Half Truths about Life Insurance

An insurance agent is taught many ways to convince a customer to buy life insurance, even if the customer suspect that he is not being given a good deal. Here are some half truths told by the agent and what the correct situation really is. Read this FAQ.

US Govt plans to file law suit against major banks

This is an interesting development. The lawsuits are for misrepresenting the risks in the mortgage backed securities. These products caused the global financial crisis and led to heavy investment losses for Singapore investors following the collapse of Lehman Brothers. The US Govt alleged that the banks failed in their duty. 

Pointed replies

How to reply in difficult situations
http://tankinlian.com/admin/file.aspx?id=556

Medishield beyond age 85

Medishield insurance (provided by CPF) stops at age 85. The annual premium payable at age 85 is $1,123. I believe that this is subsidised by the younger members and the true cost should be higher.

So far, the Ministry of Health is unwilling to extend Medishield beyond age 85. If it is extended, the premium is likely to be $1,500 to $2,000 a year for the next 10 years. This is likely to be beyond the budget of the elderly people.  When the premium is so high, those who are healthier are likely to stop the insurance. Only those who are in poorer health will continue. The cost could increase more sharply, due to the small pool.

What can the elderly consumers do? Beyond age 85, most people have so much health problem that  it may be impossible to fix them. I know of many elderly people who prefer not to go to hospital, and to let their medical conditions be untreated. They know that their time will be up soon - it is called ageing, and that there is very little that can be done by medical science.

If they want to be treated, they can still reduce their cost by going to subsidised wards, and pay from their Medisave account, or from their children's accounts. They can also try to minimise the cost by staying for short periods and only when necessary.

Tan Kin Lian

Low default risk in ETF

Dear Mr. Tan
I am a retiree. I intend to buy STI ETFs with my savings instead of buying annuities.I would also like your advice on what happens if we put our life savings into ETFs and the company behind it goes bust. Are there any other ETFs worth considering now?

REPLY
The ETF is a trust fund invested in the top 30 companies in the SGX. The fund manager is DBS or State Street. If they go bust, another fund manager will take over to manage the underlying assets (shares of SGX). The risk is very small and it is safer than investing in any single share.

A person's perspective of minimum wage

I asked my blog reader, Hang Lian, about how the minimum wage impacts business and people in New Zealand. Here is his reply.

Hi Mr. Tan,
I did not look into the minimum wage in details. What I know is it's $13 an hour (about $500 a week on 40 hrs). The exchange rates between Spore and NZ is about 1:1. 

As far as I can see, although minimum wages have been applied, the cost of living is not as high as one would expect. Many employers here are SMEs, so I also don't see how a minimum wage could add a lot of burden to businesses, let alone the MNCs.

I think the most important advantage I see is that as long as a person is willing to work, even if he earns the minimum wage, he will be able to live a reasonably comfortable live (without the need to spend too much time working as well). I lived alone for a while when I first came here, and I can say that the minimum wage is quite sufficient to support a person's basic expenses of accommodation, food, transport, etc (in some cases even 2 people). 

In Spore, for those very low income earners who earn less than $1000 a month and in some cases, working more than 10 hours a day, I can't see how this group of people make ends meet. I suspect their quality of live would be greatly compromised.

There are some employers who try to work around the minimum wage policies by paying less, which is against the law.

Of cos a lot of things are also a result of a combination of various other factors, like the general environment, working culture, lifestyle, taxes, labour laws, etc.

Hope that helps.

Hang Lian

Financial Planning Talk by Sam Goh

Here is a new financial planning talk organised by FISCA. The speaker is Sam Goh, who has experience in delivering this talk to several government agencies. Do attend his talk and widen your knowledge. Details can be found here.

Danger for the property market

The property market has gone up too high, due to low interest rate. When interest rate increases in the future after quantitative easing is over, it will cause a drop in the property market. The impact is more severe in a place like Singapore, where property are financed on short term interest rate. When interest rate rises, the impact will be severe.

Let me quote a simple example. Suppose the buyer pays for a property on a 20 year loan at an interest rate of 2% per annum. With a monthly repayment of $5,000, the borrower can afford a property worth $981,000. When interest rate increases to 4%, which is a more realistic interest rate (given that inflation is now 2% to 3%), the monthly repayment will increase by 17%. Some borrowers cannot meet the higher payment, so they have to sell the property. The next buyer can afford to buy the property at 17% lower. So, the property market will drop by 17% due to the increase in interest rate.

What can you do now - to prevent this financial disaster? You should have a 20% buffer. If you can afford a monthly payment of $5,000, buy a property that requires payment of only $4,000. The additional $1,000 is to meet higher repayment in the future.

You may not be able to get the property if you pay 20% less. In that case, it is better to wait for the property market to correct. Meanwhile, you can rent a property. Even if the rental is high, you are paying for it one year at a time. You can wait for two or three years, to see the correction in the market. It will come!

Tan Kin Lian

FISCA Talk - Financial Planning

Here is the handout for the FISCA talk on financial planning. Feel free to download and print the handout. You can attend the talk organised by FISCA by registering in www.easysearch.sg/fisca (click on Events).

FISCA Talk - Get value from your life insurance

This is the handout of the talk given by FISCA on life insurance. Attend the talk and get a better understanding of how to select the right life insurance policy. Feel free to download the PDF for your reading. If you wish to attend the talk, go to www.easysearch.sg/fisca and click on "Events".

Let elected MPs do their duty

This letter was not published in the Straits Times.

31 August 2011

Editor
Forum Page
Straits Times

I refer to the letter from the director of corporate and marketing communication of the People's Association "Why opposition MPs cannot be grass-roots advisers". She said, "Besides connecting people to people, grassroots advisers are required to help the Government connect with people and help promote government policies and programs such as anti-dengue and active ageing........Opposition MPs cannot be expected to do this and thus cannot become advisers to GROs."

I am disappointed with this partisan position taken publicly by a senior civil servant. I would request her to take a more objective look at the mission of the People's Association, which is to build and bridge communities and promote racial harmony and social cohesion in Singapore. I could not detect any reference to the need to link up with the people ONLY through the ruling party which forms the Government.

Members of Parliament from all political parties were elected to represent the people in their constituency. It can be argued that they are part and parcel of the government process of community engagement and representation. They should be entrusted with the role. All MPs, regardless of their political party affiliation, are paid out of public funds and should be required to perform the duties for which they are paid - otherwise, the public funds would be wasted.

I would suspect that the defeated candidates from the ruling party would have to struggle with the indignity of being advisers to grassroots organizations which have to connect with people who have rejected them. It does make a mockery of our democratic system.

After the last general elections, the Prime Minister had sincerely pledged to engage the people of Singapore and to respond objectively. I respect him for that and urge him to take a closer look at this aberration of our democratic process and let the opposition MPs do the job that they have been entrusted with by the people.

If they still do a good job, they deserve to be given the chance to be chosen again by the people. If they do not, despite the level playing field, the decision of the people will be swift and sure.

I would also call on the professionals in the publicly funded statutory bodies to perform their duty in a neutral and non-partisan manner. Singapore has matured and there's no need to perpetuate the political baggage of a different era.

Tan Kin Lian

Voice of the People website

Should Tan Kin Lian take the next step to organize discussions under :"the voice of the people"? Please take part in this survey.

Statement from Tan Kin Lian on the Presidential Election

31 August 2011

The outcome of the Presidential elections was obviously a shock to me. I expected a much better result and the prospect of polling less than the 12.5% of the votes (and losing the deposit) was felt to be remote.

Some commentators said that I should have known the ground feel on nomination day and withdrawn my candidacy then. This would have given the other "non-establishment" candidates the vital additional votes needed to win the elections and save me from the dismal disappointment of receiving only 4.9 per cent of the votes as well as a substantial financial loss.

As always, the wisdom of hindsight never fails but the truth was that on nomination day, the voters were still largely undecided on whom they would be voting, if at all.

My private surveys as well as information from a third party survey pointed to a credible level of support for me. I had also expected strong support from the heartlanders and the over 1 million policyholders of NTUC Income (where I had served for 30 years) as well as many people who remembered my advocacy of public causes and the plight of those who suffered investment losses during the last financial crisis.

Stacked against these positive indications was an on-line poll on Yahoo which showed a low level of support for me. However, I felt that the online poll was not representative of the entire voting population, as proven in the recent general election, and there were indications that this particular poll had been manipulated.

Anyway, it would have been difficult for me to drop out of the contest at nomination date. I would have disappointed the people who wanted to vote for me and also my supporters, who had put in a lot of work during the previous six weeks and my donors.

There was also the risk that I would be considered a coward or a quitter or someone who was never serious about the election. Most importantly, I felt that I could offer a choice of a different platform for Singaporeans to decide,

Some people asked if I would have withdrawn if I had reliable information that my support was less than 10%. The answer is that this is a moot point as we did not have that information. As already shared, we believed that on nomination day, the voters were still largely uncommitted.

I decided to contest the election on my platform to be the voice of the people, to use the influence of the President to make life better for Singaporeans and to be a truly non-partisan candidate. I worked hard to bring this message across in the TV broadcasts and the forums among the four candidates.  Regrettably, I failed to convince the voters and became the candidate with the least votes.

I also suffered considerable damage from some mis-reporting by the mainstream media. My proposal on giving better recognition to male citizens who served national service was wrongly reported as advocating that females should also serve national service. Although the media reported my correction on this point, the damage had already been done and was irreparable. I also suffered from negative slant in the reporting on some other issues – which I shall not dwell on.

My post mortem showed that there were a few weaknesses in my campaign strategy, my image and messaging. I shall not go into them in detail. 

The clear and positive message, sent in by many people after the results including those who did not vote for me, was that I was seen to be “sincere, courageous and spoke for Singaporeans”. I like to thank them for their support, understanding and encouraging words.

I was accused by my detractors of being the person responsible for letting Dr. Tony Tan become elected as President. They argued that I should have withdrawn, so that a “non-establishment” candidate could have been voted in.  I had already explained why I could not take this approach.

I would also make the point that it was really up to the last candidate to withdraw as his platform was similar to mine in several respects. In the arena of natural justice, it is really only fair that the last one in should bear the responsibility for the outcome of the changed situation

My approach was to let the people of Singapore decide on the best person to be President. I do not have any preference for any particular candidate – not even for myself. I had congratulated Dr. Tony Tan for winning a hard fought contest. Time will tell if he can deliver the promise that he will act independently of the Government and protect the interest of Singaporeans. I feel that we should give him that chance.

The election had cost me and my donors a total of $120,000, including the loss of the deposit and also a dent to my reputation.  However, I have already managed the disappointment and will take a positive attitude towards this outcome. I did receive slightly more than 100,000 votes from people who believed in my platform and looked positively towards me. Their trust and regard are worth the price that I have to pay.

I had also given a choice to the people of Singapore of a truly non-partisan platform. I respect their decision at this time but hope that the non-partisan concept embodied in my platform will find their support in the future.

I am willing to continue the work of being “the voice of the people”. If there is sufficient interest and support from other interested people, I will create a new website and mechanism to implement this role.  If not, I will try to play this role in a smaller way.

I would like to thank the small team of about 50 people that had worked hard with me throughout the campaign and to the generous donors. They had put in time, dedication, support and care.  I thank them very much for sharing the passion with me. My thanks also go to the 100,000 over people who voted for me.

What are my plans for the future? Will I take part in a future general or presidential election? I will keep an open mind on this question. It will be decided at the right time in the future. In the meantime, I will continue to serve the people of Singapore by communicating with them through the social media and also assist them to the best of my limited ability.

To conclude, I would like to leave everyone with the following quote from Marilyn Vos Savant -

“Being defeated is often a temporary condition. Giving up is what makes it permanent.”

I have not given up.

Tan Kin Lian
Candidate for the Presidential Election, 2011

TKL Facebook (www.facebook.com/kinlian)

I will be using Facebook more often from now. I invite my blog readers to go to www.facebook.com/kinlian and like my Facebook page. You can login regularly to get my views there.

Beware of investment scams

Singapore has a pro-business environment and adopts a  "buyer beware" approach towards business dealings. Under this lax regulatory environment, several investment scams have surfaced in Singapore. I became aware of these scams after the victims had written to me for my assistance.

I wish to share some of these shady investments or scams with you.

a) Gold bar. This investment product pays an attractive interest rate, say 2% every 3 months, and promises to return the full capital at the end of the period of 6 or 12 months. There is also a certificate to allow you to collect the gold bar from a trusted third party, if the buy back guarantee is not honored. The risk is that the promoter will not honor the buyback contract, citing cash flow problems and other reasons. When you get the gold bar, you will find that you had paid a higher price than the real market value of the gold . I know of a specific case where the  investor had paid a price, quoted in SGD per gram, which was 30% higher than the market price of the gold (expressed in USD per ounce). Although the price of gold had appreciated, the investor has recover the 30% in inflated price, before seeing any real gain.

b) Wine investment. This promoter sells you a portfolio of wine and convinces you that you can earn an attractive return, say 50%, when the wines are auctioned off in three years time. Several investors waited patiently for the stipulated period and received excuses why the auction could not be carried, e.g. bad market conditions. They were then pressured to make additional purchases to make a sufficiently large portfolio for a future auction. In most cases, the investors were not aware that they were sold the wines at twice of their real market price. It would not be possible to auction off the wine at a profit, if the investor had paid an inflated price.

c)  Land banks. The promoter sells land plots in foreign countries, usually under agricultural or green zoning, at a price that seemed incredibly low compared to land in Singapore. The promoter promised to apply for change of zoning within 5 to 8 years and allow the land to be sold at a large capital gain. Many investors waited patiently for the planning approval but it never happened. They were not aware that they had been sold the land at 10 to 15 times of the real market value. Under this situation, who would buy the land from them at a higher inflated price?

d) Spa packages. One promoter opened a chain of spas and sold spa packages giving discount on spa treatments to be carried out over the next 12 to 18 months. The promoter closed their operations and many customers were not able to get the treatment that they had paid for. Another spa operator took over the liability, but it is not clear if the customer had received the value for the money that they had paid.

Here is the lesson. Always avoid putting your money in investments that promise an attractive return offered by companies that are not regulated by the authority. Even if they are regulated, you have to read and understand the investment contract and be aware of the potential risk. Do not trust the assurance of the person who markets the investment to you, as the marketer might give you some wrong information due to the desire to close the sale and earn the commission. Even if the marketeer is your friend, be aware that he might have been ignorant of the real risk of the investment.

Tan Kin Lian

Streaming of Financial Planning Talk

Here is your chance to  learn about Financial Planning from the comfort of your home.

Presentation Video is at http://www.ustream.tv/recorded/16496127 

Q&A video is at http://www.ustream.tv/recorded/16497833. 

Here is the handout for the talk. 

Selamat Hari Raya Aidilfiltri

Selamat Hari Raya Aidilfiltri to all Muslim friends.

FISCA website - interesting articles

The FISCA website contains interesting articles on financial and consumer matters. A few articles will be posted each day. You can view them at www.easysearch.sg/fisca. Some articles will be available for the public (click on the information tab) and others will be available only to members (after login).

Visit the FISCA website a few times each week and keep abreast of these issues. The direct link is http://easyapps.sg/assn/Org/Information.aspx?id=5

Be aware of investment risks

A few people have approached me for assistance regarding their investment losses. They entrusted large sums of money to the wealth managers working for the banks. The investors claimed that they were not aware about how their money were invested and trusted that the wealth manager would take care of their investments. They end up with large losses.

In some cases, the investors were not able to read the portfolio statements, so it is likely that they were quite ignorant about the investments.

Some of the investments were in linked investments or leveraged investments, which carried high risks. These types of investments are speculative, and depend on the skill of the wealth manager to make the right timing decisions. It is almost impossible to acquire this type of skill. Some timing decisions is similar to gambling in a casino - a lot depends on luck.

It is likely that the wealth managers who contributed to these bad investments are also inexperienced in this field.

The more experienced wealth managers are likely to give more prudent advice - such as diversification of risk and selecting the right asset mix. In these cases, the potential return is likely to be modest, after deducting the fee payable to the manager. The investor should accept the lower yield, that commensurate with the lower risk. If the investor wants a higher yield, the wealth manager is likely to be forced to take a more risky approach - which can lead to disaster.

It is important that the investor should be aware of the risk and should select the knowledgeable wealth manager. If the investor is not aware about the risk of investments, it is better for the wealth manager to decline to take the client - so as to avoid these potential problems.

My advice: never invest in any investment that you do not understand. Invest in your education by attending the financial planning workshop organised by FISCA (www.easysearch.sg/fisca).

Tan Kin Lian

Understand the issues

Dear Mr. Tan,

Well done on the recent Presidential Election.

I'm not a Singaporean and have no rights to vote, but I have been keeping myself updated on the events. I may be wrong, but all along, I think you will be somehow crippled in your ability to help ordinary Singaporeans if you become a statesman. So, although I'm not happy with the outcome, but I do think that it's not a bad outcome.

I admire your spirit and courage to step forward for the election, it must have been a hard and long 10 days for you and your family, but I believe it's a fruitful journey.

Having been in a position to see the differences between the policies in NZ and Spore, I see some of your points, eg. a minimum wage. Unfortunately, I think some issues are not appreciated by a certain portion of the population, for example the NS one, I suspect a significant number of the female population was put off as the perception is that it's going to "disadvantage" them. The misquoting by the media is not helping either.

Finally, a Hi5! to you, Sir.

Take care.

Hang Lian

Help people in need

Dear Mr Tan,

I would like to thank you for standing up and contest in the Presidential Elections.

Despite your initial reluctance and the tough competition, you still went ahead with the attempt.

I was touched by your sincerity that could be seen in all your speeches and your voice.

I am only 19 and did not have the chance to vote, but I am here to give my 2 cents worth on what I have seen.

Although you have lost the deposit of S$48k and only garnered less than 5% of the votes, you have gained the appreciation of thousands of Singaporeans.

They may not have voted for you but they know your courage and enthusiasm in helping people in need.

You have mentioned many times in your speeches about your mini-bond campaign to help the people.

However, in my humble opinion, it was not enough to prove to the people how you can be a unifying figure who speaks for them.

Singaporeans want the growing divides to be lessened.

You also did not leverage the advantage of knowing 4 languages as you hardly spoke during the rally.

I think it was a huge mistake to let too many speakers talk in your rally.

The main person should be you as you are the candidate for Presidency.

The people want to hear what you have to say, not others.

I know that you sincerely have the commitment to be a voice of the people but the points you spoke of were not enough.

With utmost respect to you, I will take Dr Tan Cheng Bock as an example.

Dr Tan garnered just 0.34% less than the current President-Elect.

This was due to the way he campaigned and his methods of getting connected to the people.

He stayed away from bread and butter issues, and did not promise anything he could not do as a President.

The people could not see the reasons to vote for you, other than knowing that you are a really kind and good man.

It was a pity that they did not have the chance to listen to what you have to say.

I think you will do better as a man than a President.

As President, you can only control the national reserves and attempt to influence the ruling party in decision making.

However, you cannot take part in any of them.

As a man, you can do much more than that!

I hope you will continue to help people in need, like the poor and lower-income Singaporeans.

Help can come in the form of educating other Singaporeans on the issue and not necessarily money.

There is still many things to point out but I think it is pointless as the PE2011 is over.

I agree to the things you want to do for Singapore but as President, many of which you have said is not possible.

The important thing is you have experienced and learnt from this.

I wish you all the best in whatever you do.

Finally, I want to thank you for everything you have done.

Many people will misunderstand you on the basis of rumours and stories.

As long as you stay true to yourself, don't be discouraged and carry on!

Yours sincerely,

Terence Tan.

Why I voted for TKL

Dear Mr Tan,


My mother and I both voted for you. We marked a " Cross " on the last " Tan " box. There are 4 Tans. BUt we both VOTED for you.


We are touched by your generous offer to donate half your President's Pay to charity. I do NOT know why your message of the " Hi 5 " did NOT get across to Singaporeans.


I personally like your ideas of " Pension " for the elderly. My mother is old. A pension for the old would be good for her. CPF money have NOT be enough for retirement.


I don't know why you received only 4.91 % of the votes. I was praying for you to win the Presidential Election.


Do NOT lose hope. I feel sorry that you lost your SGD 48,000 deposit. I think Singaporeans should and ought to have given you a chance.


Milan Lee

Books by Tan Kin Lian

The limited period offer for my books will end soon. To place your order now, go to www.tankinlian.com/ishop and enjoy discounts of up to 50% for my books on financial planning, life insurance and puzzles.

Appreciation from a supporter

Firstly, I would like to congratulate you for taking the courage to come forward to stand in the Presidential election, though you have not make it and lost your deposit etc. 

Mr Tan, I know you are the people's people and I am definitely sure there is a purpose for the defeat.  With your 'voices of the people' website I know moving forward singaporeans need an avenue for them to voice out.   A good example, the result shows the high percentage of singaporeans still unhappy with even the current policies and that is why they vote others instead and want a active President with transparency and not a passive President just lay back and collect $m.  Knowing how the current system works, probably any feedback given to the civil service will not be actioned.  This is proven todate.   With your website, at least other singaporeans will know what is going on

Mr Tan, though I was unable to assist you due to the demise of my father, my family would like to thank you for your presence during the wake despite your tight schedule   You are really a people's person.   Imagine during the wake period, no sight of the presence or a note of condolences from his MP.   This is really sad.  Compared to opposition wards I understand that their MPs make it a point to attend every wake in their ward.  This is really complacency and such MPs should not even exist.

Once again, thank you, Mr Tan.

David Soh

Message from Tan Kin Lian

I congratulate Dr. Tony Tan for his success in this Presidential election.

I wish to thank the voters who have shown their confidence in me. The campaign has been a good experience for my campaign team and for me, and I was glad to meet many ordinary people in Singapore who has greeted me with warmth and friendship.

My family and I also thank all my campaign volunteers, supporters, donors and well wishers for their dedication, tireless energy and care throughout the campaign.

I will continue to demonstrate my care and concern for the people of Singapore and will strive to be the Voice of the People through other channels.

Tan Kin Lian
Candidate for Presidential Election, 2011

Perspective of Presidential Election 2011

I will write a note each day giving my personal perspective of the major events that have occurred during the my participation in the Presidentail Election 2011. I will start with the shocking results of polling only 5% of the votes among a field of 4 candidates.

www.facebook.com/kinlian

Post mortem on Presidential campaign

I was disappointed with my low score in the Presidential campaign. Please share your feedback in this survey.

Note: I have received over 100 replies within 8 hours! As the survey has reached its limit, it is now closed. You can now post your comments. (You can read the survey results in my facebook, www.facebook.com/kinlian.