I have 35 FAQs in my website, www.tankinlian.com, covering different aspects of investments and insurance. You can access these FAQs at www.tankinlian.com/ask.aspx.
You can search for a FAQ by typing a keyword, e.g. "unit trust" or "flood" or "critical illness", to display a short list of FAQs. This makes it easy for you to select the appropriate FAQ. Sometimes, you have to type in another keyword to get the FAQ that you need.
About 400 people visit my website daily. Most of them went to search for the FAQ. It is free, but I like to ask visitors, who have benefited from the advice in the FAQ to buy my book, Practical Guide on Financial Planning, or to join FISCA.
E-mail: kinlian@gmail.com. Website: www.tankinlian.com Facebook: www.facebook.com/kinlian
Saturday, August 14, 2010
Junk Mail
Unfair to blame agents for littering
Small businesses need fliers
Costly, messy
Take action against indiscriminate advertising
http://www.straitstimes.com/
My view
I will be building a portal called Easy Ads. This will allow the small business to advertise their products and services, instead of paying money on flyers.
My view
I will be building a portal called Easy Ads. This will allow the small business to advertise their products and services, instead of paying money on flyers.
Advice to young people on financial planning
A young man, who just started working, was approached by a friend who is an insurance agent. The young man already had SAF insurance. The agent told him, "The SAF insurance will expire at age 65. Where can you get life insurance after that? It is better to buy a life insurance policy now to supplement the SAF insurance".
The agent is giving bad advice and is misleading the young man.
Beyond age 65, there is no need for life insurance. The young man would have become an old man with grown up children (who do not depend on him) and would have accumulated sufficient savings to last for a lifetime. There is no need for people to have life insurance when they are old.
If he buys a life insurance policy, the consequences are likely to be:
The agent is giving bad advice and is misleading the young man.
Beyond age 65, there is no need for life insurance. The young man would have become an old man with grown up children (who do not depend on him) and would have accumulated sufficient savings to last for a lifetime. There is no need for people to have life insurance when they are old.
If he buys a life insurance policy, the consequences are likely to be:
- The agent would have taken away more than one year of his hard earned savings
- The cash value of the policy at age 65 would be quite low, giving a yield of perhaps 2% per annum
- The policy will continue to be a burden to the policyholder.
- The policy could have taken away more than $100,000 of his savings by age 65 (see "effect of deduction").
My advice to all young people, male and female, is to avoid locking up your future savings in a life insurance policy that gives you a poor return. Here are the ways to avoid this trap:
- Read my book, Practical Guide on Financial Planning, available for $12 here.
- Join FISCA and attend the educational talks
- Read the FAQs in my website. It's FREE.
- Avoid people trying to market life insurance or investment products to you. Here's why.
If you agree with my views, please pass the link to this article to all of your friends, so that they can avoid falling in the same trap. Send e-mail or go through Facebook and other social media.
Tan Kin Lian
PDF centric website [2]
I made a deliberate decision to pursue a document-centric websites. Some people, who are used to the traditional HTML design, disagree with my approach and argue that search engines cannot find the keywords in the documents. (Some of these critics make a living by designing website on the traditional HTML approach).
I am aware of this perceived disadvantage of the PDF design, but it is inconsequential. If a reader search for the word "insurance", he will get millions of links. Do you expect your HTML webpage with the word "insurance" to appear on the top page?
The webpages that appear at the top are from people who pays Google a few dollars per click. The buying rate could be less than 1% of clicks, so the cost of this type of advertising is very high.
If you search for "Tan Kin Lian", you will get to my website anyway. I do not expect people to come to my website through the keywords of "insurance", "investment", "property" or other generic words.
There are several advantages of the PDF centric website. It is easy for the reader to download a PDF containing the FAQs. The PDF can be read offline, printed or mailed to other people. This advantage far overwhelm the disadvantage of "missing the search engine".
I invite innovative enterprises to build the PDF centric website as a second website for your organisation. You do not have to dump the current website. Have two websites and see which attracts more visitors. You can read the PDF centric website here.
Tan Kin Lian
I am aware of this perceived disadvantage of the PDF design, but it is inconsequential. If a reader search for the word "insurance", he will get millions of links. Do you expect your HTML webpage with the word "insurance" to appear on the top page?
The webpages that appear at the top are from people who pays Google a few dollars per click. The buying rate could be less than 1% of clicks, so the cost of this type of advertising is very high.
If you search for "Tan Kin Lian", you will get to my website anyway. I do not expect people to come to my website through the keywords of "insurance", "investment", "property" or other generic words.
There are several advantages of the PDF centric website. It is easy for the reader to download a PDF containing the FAQs. The PDF can be read offline, printed or mailed to other people. This advantage far overwhelm the disadvantage of "missing the search engine".
I invite innovative enterprises to build the PDF centric website as a second website for your organisation. You do not have to dump the current website. Have two websites and see which attracts more visitors. You can read the PDF centric website here.
Tan Kin Lian
Subsidised dating
Read this story.
My view
I am very sad to read about the millions of dollars that are being wasted pursuing wrong strategies, e.g. subsidise dating. The underlying problems are the high cost of living and the burden of national service on young Singaporean males. This has been evident for many years and are getting worse as time goes by. But the government refuses to recognize the root causes and continue to pursue the ineffective strategies.
My view
I am very sad to read about the millions of dollars that are being wasted pursuing wrong strategies, e.g. subsidise dating. The underlying problems are the high cost of living and the burden of national service on young Singaporean males. This has been evident for many years and are getting worse as time goes by. But the government refuses to recognize the root causes and continue to pursue the ineffective strategies.
Customer Service
I wish to share my experience in building excellent customer service in an enterprise that I headed in the past. It uses an effective strategy that is backed by a good system, infrastructure and well trained employees.
Read
http://tankinlian.com/admin/file.aspx?id=140
Look for Customer Service in
http://www.tankinlian.com/Information.aspx?CatID=1
Read
http://tankinlian.com/admin/file.aspx?id=140
Look for Customer Service in
http://www.tankinlian.com/Information.aspx?CatID=1
Friday, August 13, 2010
Senior Citizens Bumper Stickers
For senior citizens, something to laugh about. Go to www.tankinlian.com/information.aspx, and search for "Senior Citizens".
Why peace is better than happiness?
Tom: I thought one main goal in life is to be happy.
Guru: Happiness is really a commercial goal, that’s why we have “Happy New Year”, “Happy Birthday” and so on.
Tom: Can you elaborate?
Guru: In the commercial world, their business is to sell you things, right?
Tom: Right.
Guru: It’ll be much easier for them to sell if they can convince you that happiness is your main goal in life and their product can bring you happiness.
Tom: You mean they don’t.
Guru: Some products do but whatever happiness they bring, it’s only temporal. In fact, it can be very short.
Tom: Is there a better goal in life?
Guru: Peace.
Tom: I thought peace is to do with dying, like “rest in peace”.
Guru: How about “live in peace”?
Tom: Yes, how will peace affect the living?
Guru: Suppose shopping makes you happy, but you don’t have money. What’ll you do?
Tom: I can work, earn some money and then do my shopping.
Guru: Let’s say you don’t like to work and in any case, you want your money fast. How can you get it?
Tom: Steal?
Guru: Yes. If happiness is your goal, you can justify stealing because by stealing, you’ll get your money and after you got your money, you can do your shopping and you’ll be happy.
Tom: But what happens if I’m caught.
Guru: This is the man-made laws part. So you can take your chance because you may or may not get caught.
Tom: How will it be different if peace is the goal?
Guru: If peace is your goal, then you can’t justify stealing because getting your money through stealing won’t make you feel peaceful.
Tom: Can I steal and pretend to be peaceful?
Guru: Peace belongs to divine laws. So you can’t escape the consequence.
Tom: So I can’t rest in peace?
Guru: You can, by not stealing!
Tom: But I want to be happy?
Guru: Yes, there’s another problem with happiness as the goal.
Tom: What’s that?
Guru: It leads to immorality.
Tom: I was told that it’s better to be rich and immoral than poor and moral.
Guru: Who told you that?
Tom: The rich and powerful.
Guru: Exactly, if happiness is your goal, you’ll conclude that it’s better to be rich and immoral.
Tom: What happens if peace is my goal?
Guru: Then you’ll conclude that it’s better to be poor and moral.
Tommy Wong
The book "Wisdom on how to live life" can be purchased here: www.easysearch.sg/ishop
Successful leadership
Quote
One of them is the principle of respect. You are not a leader when no one is willing to follow you. And why would they follow, when they have no respect for you?
Earning the respect of your team members/staff is the starting point for much of what we want to achieve as leaders. Without respect, forget about building trust, forget about expecting loyalty and ownership, forget about staff engagement and motivation.
Unquote
Earning the respect of your team members/staff is the starting point for much of what we want to achieve as leaders. Without respect, forget about building trust, forget about expecting loyalty and ownership, forget about staff engagement and motivation.
Unquote
The writer focuses on three important factors in getting respect:
- competence
- integrity
- fairness
The second and third factors tend to be overlooked, and the first factor (a.k.a talent) gets too much attention.
My views
A reader made a comment that the views in my blog and website reflect my bias on investing and insurance.
Of course, it does! It is my opinion. I like to express my views and my reader can make their own judgement, whether they accept or reject my view. This is the purpose of expressing an opinion.
I want to encourage Singaporeans to have a view and to express the view. They should not follow their bosses or leaders blindly. It is easy to have a view when you are clear about the values that govern your character.
Please read this document to understand my five values and how these values shape my social and political choices, and how they agree or disagree with the policies of specific political parties. I live by my values and do not take a view to be "anti-" or "pro-" any political party or person.
Even if I disagree with another view, I do not attack that person or that view. Each person is entitled to his or her own view and deserve to be respected.
Tan Kin Lian
Of course, it does! It is my opinion. I like to express my views and my reader can make their own judgement, whether they accept or reject my view. This is the purpose of expressing an opinion.
I want to encourage Singaporeans to have a view and to express the view. They should not follow their bosses or leaders blindly. It is easy to have a view when you are clear about the values that govern your character.
Please read this document to understand my five values and how these values shape my social and political choices, and how they agree or disagree with the policies of specific political parties. I live by my values and do not take a view to be "anti-" or "pro-" any political party or person.
Even if I disagree with another view, I do not attack that person or that view. Each person is entitled to his or her own view and deserve to be respected.
Tan Kin Lian
Bust of property bubble
This article explains the consequence of a busting of the property bubble.
My view
Property prices are too high in Singapore and can suffer the same consequences in the future. Do not assume that land is scarce and property prices will continue to escalate. The sharp increase in recent years is due to temporary factors, such as immigration and low interest rate. The danger is that property prices (and rental rates) are out of line with income levels, and cannot be sustained.
A warning sign - there is a report that no bids were received for an executive condominium project in Jurong. It suggest that the media report about increasing property prices may be exaggerated.
Read my views about "Invest in Property" in www.tankinlian.com/ask.aspx.
My view
Property prices are too high in Singapore and can suffer the same consequences in the future. Do not assume that land is scarce and property prices will continue to escalate. The sharp increase in recent years is due to temporary factors, such as immigration and low interest rate. The danger is that property prices (and rental rates) are out of line with income levels, and cannot be sustained.
A warning sign - there is a report that no bids were received for an executive condominium project in Jurong. It suggest that the media report about increasing property prices may be exaggerated.
Read my views about "Invest in Property" in www.tankinlian.com/ask.aspx.
Invest in the stock market
Hi, Mr Tan
Thank you very much for educating the public on financial issue. I have read your blog and bought your book -practical guide on financial planning regarding investing in share market
Can you advise me should I invest in share market or keep my spare cash (100K) in the retirement account to earn 4% interest for the next 1o years?
REPLY
Thank you very much for educating the public on financial issue. I have read your blog and bought your book -practical guide on financial planning regarding investing in share market
Can you advise me should I invest in share market or keep my spare cash (100K) in the retirement account to earn 4% interest for the next 1o years?
REPLY
if you are still not sure about the stock market, it is better to keep your money in the CPF at earn 4%.
If the alternative is to leave in a bank to earn 0.5% p.a. it is better to take the risk and invest in shares, but for the long term. Some people are waiting for the market to correct down by 10% to 20% before they make the invstment.
PDF Centric Website
My website now receives 400 visitors each day. It is a dynamic website, with information that is added every day. It is easy for the public to search for inforamtion.
I wish to offer the template for this website to any organisation that wish to develop a dynamic website to communcate actively with the public.
More details are available here:
http://tankinlian.com/Information.aspx?CatID=1
I wish to offer the template for this website to any organisation that wish to develop a dynamic website to communcate actively with the public.
More details are available here:
http://tankinlian.com/Information.aspx?CatID=1
Invest for the long term [2]
Many people who are not familiar with investments do not enter the stock market. They do not know which shares to buy and when is a good timing. They stay away from shares and other investments that are traded on the exchange. They preferred to get a fixed interest rate from a bank.
However, the low level of interest rate from the bank (i.e. lower than the rate of inflation) is forcing these prudent investors to consider other types of investments. To these risk averse investors, I have some good news!
Tip: If you invest for the long term, you do not need to worry about picking the right stocks or choosing the right timing. You only need to follow some prudent principles that are explained in my FAQ entitled "Invest for the long term". The FAQ can be found in www.tankinlian.com/ask.aspx
Tan Kin Lian
However, the low level of interest rate from the bank (i.e. lower than the rate of inflation) is forcing these prudent investors to consider other types of investments. To these risk averse investors, I have some good news!
Tip: If you invest for the long term, you do not need to worry about picking the right stocks or choosing the right timing. You only need to follow some prudent principles that are explained in my FAQ entitled "Invest for the long term". The FAQ can be found in www.tankinlian.com/ask.aspx
Tan Kin Lian
Thursday, August 12, 2010
Your endowment could be sold for more
Message from REP Holdings
Did you know that your endowment policies could be sold for a higher value instead of surrendering back to the insurance firm?
Just like you don’t have to sell your cars or flats back to the original manufacturer, your endowment policies can be assigned to a third party instead of surrendering back to the issuing life office.
We recognize that endowment policies are valuable saving tools that the policy owners have been keeping in force for a number of years. Instead of having these contracts terminated upon premature surrendering, the Resale Endowment Policies (REPs) can be transferred and continue to serve as useful financial tools.
We help surrendering policy owners to obtain higher values for their policies and provide the new policy owners taking over the REPs with shorter terms to maturity and better risk-adjusted returns.
Please visit our website www.repsholdings.com.sg or check with your financial consultants for more information. At REPs Holdings, we conserve policies and enhance values.
Micky Neo,
Director, REPs Holdings
Did you know that your endowment policies could be sold for a higher value instead of surrendering back to the insurance firm?
Just like you don’t have to sell your cars or flats back to the original manufacturer, your endowment policies can be assigned to a third party instead of surrendering back to the issuing life office.
We recognize that endowment policies are valuable saving tools that the policy owners have been keeping in force for a number of years. Instead of having these contracts terminated upon premature surrendering, the Resale Endowment Policies (REPs) can be transferred and continue to serve as useful financial tools.
We help surrendering policy owners to obtain higher values for their policies and provide the new policy owners taking over the REPs with shorter terms to maturity and better risk-adjusted returns.
Please visit our website www.repsholdings.com.sg or check with your financial consultants for more information. At REPs Holdings, we conserve policies and enhance values.
Micky Neo,
Director, REPs Holdings
Philantrophy
We have seen the ugly side of America in the greed and shameful practices of people who accumulate wealth at the expense of the ordinary people.
Now, read the wonderful side of America, in their practice and leadership in philantrophy. Something for Singapore to emulate!
Now, read the wonderful side of America, in their practice and leadership in philantrophy. Something for Singapore to emulate!
Invest in Foreign Currency
Some people invest in foreign currency deposits to enjoy a higher interest rate. They stand the risk of exposure to foreign currency loss. A foreign currency that pays a higher interest rate is likely to be a weaker currency, so this risk can be quite real.
For example, Australian and New Zealand dollars paid a high interest rate during most of the past three years. When the currency weakened in late 2008, it dropped by almost 30% within two months. Some people who invested on leverage had to close their position and lost 50% to 100% of their capital sum.
For those who are luckier, they did not earned that much. This is due to the high cost (as reflected in a large spread) of converting from Singapore dollars to the foreign currency and back. The spread can be as high as 1%.
If the difference in interest rate is 4% per annum, and you invested for 3 months to earn 1% extra, this can be totally wiped out by the spread. Why take so much risk for so little gain?
Read my FAQ on "Invest in Foreign Currency" in www.tankinlian.com (Ask Mr. Tan), to learn about this risk and the potential pitcalls.
For example, Australian and New Zealand dollars paid a high interest rate during most of the past three years. When the currency weakened in late 2008, it dropped by almost 30% within two months. Some people who invested on leverage had to close their position and lost 50% to 100% of their capital sum.
For those who are luckier, they did not earned that much. This is due to the high cost (as reflected in a large spread) of converting from Singapore dollars to the foreign currency and back. The spread can be as high as 1%.
If the difference in interest rate is 4% per annum, and you invested for 3 months to earn 1% extra, this can be totally wiped out by the spread. Why take so much risk for so little gain?
Read my FAQ on "Invest in Foreign Currency" in www.tankinlian.com (Ask Mr. Tan), to learn about this risk and the potential pitcalls.
Class action in USA - minibonds
There was a report in Bloomberg that a US court has decided to allow the minibond investors in Hong Kong to sue Lehman Brothers and the trustee HSBC in their court. Some minibond investors have asked me to organize a similar action on behalf of the minibond investors in Singapore.
At present, a US law firm, Kirby McInerney (KM), is acting for the Pinnacle Notes investors in Singapore in their legal action against Morgan Stanley. They decided earlier that they did not wish to act for the minibond investors as the issuer, Lehman Brothers, was already insolvent.
I have checked with KM if they are willing to review this case, in the light of the decision on the suit taken by the Hong Kong investors. KM has confirmed that their decision is still the same.
If any minibond investor is aware of other US law firm that are willing to take up their case on a "success fee" basis, you can ask the US law firm to contact me.
Tan Kin Lian
At present, a US law firm, Kirby McInerney (KM), is acting for the Pinnacle Notes investors in Singapore in their legal action against Morgan Stanley. They decided earlier that they did not wish to act for the minibond investors as the issuer, Lehman Brothers, was already insolvent.
I have checked with KM if they are willing to review this case, in the light of the decision on the suit taken by the Hong Kong investors. KM has confirmed that their decision is still the same.
If any minibond investor is aware of other US law firm that are willing to take up their case on a "success fee" basis, you can ask the US law firm to contact me.
Tan Kin Lian
Wait for market correction
I did a survey in mid July to ask investors about their preference in investing a lump sum at that time. I gave them 4 choices. 46 people respond to the survey. Here are the results:
More than 50% of respondents said that they would wait for a market correction of 10% to 20%.
Last night, there was a 3% market correction in USA. This will be followed in Singapore today. Over the next week, the market may correct by 10% or more. If that happens, it is time for long term investors to enter the market.
Tan Kin Lian
1. Invest the money for 5 years to get a guaranteed return of 2% p.a. 10.9% 2, Keep cash and wait for market to drop by 10%, i.e. ST index of 2,600 28.3% 3. Wait for the market to drop by 20%, i.e. ST index of 2,350 28.3% 4. Invest in preference shares or REITS to earn a yield of at least4% p.a. 32.6%
More than 50% of respondents said that they would wait for a market correction of 10% to 20%.
Last night, there was a 3% market correction in USA. This will be followed in Singapore today. Over the next week, the market may correct by 10% or more. If that happens, it is time for long term investors to enter the market.
Tan Kin Lian
Impartial Financial Advice
I wish to look for financial advisers who are willing to give impartial advice for a fee, that is based on time. They have to observe the following code of ethics:
1. To give advice in the best interest of the client
2. To be transparent about the fee
3. To charge the client fairly for the actual time that is spent and the value of the advice that is given
If you are willing to give advice based on this code, please send a resume to me and state your fee. I will post your details in my website, for consumers to contact you.
I urge consumers to be willing to pay a fee to a financial adviser who gives valuable, impartial advice. If you are willing to pay a fee for financial advice, I will refer you to the financial adviser.
Tan Kin Lian
1. To give advice in the best interest of the client
2. To be transparent about the fee
3. To charge the client fairly for the actual time that is spent and the value of the advice that is given
If you are willing to give advice based on this code, please send a resume to me and state your fee. I will post your details in my website, for consumers to contact you.
I urge consumers to be willing to pay a fee to a financial adviser who gives valuable, impartial advice. If you are willing to pay a fee for financial advice, I will refer you to the financial adviser.
Tan Kin Lian
Existing Life Insurance Policy [2]
I have received many requests from consumers asking my advice if they should continue their existing life insurance policies. They gave me a lot of details of the various policies that they now hold.
I am not able to give individual advice of this type, as it requires me to spend a lot of time. I will refer them to a financial adviser, who is willing to give the advice for a fee that is based on time, similar to seeing a doctor or lawyer. I advice consumers to be willing to pay for impartial advice.
If you wish to avoid paying this fee, you can learn to make decisions for yourself. You can follow the guide explained in my FAQ on "existing life policies" available from www.tankinlian.com/ask.aspx.
Tan Kin Lian
I am not able to give individual advice of this type, as it requires me to spend a lot of time. I will refer them to a financial adviser, who is willing to give the advice for a fee that is based on time, similar to seeing a doctor or lawyer. I advice consumers to be willing to pay for impartial advice.
If you wish to avoid paying this fee, you can learn to make decisions for yourself. You can follow the guide explained in my FAQ on "existing life policies" available from www.tankinlian.com/ask.aspx.
Tan Kin Lian
Bad customer service
I found it troublesome to make an Internet transfer from my DBS bank account to a payee's bank account. DBS required me to register the payee and authenticate it using my mobile phone. Their webpage did not respond to the creation of the payee details, so I had to go through the tedious process a second time. I have to enter my 2FA token a few times and respond to a few SMS messages. It took me 20 minutes to complete the process. As this is a once-off payment, I had to delete the payee record.
I sent an e-mail to DBS to tell them about my experience. I received an e-mail reply from the service quality manager by e-mail. It is a standard reply stating the importance of the 2FA token for authentication. The reply did not address my actual issue.
I sent another e-mail to the service quality manager to ask if DBS Bank is really interested to understand why it was so troublesome for me. I gave them my telephone number to call. The service quality manager did not reply or telephone me. She just ignore my second e-mail.
This is the poor standard of service of DBS Bank. But it is typical behavior of many people in Singapore, i.e. ignore the complaint. But this should not be the behavior of a person holding the position of a service quality manager.
It will be very troublesome for me to move my account to another bank, as I had a lot of GIRO payments to transfer, but I will do it. I need to find another bank that has better customer service.
Tan Kin Lian
I sent an e-mail to DBS to tell them about my experience. I received an e-mail reply from the service quality manager by e-mail. It is a standard reply stating the importance of the 2FA token for authentication. The reply did not address my actual issue.
I sent another e-mail to the service quality manager to ask if DBS Bank is really interested to understand why it was so troublesome for me. I gave them my telephone number to call. The service quality manager did not reply or telephone me. She just ignore my second e-mail.
This is the poor standard of service of DBS Bank. But it is typical behavior of many people in Singapore, i.e. ignore the complaint. But this should not be the behavior of a person holding the position of a service quality manager.
It will be very troublesome for me to move my account to another bank, as I had a lot of GIRO payments to transfer, but I will do it. I need to find another bank that has better customer service.
Tan Kin Lian
Bike sharing
This writer argues that it should be done on a large scale, supported by corporate sponsors.
Wednesday, August 11, 2010
LKY Water Prize and National Day Award
Dear Mr. Tan,
Please highlight this link in your blog
http://de-leviathan.blogspot.com/2010/08/most-ironic-awards-lee-kuan-yew-water.html
CH Yak
Please highlight this link in your blog
http://de-leviathan.blogspot.com/2010/08/most-ironic-awards-lee-kuan-yew-water.html
CH Yak
High price of HDB flats
Do the residents benefit when there is appreciation in the value of HDB flats? This person thinks that they do not.
My view
It is better for the flat prices to be kept at a reasonable proportion of the average income, e.g. 5 years. Currently, most people are paying more than they can really afford. It caused them to cut down on other expenses.
My view
It is better for the flat prices to be kept at a reasonable proportion of the average income, e.g. 5 years. Currently, most people are paying more than they can really afford. It caused them to cut down on other expenses.
The Purpose of Talent
The word "talent" become fashionable after a report printed by the management consultancy firm, McKinsey entitled "The War for Talent". The report said that "talent" is the most important corporate resource for the next 20 years.
I wondered what happened to the world before "talent" was discovered. Did we get into trouble? Was the world stuck in the dark ages, with no progress? Was there no scientific discovery and progress, before talent was discovered?
Anyway, what is a "talent"? I thought that it referred to the small number of remarkable people who were able to create wealth and give a better standard of life to the billions of people in the world. But, this was not to be the case!
Who were the talents that were sought after by the corporations? They seem to be the smart people who created the sub-prime mortgages, structured products and financial derivatives, or engaged in humongous bets on the financial markets. If they get the bets right, they make billions in profits. If they got it wrong, they will be bailed out by Uncle Sam.
The talents included the top CEOs who increased the profits of their companies by reducing the cost through global outsourcing, leading to the destruction of countless jobs and high unemployment. They included the talents who created accounting frauds, ponzi schemes, investments scams and the biggest asset bubbles of all times. Before they were discovered, they were lauded as talents who created wealth (a.k.a asset bubbles and large bets).
They included the CEOs who make super profits by exploiting their monopolistic power or through a hidden cartel (e.g. look at the high charges for banking and telecommunication services). These super profits were extracted from the high prices paid by the consumers who were paid depressed wages for their work.
They included the lawyers and doctors who charged large fees for providing their services to the clients, i.e. fees that would make the many families bankrupted for a generation.
It is easy to make super profits by betting, by cheating and by exploiting the weak. It need talent to do all of these and avoid getting caught by the law.
What is the value of talents, if they are not backed by ethical behavior and the spirit of public service, of doing good for the ordinary people?
Tan Kin Lian
I wondered what happened to the world before "talent" was discovered. Did we get into trouble? Was the world stuck in the dark ages, with no progress? Was there no scientific discovery and progress, before talent was discovered?
Anyway, what is a "talent"? I thought that it referred to the small number of remarkable people who were able to create wealth and give a better standard of life to the billions of people in the world. But, this was not to be the case!
Who were the talents that were sought after by the corporations? They seem to be the smart people who created the sub-prime mortgages, structured products and financial derivatives, or engaged in humongous bets on the financial markets. If they get the bets right, they make billions in profits. If they got it wrong, they will be bailed out by Uncle Sam.
The talents included the top CEOs who increased the profits of their companies by reducing the cost through global outsourcing, leading to the destruction of countless jobs and high unemployment. They included the talents who created accounting frauds, ponzi schemes, investments scams and the biggest asset bubbles of all times. Before they were discovered, they were lauded as talents who created wealth (a.k.a asset bubbles and large bets).
They included the CEOs who make super profits by exploiting their monopolistic power or through a hidden cartel (e.g. look at the high charges for banking and telecommunication services). These super profits were extracted from the high prices paid by the consumers who were paid depressed wages for their work.
They included the lawyers and doctors who charged large fees for providing their services to the clients, i.e. fees that would make the many families bankrupted for a generation.
It is easy to make super profits by betting, by cheating and by exploiting the weak. It need talent to do all of these and avoid getting caught by the law.
What is the value of talents, if they are not backed by ethical behavior and the spirit of public service, of doing good for the ordinary people?
Tan Kin Lian
How to read benefit illustration
When an agent sells a life insurance policy to you, the agent has to give you a benefit illustration and explain the contents to you. The benefit illustration contains a lot of information but you must look for two important items that are hidden in that jungle, i.e. the distribution cost and the effect of deduction. The agent is likely to skip these figures, so you have to ask the agent to identify them and show them to you.
You need to know how to interpret these figures. They are explained in my FAQ on "benefit illustration" available in www.tankinlian.com/ask.aspx. Be sure to pay attention to these two indicators and know what is acceptable and what is not. Most life insurance policies do not pass the benchmark, i.e. they give a poor yield to the policyholder.
You can also read my book, Practical Guide on Financial Planning, to learn about how to invest your savings to get a good yield and avoid excessive risk.
Be educated. And save more than $100,000 on the "effect of dedution" taken from your savings!
Tan Kin Lian
You need to know how to interpret these figures. They are explained in my FAQ on "benefit illustration" available in www.tankinlian.com/ask.aspx. Be sure to pay attention to these two indicators and know what is acceptable and what is not. Most life insurance policies do not pass the benchmark, i.e. they give a poor yield to the policyholder.
You can also read my book, Practical Guide on Financial Planning, to learn about how to invest your savings to get a good yield and avoid excessive risk.
Be educated. And save more than $100,000 on the "effect of dedution" taken from your savings!
Tan Kin Lian
Tuesday, August 10, 2010
Poor customer service
Why do Singapore provide poor customer service? Here is a view.
My view
Good customer service comprise of three components:
My view
Good customer service comprise of three components:
- Culture
- Training
- System
While there is little that can be done about culture, as it comes from the upbringing and education, there is much that can be done to put up a customer service system, backed by training based on that system. If we study great organisations like Walt Disney, we can see the importance of system and training.
David Marshall in 1994
http://thinkhappiness.blogspot.com/2006/08/meeting-david-marshall-in-1994.html
I've got nothing against money. I'd like to have money myself! I'd like to
have a house and a garden and dogs and a car and a chauffeur but, look,
I've got a flat. I've got a swimming pool attached to the flat. I've not
even got a car but I use taxis. I have a dignified way of life without
being wealthy.
I don't see the necessity of owning a Mercedes-Benz and a swimming pool
and a couple of mistresses. I think we've got our values all wrong.
You know $96,000 a month for a Prime Minister and $60,000 a month for a
minister. What the hell do you do with all that money? You can't eat it!
What do you do with it? Your children don't need all that money.
My children have had the best of education. In fact, I'm very proud of
them. One of them is a senior registrar to two major hospitals in Oxford.
Another of them is a consultant in European law to the Securities and
Investment Board in the United Kingdom. They've had their education. There
are no complaints.
I never earned $60,000 a month or $90,000 a month. When I was Chief
Minister, I earned $8,000 a month.
Look, what is happening today is we are encouraged to and are becoming
worshippers of the Golden Calf.
We have lost sight of the joy and excitement of public service, helping
our fellow men. The joy and excitement of seeking and understanding of the
joy of the miracle of the living the duty and the grandeur. We have lost
taste for heroic action in the service of our people.
We have become good bourgeois seeking comfort, security. It's like seeking
a crystal coffin and being fed by intravenous injections through pipes in
the crystal coffin; crystal coffins stuck with certificates of your
pragmatic abilities.
I've got nothing against money. I'd like to have money myself! I'd like to
have a house and a garden and dogs and a car and a chauffeur but, look,
I've got a flat. I've got a swimming pool attached to the flat. I've not
even got a car but I use taxis. I have a dignified way of life without
being wealthy.
I don't see the necessity of owning a Mercedes-Benz and a swimming pool
and a couple of mistresses. I think we've got our values all wrong.
You know $96,000 a month for a Prime Minister and $60,000 a month for a
minister. What the hell do you do with all that money? You can't eat it!
What do you do with it? Your children don't need all that money.
My children have had the best of education. In fact, I'm very proud of
them. One of them is a senior registrar to two major hospitals in Oxford.
Another of them is a consultant in European law to the Securities and
Investment Board in the United Kingdom. They've had their education. There
are no complaints.
I never earned $60,000 a month or $90,000 a month. When I was Chief
Minister, I earned $8,000 a month.
Look, what is happening today is we are encouraged to and are becoming
worshippers of the Golden Calf.
We have lost sight of the joy and excitement of public service, helping
our fellow men. The joy and excitement of seeking and understanding of the
joy of the miracle of the living the duty and the grandeur. We have lost
taste for heroic action in the service of our people.
We have become good bourgeois seeking comfort, security. It's like seeking
a crystal coffin and being fed by intravenous injections through pipes in
the crystal coffin; crystal coffins stuck with certificates of your
pragmatic abilities.
The Notebook Mall
The notebook mall is operated by Toh Yee Peng. He sells notebooks at a lower price, compared to similar products in the market. The mall received 13,000 visits in July or about 450 visitors each day. Most customers bought the Lenovo notebooks and opted for home delivery at $5.
Based on feedbacks from the customers, Yee Peng has added two new services in The Notebook Mall:
With these services, he aims to differentiate his Notebook Mall compared to traditional brick and mortar IT shops and other online malls.
Website: www.thenotebookmall.com
E-mail: sales@thenotebookmall.com
Based on feedbacks from the customers, Yee Peng has added two new services in The Notebook Mall:
- customers to advertise laptops for sale (a free service)
- disk imaging - cloning a hard disk (very important for as backup for small companies - $100 only).
With these services, he aims to differentiate his Notebook Mall compared to traditional brick and mortar IT shops and other online malls.
Website: www.thenotebookmall.com
E-mail: sales@thenotebookmall.com
Lehman, HSBC maybe sued over minibonds
This is an important decision in US courts to recognize that HSBC and Lehman Brothers may be sued for the products that they sold in Hong Kong. Read this Bloomberg report.
I have asked the US lawyer if this decision has bearing on the legal action on the Pinnacle Notes. 200 investors in Singapore have signed to join this legal action.
I have asked the US lawyer if this decision has bearing on the legal action on the Pinnacle Notes. 200 investors in Singapore have signed to join this legal action.
Property as a cost of living
Many people paid too much for a property thinking that it will appreciate in price and is an investment. This is the wrong way to look at a property. The property should be looked at an expense, representing 4% of the cost of the property.
If you pay $500,000 for a property, you should take your cost of occupying the property to be 4% or $20,000 a year. This is the amount that you have to pay, if you rent a property.
The large appreciation in property prices in the past will not be repeated, as the property prices are now too high, relatively to the average income of the people. Read these important facts in my FAQ on "property" in my website.
www.tankinlian.com (search for Property).
If you pay $500,000 for a property, you should take your cost of occupying the property to be 4% or $20,000 a year. This is the amount that you have to pay, if you rent a property.
The large appreciation in property prices in the past will not be repeated, as the property prices are now too high, relatively to the average income of the people. Read these important facts in my FAQ on "property" in my website.
www.tankinlian.com (search for Property).
Risk management
In this article, I explain the various ways to manage risks, besides buying insurance. I also explain the importance of savings as a form of risk management and the important factors to look for in selecing an insurance policy.
www.tankinlian.com (see Latest or Ask Mr. Tan)
www.tankinlian.com (see Latest or Ask Mr. Tan)
High deduction for investment linked plan
A graduate, who recently got a job, was approached by a friend to invest $300 a month in an investment linked policy. His friend showed him the colorful brochures of three funds with projections of yields of 5% and 9%. The graduate sought my views about these funds.
I asked him to send the benefit illustration to me. He initially sent me the fund brochures (which he mistook to be the benefit illustration). Later, he found the benefit illustration. Here is my reply to him:
1) The distribution cost for 5 year sis $6,383, representing 177% of your annual savings. Do you really want to give so much of your saving away?
2) Based on 9% yield (which is not guaranteed and over-optimistic), the accumulated premium at the end of 25 years is $332,366. However, the amount that is taken away from you is $131,966 (39% of total), leaving you with a net amount of only $200,400. This is a lot of money to be taken away. According to the benchmark in my book, an acceptable deduction is 20%.
3) Based on a more realistic gross yield of 5%, the projected cash value at the end of 25 years is only $115,900 representing a net yield of 2%. This is a hefty deduction of 3% from the gross yield of 5% and is not sufficient to cover future inflation.
4) This is a bad investment plan and should be avoided.
The graduate was also asked to pay another $150 a month for the death and critical illness cover. This is excessive, compared to the premium charged on similar cover in the SAF group insurance policy. It is so easy for the public to be misled into buying life insurance products that offer poor value for their savings.
Tan Kin Lian
Practical Guide on Financial Planning
FAQs in TKL website
Yes, Prime Minister
Read this response from a citizen to the National Day message from the Prime Minister.
When should one retire?
Read this article.
My view
I agree with Dr. Wong Wee Nam. We need to build the services and infrastructure to cater to the needs of our aging population. We should also relieve them from the worry of meeting the rising cost of living.
My view
I agree with Dr. Wong Wee Nam. We need to build the services and infrastructure to cater to the needs of our aging population. We should also relieve them from the worry of meeting the rising cost of living.
Monday, August 09, 2010
Relevance of Tommy Wong's book
If you consider there are many negative events happening around the world, and would like a understanding of the mentality of the rich and powerful, you are recommended to read the chapter “Conversation with Guru Dick” in Tommy Wong’s book “Wisdom on How to Live Life”. The book also offers an alternative, spiritual way of living our lives. It has special relevance to the people who were misled into investing in the toxic financial products.
The book can be ordered here.
Build FISCA
A young man thanked me for replying promptly to his question about an insurance policy that is being offered to him, especially (as he pointed out) on a public holiday.
I run a small start up (see www.tankinlian.com for a range of my consulting, software development and other activities) and have to spend most of my working time there.
I can and have to do the educational work (i.e my blog and website) mostly in the evenings, weekends and public holidays. I also have to spend a lot of time looking for volunteers for FISCA and to get their commitment to spend time on its educational activities. That is also a lot of work and sacrifice. But the work has to be done, in the interest of educating the public about financial issues and giving them the knowledge to make better financial decisions.
I like to ask those who have benefited from my blog and FAQs in my website to give tangible support for FISCA in the following ways:
I run a small start up (see www.tankinlian.com for a range of my consulting, software development and other activities) and have to spend most of my working time there.
I can and have to do the educational work (i.e my blog and website) mostly in the evenings, weekends and public holidays. I also have to spend a lot of time looking for volunteers for FISCA and to get their commitment to spend time on its educational activities. That is also a lot of work and sacrifice. But the work has to be done, in the interest of educating the public about financial issues and giving them the knowledge to make better financial decisions.
I like to ask those who have benefited from my blog and FAQs in my website to give tangible support for FISCA in the following ways:
- Join FISCA as a member (only $36 a year)
- Attend the educational talks of FISCA ($30 for public, reduced rate for members)
- Donate to FISCA (say 10% of the distribution cost that you saved by avoiding a bad policy)
FISCA needs funds to pay an allowance to its volunteers (some of whom are not gainfully employed). I am not able to handle FISCA on my own. More people are joining FISCA (and I thank them for their support), but I need much more. So please spread the word around.
Remember - if you have gained from my educational activities, you could save $100,000 over the next 30 years,. That is a lot of money - not to be taken for granted. Make a generous donation to FISCA.
Tan Kin Lian
Bill Gates and Education
Read what Bill Gates say about education.
My view
I qualified to be an actuary through self-study, before the days of the Internet. Today, the process would have been much easier for someone to learn through self-study. They can also interact with class mates thorugh social media, Skype and conference calls. It is possible to learn using the methods proposed by Bill Gates.
I also have experience teaching a course at a local university and is familiar with the structure of the learning, delivery and testing. It is possible to build a new university that is entirely virtual. But it needs a properly designed learning management system that suits this environment.
My view
I qualified to be an actuary through self-study, before the days of the Internet. Today, the process would have been much easier for someone to learn through self-study. They can also interact with class mates thorugh social media, Skype and conference calls. It is possible to learn using the methods proposed by Bill Gates.
I also have experience teaching a course at a local university and is familiar with the structure of the learning, delivery and testing. It is possible to build a new university that is entirely virtual. But it needs a properly designed learning management system that suits this environment.
Happy 45th National Day
The article below the editorial by the Straits Times on 9 August 2010 carried this title "Celebrate achievements, strive hard for the future".
I was struck by the cartoon of a person with a broad smile, but his mouth was covered by the flag of Singapore. This thought crossed my mind, "Is this a subtle message that Singaporeans should smile and keep their mouth shut?"
I was also surprised that the chairman of the Public Utilities Board was given the top honors in this year's National Day. The timing seemed to be quite out of place, as Singapore had recently suffered from three unprecedented floods and the flooding problem had not been explained, let alone solved. Is this a message that public opinion does not count? (On a personal level, I know Mr. Tan Gee Paw to be humble and friendly, has made significant contribution to Singapore and is deserving of this award).
And here is my personal mesage for our national day.
Tan Kin Lian
I was struck by the cartoon of a person with a broad smile, but his mouth was covered by the flag of Singapore. This thought crossed my mind, "Is this a subtle message that Singaporeans should smile and keep their mouth shut?"
I was also surprised that the chairman of the Public Utilities Board was given the top honors in this year's National Day. The timing seemed to be quite out of place, as Singapore had recently suffered from three unprecedented floods and the flooding problem had not been explained, let alone solved. Is this a message that public opinion does not count? (On a personal level, I know Mr. Tan Gee Paw to be humble and friendly, has made significant contribution to Singapore and is deserving of this award).
And here is my personal mesage for our national day.
Happy 45th National Day!
Tan Kin Lian
Lesson for Singapore
I was attracted to an article in the Straits Times entitled "Change of Tack: One pro-business S Korea Leader now raps corporate giants".
Quote:
South Korean President Lee Myung Bak has turned on the country's powerful business congolomerats, or chaebol, blaming them for the hardship faced by workers.
"Conglomerates rake in hundreds of billions of won in profits, but the ordinary Koreans are still suffering from economic hardship. They must feel socially responsible", he said.
The criticism got harsher when be visited a micro-credit bank, which the government launched last year to provide cheap loans to the poor.
There, Mr Lee blasted the chaebol for practising "social injustice" by running consumer finance companies that charge low-credit borrowers "usury" rates.
"I am not coercing the conglomerates, but I am telling them to play fair. They have a large amount of cash on their hands, but they are not making investments, and instead, worsening the hardship of the working class" he said.
The chastisement is surprising as Mr Lee had spent 30 years of his working life in the Hyundai Group before going into politics.
Unquote.
I was struck that the situation in South Korea had strong resemblance to what is happening in Singapore.
President Lee knows that businesses will focus on making profits, the more the better, and cannot be coutned to play the role of government to achieve social justice and improve the lot of the ordinary people. He has decided to take the lead to achive the national goals.
When I first visited South Korean in 1985, it was under martial law. Today, South Korea has made significant progress in economic and social development. It is time for Singapore to catch up.
Quote:
South Korean President Lee Myung Bak has turned on the country's powerful business congolomerats, or chaebol, blaming them for the hardship faced by workers.
"Conglomerates rake in hundreds of billions of won in profits, but the ordinary Koreans are still suffering from economic hardship. They must feel socially responsible", he said.
The criticism got harsher when be visited a micro-credit bank, which the government launched last year to provide cheap loans to the poor.
There, Mr Lee blasted the chaebol for practising "social injustice" by running consumer finance companies that charge low-credit borrowers "usury" rates.
"I am not coercing the conglomerates, but I am telling them to play fair. They have a large amount of cash on their hands, but they are not making investments, and instead, worsening the hardship of the working class" he said.
The chastisement is surprising as Mr Lee had spent 30 years of his working life in the Hyundai Group before going into politics.
Unquote.
I was struck that the situation in South Korea had strong resemblance to what is happening in Singapore.
President Lee knows that businesses will focus on making profits, the more the better, and cannot be coutned to play the role of government to achieve social justice and improve the lot of the ordinary people. He has decided to take the lead to achive the national goals.
When I first visited South Korean in 1985, it was under martial law. Today, South Korea has made significant progress in economic and social development. It is time for Singapore to catch up.
Which type of attachment brings bliss?
Extract from Tommy Wong's book, "Wisdom on How to Live Life"
Tom: Can you tell me more about living as souls?
Guru: By living as souls, we’re not too motivated by physical rewards. That’s why we can live with no attachment to physical objects.
Tom: This no attachment part, is it really achievable?
Guru: It’s not a question whether it’s achievable. It must be achieved in order to avoid pain.
Tom: Attachment leads to pain.
Guru: Yes, actually this saying only applies to physical and emotional attachments.
Tom: You mean there is a type of attachment that can bring joy?
Guru: Yes, by attaching to the Divine, it actually brings bliss. It’s called spiritual attachment.
Tommy Wong's books (book 1 and 2) can be ordered here.
Tom: Can you tell me more about living as souls?
Guru: By living as souls, we’re not too motivated by physical rewards. That’s why we can live with no attachment to physical objects.
Tom: This no attachment part, is it really achievable?
Guru: It’s not a question whether it’s achievable. It must be achieved in order to avoid pain.
Tom: Attachment leads to pain.
Guru: Yes, actually this saying only applies to physical and emotional attachments.
Tom: You mean there is a type of attachment that can bring joy?
Guru: Yes, by attaching to the Divine, it actually brings bliss. It’s called spiritual attachment.
Tommy Wong's books (book 1 and 2) can be ordered here.
Cancel the policy during free look period
Dear Mr. Tan,
I am 21 years old and have recently bought an ILP. I have read your blog extensively to find out what the terms in my Benefit Illustration mean. I worked out the figures in an Excel sheet and found out that the Effects of Deductions take at least ~25% from the Accumulated Premiums, and that the Annual Rates of Return is reduced by at least 1.9% depending on when I choose to surrender the policy.
Is this a good policy to buy? The 14 day free-look period will start tomorrow and I am considering cancelling this policy as I feel that this is an expensive policy. Please do help me take a look at the files and let me know if my calculations are correct.
Your blog is very informative for a starter like me and I will continue to read it to find out more about financial planning. :)
REPLY
The distribution cost at end of 5 yers is $3,929 which represents 164% of the premium. This is high.
The effect of deduction at the end of 25 year is:
For 25 years, the effect of deduction should not exceed 20%. In this case, it is too high.
As you are still in the free look period, it is better to cancel the policy and get a full refund. As you are young, you can buy term insurance from SAF and invest the difference in a low cost investment fund, such as the STI ETF. Read my book Practical Guide on Financial Planning and also attend the talk organised by FISCA.
All the best for your future.
I am 21 years old and have recently bought an ILP. I have read your blog extensively to find out what the terms in my Benefit Illustration mean. I worked out the figures in an Excel sheet and found out that the Effects of Deductions take at least ~25% from the Accumulated Premiums, and that the Annual Rates of Return is reduced by at least 1.9% depending on when I choose to surrender the policy.
Is this a good policy to buy? The 14 day free-look period will start tomorrow and I am considering cancelling this policy as I feel that this is an expensive policy. Please do help me take a look at the files and let me know if my calculations are correct.
Your blog is very informative for a starter like me and I will continue to read it to find out more about financial planning. :)
REPLY
The distribution cost at end of 5 yers is $3,929 which represents 164% of the premium. This is high.
The effect of deduction at the end of 25 year is:
Cash value Accumulated Effect of % of premium deduction Acc Prem 5% 85,900 120,272 34,372 29% 9% 153,000 221,578 68,578 31%
For 25 years, the effect of deduction should not exceed 20%. In this case, it is too high.
As you are still in the free look period, it is better to cancel the policy and get a full refund. As you are young, you can buy term insurance from SAF and invest the difference in a low cost investment fund, such as the STI ETF. Read my book Practical Guide on Financial Planning and also attend the talk organised by FISCA.
All the best for your future.
Avoid a promotion on life insurance
Hi Kin Lian,
I recently just graduated from university and have been approached by a friend to purchase an investment linked policy. I m in dire need of some advise. The policy goes like this:
REPLY
Send the benefit illustration to me.
Read my book Practical Guide on Financial Planning and the FAQs in the website.
Be careful about buying something (especially a life insurance policy ) on a promotion, as it will usually color your judgement.
I recently just graduated from university and have been approached by a friend to purchase an investment linked policy. I m in dire need of some advise. The policy goes like this:
- approximately about $450 premium each month with a coverage of 300k (100k for 30 critical illness and 200k for death)
- I can draw out the cash when it break-evens, estimated at 9 - 10 years. The promise of interest earned will be at 5 to 9%
- The funds chosen for investment are Singapore equities.
- There is a ongoing promotion that for every 1.8k premium i pay this year, I get $300 "free".
REPLY
Send the benefit illustration to me.
Read my book Practical Guide on Financial Planning and the FAQs in the website.
Be careful about buying something (especially a life insurance policy ) on a promotion, as it will usually color your judgement.
Insurance against unemployment
In this FAQ, I explain why insurance is not available to cover unemployment and what is the best way for consumers to be financially secure against the risk of unemployment. I also explain why consumers should avoid paying a high premium towards a critical illness policy.
www.tankinlian.com (see Ask Mr. Tan or Latest)
www.tankinlian.com (see Ask Mr. Tan or Latest)
Sunday, August 08, 2010
Participating Policy
In this article, I explain what is a participating life assurance policy and how are the reversionary bonus ro cash dividend calculated for these policies, and why this type of policies should be avoided by consumers in Singapore.
www.tankinlian.com (see Latest or Ask Mr. Tan)
For alternative types of investments that give a better yield, read Practical Guide on Financial Planning
www.tankinlian.com (see Latest or Ask Mr. Tan)
For alternative types of investments that give a better yield, read Practical Guide on Financial Planning
Singapore Exchange
In this FAQ, I explain why it is better to invest in the financial products traded in the Singapore Exchange (SGX) compared to other platforms, such as the products offered by banks and marketing intermediaries. The SGX offers a wide range of products at transparent prices with narrow spreads and allow you to buy or sell the same prodcut. However, unit trusts are not traded on the SGX.
www.tankinlian.com (click on Ask Mr. Tan or Latest)
www.tankinlian.com (click on Ask Mr. Tan or Latest)