or disability.

If you really need to pay more for the property, you can stretch up to 6 years of family income, after you have done your budgeting carefully.

Tan Kin Lian

Attractions of Kuala Lumpur

Read this article.

Thursday, December 17, 2009

Workers like flex-time

This article shows the appeal of flex-time. I had advocated pay by the hour, instead of monthly salary. It allow flex-time to be implemented easily.

To all fathers with daughters

You can let go, daddy.

Economics and financial planning

There are two schools of thought in managing the economy. Some economists believing in managing demand and let supply follow demand. Other economists believe in managing the supply and let demand follow supply.

There is a similar choice in financial planning. Many financial planners believe in getting the client to establish the goals, from which the financial plan can be developed. I find this approach to be not suitable, as the client is likely to set goals that are too high, and will setting aside savings that they cannot afford, based on their earning capacity.

I prefer to work on the earning capacity and allocate the proportion to be used for current expenses and the remainder for the future, which includes the purchase of a residential property for own occupation. Based on my analysis, a typical allocation is 50% for current expenses, 25% for property and 25% for retirement. This benchmark allocation should apply to most working families.

If a family has special needs, they may modify the allocation to suit their own situation, but the starting point should be to consider the financial plan based on this benchmark. For example, a high income earnings may be able to set aside a larger allocation for the future, while a low income earner may have to set aside a bigger allocation for current expenses.

The allocation for the future includes the combined contribution (of employer and employee) to the Central Provident Fund. The current combined contribution is 34.5% for most workers. To achieve the benchmark of 50%, the worker has to set aside 15.5% in a personal savings plan. This concept is explained in my book on financial planning.

Tan Kin Lian

Torchlight for travellers

I took the rechargeable torchlight with me for my tour of China. I stayed in 5 hotels over the 8 days. I had to change a hotel almost every day.

The layout of every hotel room is different and the switches are complicated. It is difficult to find the correct switch to turn on at night. The torchlight came in very handy. The locator light help me to find the torchlight in the dark. I use the torchlight to see the labels on the swtiches or to find my watch or other items that I needed.

This torchlight is very useful when you travel.

Why big banks are bad for the economy

Read this article. Here are some key points:

a) The big banks want to pay back the bailout money to be free of the pay caps and other restraints.
b) Their profits still come mostly courtesy of taxpayers. Their trading earnings are financed by more than a trillion dollars’ worth of cheap loans from the Federal Reserve, for which some of their most noxious assets are collateral.
c) They benefit from immense federal loan guarantees, but they are not lending much. Lending to business is very tight.
d) The whole system has grown more concentrated, as many big banks have taken over other banks. The growth of the biggest banks ensures that the next bailout will have to be even bigger. These banks will be more likely to take on excessive risk because they have the implicit assurance of rescue.

Future jobs in America

This article explains the future jobs that will grow in America. The industries are:

full service restaurants
local government
employment services
nursing care services
office of physicians
general merchandise stores
computer system services
home health care services
services for elderly and disabled
consulting services.

Many of these trends will apply to Singapore.

CT scans are costly and have their risk

Read this article.

Collapse of Pinnacle Notes Series 3

Hi Mr Tan,

Just when the public thought the toxic structured products saga has been settled, another one of the Morgan Stanley's Pinncale Notes Series has gone into mandatory redemption. Hong Leong Finance, one of 7 distributors of the Series 3 has informed me(see attached)that there is a mandatory redemption event and investors will lose all or substantially all their original principle invested. This happened not because of a reference entity like Lehman has collapsed but simply because the Notes have invested in a lot of unknown companies that have now defaulted. 

Many S'pore investors are just being told of this shocking Christmas present and more bad news may come as Series 2 and 6 are also sinking. 

Please post this in your blog as the creator and distributor of this product should not be allowed to get away with this. They used big corporate names as Reference entities to misled public into investing the product but actually invested something else!

Authority has to act to stop investment scams

Mr Tan
I note that in the Madoff case the prosecutors are considering prosecuting the programmers and perhaps the heads of the feeder funds. Presumably this is on the basis that they must have been aware that
something was not right but did nothing about it. They also  took huge payments for supporting a scam..

It takes many parties to operate a scam. I am often amazed that when investment schemes fail that the sales people and agents  blame the owners. The owners blame the agents and salepeople. All parties claim
complete innocence of any wrong doing.  With some of the investment schemes such as land banking plots, various oil Investment schemes, sunshine investments  etc it is obvious that many people involved know
that the investment scheme cannot work but choose to be involved anyway.

These people enable the scam and give it credibility by their involvement.

Singapore has a reputation for providing rigourous punishment to a few individuals to discouorage anti-social or criminal behaviour by the rest of the population. As an example:-  jail sentences being applied
for using mobile phones while driving.

Perhaps applying very stiff penalties to one or two company directors, sale people and agents for their involvement in fraudulent investment schemes would encourage others to think more carefully about what they
allow themselves to be involved in and earn commission for.

I agree with your views. I am unhappy with the passive response of the Authority in Singapore towards these investment scams. I will do my best to argue the case for the Authority to be more actively involved in stopping these scams.

Snap election in Singapore?

Here is an article by Seah Cheang Nee.

Minimum wage and employment

Paul Krugman argued that cutting the minimum wage will not increase employment. Here are his reasons. I agree with his thinking.

Impact of Sichuan Earthquake in 2008

Sichuan suffered a big drop in tourism revenue for the past 12 months. Tourist visits to Sichuan dropped significantly after the earthquake. It is only starting to recover. My tour guide said that he looked after only three tour groups during the past 12 months.

My group was able to get the top class hotels as pack of the package for an affordable price. It is a good time to visit Sichuan as the cost is still low and the service is excellent. Sichuan has excellent natural landscapes, sceneries, mountains, waterfalls and rivers. Tourism is an important part of its economy.

Visit to Sichuan, China

I visited Sichuan China for the past 10 days from 9 to 16 December. I was not able to update my blog during this period as Blogspot is still blocked in China. I shall be writing about some interesting observations from my visit.

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