Saturday, May 15, 2010

Countdown to 2 million visitors

The total visitors to my blog has just passed 1,900,000. I expect the count to reach 2 million by end of June 2010. By that time, my blog will be 40 months old. The average visitorship for this period is 1,700 visitors a day. The daily average has now reached 2,600 visitors.

Credit card charges

Hi Kin Lian,
I would like to share what I found out about this. Credit card companies charge an administrative fee of 1.25% onwards to card users for transactions in non SGD currencies. Maybank charges 1.25% as does RBS. I think the rate charged by Citibank and DBS are 1.5%. This is on top of the 1% charged by VISA/ Mastercard.

So let's say I buy something online in USD, and the exchange rate determined by VISA for the posted date is USD 1 = SGD 1.40. The charge I receive will be 2.25% on top of that.

Now, if I buy in a non USD currency say GBP, the GBP charge will be converted to USD first, then USD to SGD so resulting in an extremely unfavourable rate.

There's not much transparency regarding this and I obtained this information after I questioned my bank about it. Hoping you can help educate the public especially your blog readers on this. Thanks.
I am not able to verify this fact. Can other readers share you experience?

Fraudulent accident claim - aggravated damages

It is fraudulent for a motorist to submit a claim for repair to a vehicle where the damages have been aggravated or created after the accident. For example, if the orginal damage is a scratch and the repairs are for a major dent, the claimant is committing a fraud, i.e. cheating.

Many vehicle owners may not be aware that they are a party to this fraud. They leave the car to their workshop and sign an authority for the workshop to make a claim on their behalf. Some workshop, that specialises in inflating the claim, will aggravated the damage or inflict additional damages to the vehicle, and will take a photograph of the damages, to submit to the insurance company.

The insurance claim officer may not investigate the claim and will accept the claim as submitted. They are unwilling to challenge the claim, even if they were asked by the policyholders.

This fraud has been rampant for several decades. Large sums are being paid for the inflated claims. This results in higher premiums being charged for motor insurance.

Many people have lodged reports to the Police on this fraudulent activities in past years. If the Police is serious about  investigate the complaints and bring the culprits to court, this fraud can be contained. I hope that this action can be taken, to reduce the cost of motor insurance in Singapore.

Tan Kin Lian

Dilemma on language

Read this article by Seah Cheang Nee.

My comments
I prefer the allow the student to choose a second language, which may not be their mother tongue. Those who find Chinese difficult to learn can choose Malay or another language.

Friday, May 14, 2010

Withdrawal of Foreign Currency Deposit

Dear Mr. Tan,

I had a foreign currency account in NZ dollars with X Bank. On 16/04/10, I went to the X Bank to withdraw the foreign currency time deposit account. I was attended to by a Relationship Manager Ms Y. I had specifically asked her to quote how much would I get back in Sing dollars should I wish to withdraw the foreign currency account. She did some calculations and said the amount was $31,326.07. She did not at any time informed me that the amount she quoted was in NZ dollars. I assumed that the amount quoted was in Sing dollars. I did a quick mental calculation and I would gain $1,326.07 over my original investment of S$30,000. I then agreed to the withdrawal.

I was then asked to sign a foreign currency withdrawal form. Upon signing, I noticed that amount of $31,326.07 was not written on the form. She said the amount quoted was only an indicative price and therefore cannot be written down. I trusted her and X Bank wholeheartedly. That was my biggest mistake.

True enough, I was shocked to receive only $30,257.85 when I went back to X Bank to collect the cashier order on 22/04/10. I approached Ms Y for the shortfall of $1,068.22. She said that the amount she quoted on 16/04/10 was in NZ dollars and after conversion to Sing dollars, would be $30,257.85. I remembered vividly that she did not at any time on 16/04/10 informed me that the amount quoted was in NZ dollars. She insisted that she did. It was her words against my words. She then showed me a document with the word NZD written in blue beside the amount of $31,326.07. I told her that the word NZD was not written in my presence on 16/04/10. If it was written in my presence, I would have realised that the amount she quoted to me was in NZ dollars. My natural instinct would ask what would that amount be in Sing dollars.

I was naturally not happy and requested to see her Manager. The Manager listened to my explanation attentively. However, he insisted that Ms Y was absolutely correct to give the quote in NZ dollars. He further explained that it was the Bank's practice to quote their clients in the currency they invested in and not in Sing dollars. I re-emphasised to him that I specially told Ms Y that I wanted the money back in Sing dollars. I would have assumed that the amount she quoted was in Sing dollars. Moreover, she wrote the amount on a piece of paper as $31,326.07 without the NZD in front of the quoted amount. I therefore assumed that the amount quoted was in Sing dollars. On hind sight, I should have asked to make 100% sure. He could not help or advise me further. I left the bank with a heavy heart having lost $1,068.22.

I was inexperienced and had learnt a lesson, albeit any expensive one for a retired person . It would be my first and last time that I would do foreign currency investment. It was a case of poor communication or rather miscommunication. I requested the Bank Manager to advise all their Relationship Managers to inform their clients clearly on which currency the amount was quoted, especially to elderly clients who are not so financial savvy. The exchange rate would make a big difference.

I just want to share this unpleasant experience with your readers. Please remember to ask the Relationship Manager clearly on which currency the amount was quoted.


Legal action for overcharging of fees

Read this report of a class action in Australia.

My comment
I hope that the banks are fairer in the charges that they levy on customers, and that the regulator will take the lead to get the banks to be reasonable in their charges.

Investigation of US banks by New York AG

Read this article.

My comment.
This investigation has relevance to the investors of the Mini-bond, Pinnacle notes and Jubilee notes. If the banks had acted fraudulently in getting the rating agencies to give a misleading rating, there is the possibility of recovering the loss in US courts.

I respect the AG of New Yrok. At the time that the alleged wrongdoings were happening, people were not aware. When they now know the facts, with the benefit of hindsight, they are willing to take the banks to court and let the court decide if there were any wrongdoing. The banks are likely to agree to some form of settlement and to make some compensation to the parties that were wronged.

I hope that our authority in Singapore will also consider similar action on behalf of the small investors that were hurt by these wrong doings.

Dr. Goh Keng Swee

Dr. Goh Keng Swee has passed away after a long period of illness. He was the architect of Singapore's economic success. He was also the founder of NTUC Income.

Taxi surcharges

Read this letter in the Straits Times Forum

My comment
I agree with the writer that we should simplify our system of taxi charges, and avoid the peak hour and location surcharges. It is better to have a standard flat fare applicable to all taxis. The mileage charge can be higher than the current fares to provide sufficient income for the taxi drivers.

The government can also reduce the charges levied for taxis so that the taxi fares can be lower across the board. If more people take taxis instead of their private cars, it will reduce the pressure on parking space.

Mother Tongue Language

Did the government make these commitments?

My view.
The purpose of education is to teach students to be literate, numerate, able to communicate and have social skills and values. A second language is useful. The approach towards any subject, including the second language, should be flexible and be changed according to future needs.

Thursday, May 13, 2010

Why is life a struggle?

Extract from Tommy Wong's book, "Wisdom on How to Live Life"

Tom: I was told that life is a struggle.
Guru: Life is only a struggle because the world operates on the basis of competition rather than cooperation.
Tom: Can you elaborate?
Guru: You see like you and I, if we take a walk on the basis of cooperation, then we’ll walk at a pace that both of us are comfortable with. We can then also enjoy the scenery on the way.
Tom: Enjoy life.
Guru: So who is the winner?
Tom: We’re both winners.
Guru: But if we take the walk on the basis of competition, then we’ll walk as fast as we can. Both of us will find the walk a struggle and there’s no chance to enjoy the scenery.
Tom: Life becomes a struggle.
Guru: So who is the winner?
Tom: There’s no winner, we’re both losers.
Guru: Exactly, in the world of competitions, even winners are actually losers. That’s why the world is full of losers.
Tom: And that includes the rich and powerful?
Guru: And that includes the rich and powerful!

Tommy Wong's book can be ordered online here. The price is cheaper than ordering through Amazon.

Aviva Car Insurance

The website is

It is quite easy to get a quote. I found that the quote for my car insurance is $1,015. My existing insurer charges $761. So, Aviva is more expensive. My daughter also checked and found that in her case, Aviva is more expensive than the existing insurer.

I like other readers to check their premium based on your existing cover. You can post the details of the premium (existing compraed to Aviva) here.

Freedom, fairness and responsibility

A new government has taken office in the UK. It is a coalition government formed by the Conservative and the Liberal Democratic party. The new Prime Minister David Cameron said, "It will be an administration based on three key principles - freedom, fairness and responsibility".

I am heartened by these key principles and hope that Singapore will also aspire towards them. Here are some changes that have to be done in Singapore:

1. Freedom: allow people to express their views freely, without being sued for damages when they give any honest, negative opinion.
2. Fairness: reduce the wide disparity in income and ensure that people can seek justice, even if they do not have the money to engage lawyers
3. Responsibilty: take action to correct any flaws, instead of pushing the responsibility from one agency to another.

Tan Kin Lian

Property bubble?

Read this article.

My view.
All bubbles will burst one day. What goes up must come down. Any investment, including property, can go up to an unrealistic high price, but cannot stay there forever. It can only be sustained at a level that is affordable to the buyers, i.e. relative to the average national income.

Like Singapore, Dubai also had limited land. It created a property bubble that has now collapsed. Singapore will not be exempted.

There is one key difference in Singapore, and that is the role of the HDB and the CPF. The savings in the CPF had been used not only to service the mortgage payment but also to prop up the property market (by taking second priority to bank mortgage). HDB had been tolerant in allowing unemployed owners to delay payment of their mortgage installments.

In the case of Singapore, I expect that the property market will not collapse, but will remain dormant for many years. It will not show the kind of appreciation that had happened in the past. The return on property, as an investment, will be low.

Someone sent me this link:

Wednesday, May 12, 2010

Feedback on Business Simulation Game

Click here for more details of the Business Simulation Game (BEST)

AA: it's a fun and interesting game, and we can learn about business planning from playing it.

HMW: I noticed there are a few parameters, namely unit price, capacity, expenditure on marketing. I tried a premium pricing strategy, i.e. high price for high margin, and correspondingly putting a higher marketing expenditure and reducing capacity. The performance was dismal. Incurred big losses.

JA: Best Global is not only fun and interactive, it also allow us to develop good practical business sense. Some strategies, which I personally found quite useful.

a. Set the right price that generates sufficient margin to cover our overheads + some modest profit. Excessive price undercutting may gain us market share but at the expense of our overall profitability.

b. Over investment in infrastructure and over recruitment (capacity) is expensive. Manage our expense well.

c. Understand the market. If the market is not doing so well (i.e. in the red), we may wish to consider reducing our market share by increasing our price and reducing our capacity.

AG: Good and very user friendly.The guide is very informative and useful.  Overall the interface is much better than what we had previously. I also see new elements like capacity, market share and profitability which makes it more interesting.

Read the Player Guide here:

Building wealth

Read this article on savings, avoiding debt and investing.

My comment
The tips are similar to the points made in my book - Practical Guide on Financial Planning available online.

Mortgage on your home

This article explains how to pay off your mortage early. - but after you have built up an emergency fund and have set aside money for your children's education.

My comment
It is more important to avoid getting a large mortgage in the first place. You should buy a property within 5 years of your annual income, and pay it within 25 years with a monthly repayment of less than 25% of your income. This is explained in my book on financial planning.

Mother Tongue Language

There is much controversy over the issue of the mother tongue language. I do not have my personal view about whether the weightage should remain the same or be reduced.

I wish to express my concerns on two issues:

a) Some people hold strong views that the weightage should be maintained while others felt strongly that it should be reduced. I am concerned about the manner in which the views were expressed, without regard for the views of other people who may be in different circumstances.

b) There seem to be a loss of trust in the government leaders to find the right balance that takes into account the diverse views of the people. I believe that they have the responsibility to seek the right policy which accommodates the views and needs as many people as possible.

I believe that it is possible to encourage students to learn a second language, without forcing them to do it through the "weightage" in the PSLE.

Tan Kin Lian

Signs at MRT stations

The most important signs at a train station are the "Platform No" and the "Way Out" signs. In most train stations in other cities, these signs are large, standardised and are easily seen. At our MRT stations, these signs are small and non-standardised.  We have signs that show "Exit" and other signs that show "Way Out".

I hope that our signs can be standardised and displayed in large signs at a prominent place. This will be helpful to visitors and tourists, who are not familiar with our MRT system.

Education system in Singapore

Read this article by Ng E-Jay.

My comments
I prefer an education system that teaches our young to be literate, numerate, know how to communicate, interact and have values. They should not be required to compete for top positions in class - which teaches them to be selfish.

Tuesday, May 11, 2010

Security at Suntec City

I visited an office in Suntec City. They asked to scan my NRIC but as it was lost, I gave them another card with the bar code. They gave me a visitor pass, just to get through the barrier.

I do not know the purpose of recording all visitors to the offices. There must be several hundred thousand visitors to Suntec Mall every day. They are not recorded. So, what is the purpose of knowing who visits the office? How does it enhance the security of the office? If there is a bomb, it is likely to occur among the visitors to the mall.

Avoid being overcharged

This article explains about the legal but dishonest ways that you can be overcharged.

My comment
There are many similar cases in Singapore. As companies wish to maximise their profits, they are now using unethical means. Share your views here.

Focus of TKL blog

The focus of this blog, as stated in the header, is "insurance, finance and current affairs in Singapore". I wish to cover all three topics to be best of my ability. I appreciate the contribution of readers who direct me to other blog postings that are relevant to my blog.

My blog is aimed at the 2,500 daily visitors who find it to be useful and relevant to them.

Some people disagree with the views posted in my blog. They are welcomed to give your views, but should avoid engaging  in personal or malicious attacks. If they do not like the focus of my blog, they do not need to visit this blog. (Note: I continue to get malicious attacks regularly from two persons, and have blocked their comments).

Tan Kin Lian

Exchange Traded Funds (ETF)

There are two types of exchange traded fund (ETF).

a) An ETF that is invested in the shares that track the index
b) An ETF that is composed largely of deriviatives and have leverage.

You should invest in type (a), such as the STI ETF managed by StateStreet in SGX. This type of ETF is held by a trustee under the trust law.

You should avoid type (b), as it carries the risk that the issuer of this product may get insolvent, as has happend with Lehman Brothers.

Do not worry about the liquidity of the STI ETF. It is sufficient for ordinary investors, who wish to invest small sums of money for the long term and to withdraw small sums every one or two months for their expenditure. Liquidity is not an issue.

The STI ETF is NOT suitable for speculators who need the liquidity for trading. If you wish to trade, it is better to get a liquid stock.

If you are not sure about the structure of the ETF (i.e whether type a or b), you should ask the stockbroker or just stick to STI ETF (managed by State Street).

Tan Kin Lian

Investment Linked Policy

I have often been asked for my views about an investment-linked policy (ILP). It separates the term insurance and investments. Do they provide good value to the consumer?

In most cases, they provide poor value for the following reasons:

a) A large part of the savings for investments is taken away to pay the "distribution cost"
b) The premiums charged for the death benefit and riders are quite high
c) The distribution cost and effect of deduction are usually higher than the traditional policies
d) The projected returns are optimistically and potentially misleading.
e) Many consumers find the benefit illustration to be too complicated to understand.

In most cases, the consumer is better off in buying the death cover and riders in a separate policy and to get competitive quotes from several companies. The best cover is the group term insurance offered by SAF,  SAFRA and NTUC. Most people are eligible to participate in these policies.

It is better to invest in a low cost investment fund, such as the STI ETF available on SGX. This is explained in my book on financial planning, which is available here.

Tan Kin Lian

Gold and barter

Read this article.

My comment.
I always avoid paying a high price for an investment in high demand or in a bubble, including gold or property. Those who can get out early can make a profit. The other investors have to hold on to the investment for a long time to recover their cost of investment.

Monday, May 10, 2010

Bank charges

I have to pay USD100 to Hong Kong. The bank charge $20 for cable charge and $10 for handling fee. Western Union (through the Post Office) also charge $30. This amounts to 20% of the amount to be paid. I asked the supplier to collect by credit card or Paypal. I hope that they agree.

Survey: Puzzles to train your mind

If you have practiced on the shape quiz or tangram, please take part in this survey.

Feedback on my book

If you have bought my financial planning book, please give your feedback here.

Pricing of HDB flats

Read this article in The Online Citizen.

My comments
I prefer to give an option to the public to buy the HDB flats at cost plus or at market price (less subsidy). Both types are subject to their conditions. This is similar to executive condo (EC) flats that are subject to conditions which are different from private condos.

The option to buy HDB flat at cost plus may suit some young people who looks at the flat as a home, rather than as an investment. They want to pay a lower price to keep down the cost of living.

Visitors' ICs should not be retained

Publised in Straits Times Forum, 10 May 2010
MANY building owners in Singapore require a visitor to exchange his identity card (IC) for a visitor's pass.
The intent is to ensure that he returns the pass. It also serves as a security measure.
However, there is a risk of loss or mis-use of the IC when it is retained in this manner.
As a visitor, I have to take care of many other matters relating to my visit. Standing in a long queue to get back my IC adds to the hassle.
I hope building owners respect the right of people to visit their premises to conduct business. They should not be allowed to retain a visitor's IC.
Tan Kin Lian

Amount of Life Insurnace

This article explains the amount of life insruance that you need. In my book on financial planning, I suggest that the amount should be 5 to 10 years of your current income. You can buy a large amount of cover at a low cost by choosing term insurance for 25 years (not longer). If you can get decreasing term insurance, it is even cheaper.

Most people in Singapore can buy cheap term insurance through the SAF, SAFRA, NTUC or Public Officer's scheme.

Tan Kin Lian

Commission for life insurance agents

A life insurance agent argued that the agent has to incur high expenses and deserve the commission that is paid. This is only one part of the story, as seen from the perspective of the agent.

The agent should also see this issue from the perspective of their client. The agent has a duty to take care of the interest of the client. This includes recommending a suitable life insurance product that is good for the client. In the case of an investment plan, there is a duty to advice a plan that offers a fair return for the long term savings. In the case of a term insurance policy, the agent has to recommend a policy that charges a fair rate of premium (but does not need to be the lowest).

The problem arises when there is a conflict of interest. Many agents recommend a policy that pays a high  commission but this is at the expense of the client (who trusted the agent). The agent is trained to give the marketing  reasons to sell the policy, but they are not honest advice.

Some insurance agents behave worse. They approach the client every few years to get the client to stop an existing policy and take up a new "better" product. The agent earns the high commission once again, and the unsuspecting client is being taken "for a ride" and to incur a high cost again. This is how the financial future of many consumers are destroyed by the bad advice given by some unscrupulous agents.

There are some agents that behave ethically and recommend honest products that are good for consumers. The difficulty is for the consumer to tell one agent from another. This is why consumers have to be educated about insurance. My book on financial planning is aimed at achieving this goal. There is a chapter about dealing with financial advisers or insurance agents.

Several countries are now implementing legislation to ban the payment of commission on life insurance products. The agent has to earn a fee to provide financial advice to the consumer. Singapore should follow the same step, to safeguard the financial future of the ordinary people.

Tan Kin Lian

Sunday, May 09, 2010

Doing things in Singapore

Comment posted in this blog. I invite readers to contribute to this topic.
We should compile a list of difficult and complicated ways to do simple things in Singapore. Here is my initial attempt to get the ball rolling:
1. Taxi fares
2. Buying a car
3. Buying an HDB lease
(legally, your HDB flat belongs to the government. What? You think the government is actually upgrading your flat/estate for free? It's you who is subsiding the estate upgrading since the estate and flat does not belong to you)
4. Our primary school textbooks and exams
5. getting a meaningful job when you are retrenched in your 40's
6. calculating the cost of constructing an HDB flat
7. listing and calculating the value of Singapore assets and reserves so that the Singapore President will know how to protect them

Life today compared to four years ago

This article by Lucky Tan compares life in Singapore now and four years ago.

Free lance "sales manager"

I searched for a GPS tracker from the Alibaba website and found many suppliers in China. I sent an e-mail to a few suppliers. I received two replies on Sunday from the same person, replying on behalf of two different companies in Shenzhen.

I suspect that this person is a freelance "sales manager" whose role is to reply to inquiries.  It seems to be an entrepreneurial approach and also excellent customer service. I hope that companies in Singapore adopt the same approach and employ such "sales managers". It will create job for unemployed people.

Taxi surcharges

A taxi driver told me that Marina Bay Sands is outside the CBD and does not attract the surcharge. Taxi drivers are not interested to pick up the passengers there. There is a long queue of people waiting for taxis. To solve this problem, the taxi companies have applied to Land Transport Authority to designate this location as subject to surcharge. The public is not happy, as the surcharge is now being extended to more areas.

We have a confusing system of taxi fares in Singapore. It may be better to follow the practice in other countries where there is a flat fare (which may be higher than the existing fares) and no surcharge for peak hours or certain locations.

A friend from Malaysia told me that he had difficulty in getting a taxi in Singapore. He had visited Singapore before, and it was easier to get a taxi many years ago. I told him that he probably tried to get a taxi during the time before the peak hour surcharge applies. It seems that many taxi drivers will disappear during this period and will reappear at the peak hour.

Get Rich Quick Schemes

Hi Mr Tan,

Central Bank of Malaysia (i.e. Bank Negara Malaysia) recently probes an illegal deposit company - "The Gold Label Sdn Bhd" - as stated in this report, 8-May-2010.

There are just too many fraudalent & illegal get-rich-schemes (with empty promises and empty 'guarantees') designed to cheat consumers nowaday. As long as those being cheated stands out and notify the Central Bank or other authorised regulatory agencies, these regulators could conduct checks and investigations protecting the general public.

I believe there is similar authorities in Singapore too.


My comment
There is a law against illegal deposit taking in Malaysia. I believe that a similar law applies in Singapore. The financial products sold in Singapore that offer a buyback option option with interest at a high rate is a form of deposit taking. It should be regulated by the authority in Singapore.

Fragile global financial system

Read this excellent article by Lucky Tan.

My comment
I agree with the reference to high property prices in Singapore that is propped up by debt. Investors who believe that property prices in Singapore will continue to move up due to limited land should reconsider their views.

Need for Unity in Oppostion Parties

Read this article by Yoong Siew Wah.

Fair remuneration of agent

At the FISCA talk, I asked the participants what is a fair amount for an agent to earn on selling a life insurance policy with a monthly premium of $500. Should it be $2,000? Most participants felt that this was too high.

The actual amount that is earned by the agent (and the managers) is shown as "distribution cost" in the benefit illustration. It varies from $6,000 to $10,000. The participants were shocked. They did not realise it.

If you wish to buy a life insurance policy, look for the distribution cost and the effect of deduction. These two important points are explained in my book, Practical Guide on Financial Planning. The effect of deduction can amount to $200,000 for a policy of the above size. It is a lot of money that is deducted from your accumulated savings.

Spend $12 and 12 hours to learn about the basics of financial planning by reading the book. Attend the FISCA talk to get a better understading.

FISCA talk on Financial Planning - 8 May 2010

The FISCA talk on financial planning was attended by 60 participants on 8 May. The interaction was excellent.

FISCA will be holding a monthly talk on Financial Planning at the School of Business in SMU. Go to FISCA website to register.

Legal agreement

Read this letter about the role of lawyers in drafting unfair legal agreements.

My comment
We need a process to ensure that legal agreements that are imposed on the public for regulat transactions are checked to be fair. I hope that CASE or FISCA can play this role.

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