In my financial planning talk, my advice is to spend not more than 5 years of the family income on their home. Many participants said that for a family income of $60,000, my 5 year benchmark is $300,000 and it is not possible to buy any HDB flat at this price.
I checked the HDB website and found that it is possible to buy a new 4 room HDB flat way below this price, if the government glrant is counted. Without the grant, it is still possible to buy with this budget.
Many new condos are still being sold at new property launches, and the prices are way above their actual price. The buyers were told that they are getting a discount and bought thinking that they got a good deal. The discount is false, as the prices have been marked up way above the actual market price for similar properties.
The practice adopted by the marketing agents are also questionable, possibly illegal. The buyers are asked to give a blank check and to sign open ended powers of attorney to the marketing agent, in return for a deceptive "discount".
While the prices at new launches continue to show higher prices compared to previous launches, the buyers are not really able to sell their new properties to make a profit - the resale market show a big discount to the new launch prices.
This distortion is extremely bad, and is being tolerated in Singapore under the "free market" approach adopted by the government. The government should address this bad practice, in addition to the cooling measures.
Most people still think that a progressive income tax system is fairer to society. Those who earn more should pay more tax.
Many countries are moving closer to a flat rate tax system, where the majority of tax are paid at a flat rate of the earnings, rather than at a higher rate on the top bands of income. This move is a subtle one, and many people may not have noticed it.
When countries introduce GST or VAT, they are actually moving to a flat rate system. Most people spend 80% of the current earnings and they have to pay the same rate of GST or VAT on their spendings.
Singapore is mostly on this model. As a further example, look at the way that dividends on shares are taxed. In the past, the shareholders at the lower income brackets were allowed to claim back a part of the tax paid by companies, if their personal tax level is lower than the corporate rate. This has stopped for several years now, under the concept of a flat rate tax.
A flat rate tax is acceptable, even for the lower income, if the wages are set high enough so that the net income, after tax, is sufficient to meet the cost of living. This is the approach used in several countries; which I subscribe. Most of them have a high minimum wage.
The situation in Singapore is quite bad. We have a troublesome system of collect tax in "bits and pieces" through the GST system, and then to give permanent GST vouchers to the lower income. Our system is administratively wasteful and unfair (as some lower income people do not get the GST).
Some people will disagree with me, after they have given thought to the idea. There will be a large number of people who will disagree with me without much thinking; they just want to appear to be "smart"; want to justify the status quo for some "political purpose" or may have not given much analysis to the matter.
Here are some good features of a health care system:
a) The state should make basic health care available at affordable rates, through economy of scale and subsidy and provide adequate resources to meet the demand
b) Those who can afford private care can go outside of the state system and pay on their own or through insurance
c) Each person only needs to have one insurance plan to cover their health care needs, instead of the complicated and fragmented system that is adopted in Singapore.
Here is an excellent description of the health care system in Korea. It is much better than the fragmented system in Singapore
f you have adequate savings and cash in the bank, it is a good idea for you to put the savings into the CPF special account or the retirement account and earn interest at 4% per annum.
You will be allowed to withdraw the savings monthly, from age 65, through CPF Life. The money is payable for as long as you live. If you are born before 1958, you are allowed to withdraw your money in monthly installments, instead of buying CPF Life. Both options are good.
Some people are worried that CPF does not have money to pay them back. This is not true. CPF has more than sufficient money to pay back all their members.
There is also the belief that the CPF money is invested by GIC and Temasek and they make loses on their investments. This is also not true. These fund managers make a good return on their assets.
If you have spare cash, it is better to put into CPF to earn 4%. You can top up the special account and retirement account to the full amount that is allowed for yourself, spouse, parents and siblings. Check with CPF on how this can be done.
I am shocked at the type of questions asked in the application form for public service jobs, relating to the past offences committed by the applicant. Questions were asked about past and pending convictions.
The government is setting a bad example in penalizing a person for life, if he or she had been previously convicted, and had served a sentence. How can an ex-convict rehabilitate? Does thegovernment expect everybody to be angels? Can a person who made a mistake before, be allowed to turn over a new leaf?
I am aware that there are certain high or sensitive level position that need people of good character and that ex-convicts should be barred. But, this requirement should not be imposed for the front line jobs, where the risk is virtually non-existent.
I urge the government to set a good example, and remove these discriminatory questions from their standard application form for most entry level jobs. They can reserve these questions for promotions to sensitive positions. CONTRIBUTED BY A READER OF MY FACEBOOK If you apply for any government job they ask you that, as well as whether you have ever suffered from any mental illness, or have any disabilities: *1. Have you suffered, or are suffering from any medical condition, illness, disease, mental illness, substance dependence1 or physical impairment? Yes No
*2. a) Do you have a criminal record in Singapore?2 Yes No b) Have you been convicted in a court of law in any other country (excluding parking offences or criminal records disclosed above)? Yes No
*3. Have you been charged with any offence in a court of law in Singapore or in any other country for which the outcome is pending (excluding parking offences)? Yes No
*4. Are you aware of being under any current police investigations in Singapore or in any other country following allegations made against you? Yes No
*5. Have you been or are you under any financial embarrassment i.e. (a) an undischarged bankrupt, (b) a judgement debtor, (c) have unsecured debts and liabilities of more than 3 months of last-drawn pay, (d) have signed a promissory note or an acknowledgement of indebtedness? Yes No
*6. Do you have intention to apply for foreign citizenship/foreign permanent residence within the next one year? Yes No
*7. If you are currently working in the Singapore Public Service, which Ministry/Statutory Board are you working in?
*8. If you have been in the employment of the Singapore Public Service before, which Ministry/Statutory Board were you last with before you left the Public Service?
*9. Please indicate the reason for leaving the Singapore Public Service.
*10. Have you broken any bond, left an employer without serving your period of moral obligatory service or are currently serving any bond or moral obligatory service (e.g. bonds associated with scholarships or obligatory service related to training awards or no-pay leave, etc)? Yes No
*11. If your answer was "Yes" to any of the questions above, please give details :
I asked CPF about how to make withdrawal from my CPF retirement account. I am allowed to keep my money in the retirement account for as long as I want. I can start my monthly withdrawals at any time (after age 62 in my case), based on my choice. http://tankinlian.com/admin/file.aspx?id=739&IID=745
I wish to share my experience of topping up the CPF retirement account to the full amount for myself and my wife. This is suitable for people who has extra cash and wish to earn a higher interest rate under the CPF scheme. http://tankinlian.com/admin/file.aspx?id=738&IID=744
I wrote this article to Voices but was not published. Perhaps, you can post it up in your blog.
In recent times, when one often come across many advertisements about sales offers, it is imperative that one has to be more discerning about claims made by some irresponsible salesman.
I am speaking from my personal experience at IMM Gain City. On 24 Dec 2012, I went there to place an order for system 3 non-inverter air-con. After getting some quotes, I then decided to place an order for Brand A.
However, I was persuaded to purchase Brand B instead. This salesman told me that" he has so far received no complaints from customers ". Despite my comments that I have had the positive experiences of using Brand A before and that it is a trusted brand for many years, he told me that Brand A has become very unreliable in recent times.
To entice me to buy Brand B, he at first offered me a discounted price of $2K. After speaking to my cousin over the phone, he then further offered me a price of $1980. The installation date was to be on 31 Dec 2012.
On 26 Dec 2012, I called him to check on some negative feedback I have received from other users about Brand B remote system being problematic. He told me specifically that there is no such problem. However, he subsequently called me up several times asking me to purchase further extended warranty at additional cost. I did not take up the offer.
On 31 Dec 2012, the date of installation, I instructed my cousin (who was at the premise) to check with the installers about the quality and reliability of this Brand B model. She was told this is not a reliable brand. This reinstate my suspicion that this salesman has not been truthful and has, in fact mis-represented about the quality of both brands.
I am deeply disappointed with his lack of professionalism , responsibility and sincerity . He does not have the interest of the customers at heart as he has not accepted my earlier order for a Brand A and instead try to influence my decision with some unjustified claims which are even contradicted by the Gain City technicians who , I believe are more first-hand experienced in such products.
For many unsuspecting victims who are misled, like myself, there is indeed little recourse for customers and one can only suffer in silence .
A family should take a loan not more than 200 times of the monthly payment that they can afford. If the monthly payment (including CPF) is $2,500, the maximum loan is $500,000. This allows for interest rate to increase to 3.5% and for the loan to be repaid over 25 years. http://tankinlian.com/admin/file.aspx?id=736&IID=742
Someone asked me if his criticism of the work of the CPIB for a case now being heard in court could be unlawful. I searched for the definition of "contempt of court" and found this explanation:
Contempt of court is a court order which in the context of a court trial or hearing, declares a person or organization to have disobeyed or been disrespectful of the court's authority. Often referred to simply as "contempt," such as a person "held in contempt," it is the judge's strongest power to impose sanctions for acts which disrupt the court's normal process.
A finding of contempt of court may result from a failure to obey a lawful order of a court, showing disrespect for the judge, disruption of the proceedings through poor behaviour, or publication of material deemed likely to jeopardize a fair trial.
To prove contempt, the prosecutor or complainant must prove the four elements of contempt:
- Existence of a lawful order
- The potential contemnor's knowledge of the order
- The potential contemnor's ability to comply
- The potential contemnor's failure to comply
Conclusion: for the act to be unlawful, the court must give an order that the criticism of the CPIB is deemed to be "publication of material deemed likely to jeopardize a fair trial" and, after the order has been given, the party continue to ignore it.
I wrote an earlier article on why tax is necessary to collect revenue to pay for public services that are enjoyed by all residents.
Ideally, everybody who enjoys the public service should contribute to the taxation. However, there are people who earn below the poverty line that cannot afford to pay the tax.
By giving a minimum wage above the poverty line, it should be possible for everyone to be able to pay tax to contribute to the public service.
The best form of tax is a payroll tax. This is a tax that is calculated at a certain percentage of the wages and other income.
In Singapore, most people at the lower income level spend nearly all of their income. They pay GST at 7 percent. GST can be replaced by a payroll tax of 7 percent. If this is collected on wages, there is no need to collect GST on every item that is purchased.
Strictly speaking, the payroll tax should be paid by the employer. To avoid increasing the business cost, the employee should be allowed to deduct the payroll tax from the employee's salary, as it is to replace GST. However, for employees earning below a certain level, the cost should be absorbed by the employer.
As most employees do not spend of of their income, it is possible for employers to collect a lower rate of payroll tax (say 5%) instead of 7%.
Collecting payroll tax is simpler and neater than collecting GST. It will also avoid the add-on effect of GST, i.e. the GST collected at the earlier levels are added to increase the final product cost, i.e. the compounding effect. Currently, the administrative cost of collecting GST is also added to the final product cost; this cost can be avoided if the payroll tax is implemented.
Singapore is used to paying CPF contribution on salaries. This infrastructure makes it easy to collect payroll tax. The remaining issue is to collect the payroll tax on self-employed people, professionals and business people. It should be possible to levy the same payroll tax on their earnings.
Ever since GST was introduced, I have been against it for two reasons; it is regressive (i.e. the lower income bears a bigger burden) and it is wasteful (i.e. a lot of administrative work has to be done to collect the tax).
If we have to accept that the tax should be collected at 7% on all spending, it is better to adopt the payroll tax approach.
I met a persistent marketeer and finally decided to apply for two credit cards of Standard & Chartered Bank, that I do not really need.
I decided not to use the card until I had fixed by GIRO arrangement. I did not want to pay late and incur a penalty ($50?) as well as 2% interest charge. I know that banks make a lot of profit on these high charges.
Six months had passed. During this time, my first GIRO application disappeared mysteriously. I had to send another set. The bank told me it take 4 to 6 weeks for the GIRO to be approved.
Why so long? I thought that our banks had spent tens of million dollars on IT systems that allow electronic transactions to be made instantaneously?
I had a nasty feeling that they do not really welcome GIRO payments and to miss the chance of imposing their charges.
Nobody bothered to tell me that the GIRO payment had been approved. I had to call their hotline to find out.
After so much trouble, I lost interest to use their credit cards. I have put a reminder to cancel the credit cards when the 3 year free use period expires.
I went to ATM to subscribe for 30,000 Olam rights. Due to the troublesome process at the ATM, with so many terms and conditions to read and so many steps to take, I made the mistake of subscribing for 3,000 shares (not 30,000). Fortunately, I discovered it in term to cancel the transaction. There are so many traps that one can fall into, and a mistake could be costly.
I recall an earlier case where another person made a mistake in subscribing to the rights at the ATM, due to the confusing procedures, and lost a large sum of money.
My message is to MAS who must be the party to impose these requirements. By burdening the public in this manner, you are not protecting them; instead, you are causing a big risk to them.
Most people do not like taxes as they think that a part of what they earn from their hard work is being taken away from them.
There is another way to look at this matter. The state collect taxes to provide for public services for the people, e.g. health care, education, housing, safety, environment and settlement of disputes.
These are essential services needed by the community. If these are not provided by the state, the individuals have to pay a higher price by purchasing the same services from the market.
The debate should be on the types and level of services to be provided by the state, and those to be provided by the market.
The majority of people at the lower income brackets (say comprising up to 70% of the population) would prefer probably that the basic services should be provided by the state. The top 30% can opt to pay more for these services, e.g. private health care and overseas education.
Another question is how to pay for these services. Ideally, every one should pay an equal amount, as they are likely to use the same amount of services during their lifetime. This argues for a flat rate tax or a per capita tax.
This type of tax system may place an unfair burden on the lower income, who do not earn enough to pay the tax. The solution is to give everybody a higher wage level, through a minimum wage, so that they can afford to pay their fare share of tax. This is the approach adopted in countries like Australia. I like this system.
It is a big challenge to move to such a system. I am not suggesting that it can be done easily. But it is good to understand the principles on why there should be taxation, what is the level of tax and who should pay for the tax.
I have printed this sign on a card board. I will use it to look for someone to share a taxi to Ang Mo Kio. I will try it where there is a taxi queue, e.g. at the airport. You can also use the sign to write in your destination. http://tankinlian.com/admin/file.aspx?id=733&IID=739
My wife and I have been considering the purchase of a private property (for own stay) for some time now and hope to be able to get your advice.
We understand that the current property bubble is formed by a few reasons: - 1) low interest rate environment 2) QE policies in the western economies which have created massive liquidity in the market 3) low supply of public housing over the last few years resulting in massive pent up demand 4) booming economies with many cash rich individuals (China)
I read from your blog where you shared on your past experience with bubbles. We are hoping to learn from your experience as it seems like this bubble is unlikely to bust in the next 2 years since the FEDS has agreed to keep interest rate low until 2015.
Middle class folks like myself can only see our dream of upgrading floating further and further away. Look forward to your views.
It may not bust within 2 years, but surely it will bust within 10 years? The question is - after bursting, will it recover? The prices are not sustainable, so the recovery will be difficult - look at Japan and USA.
Keep your commitment as small as is necessary. There will be a chance to buy it at a much cheaper price within 10 years.
I have came across two cases where the insurance company reject claims due to unauthorized modification of the motor vehicle.
The motorist met with an accident and the insurer found that the vehicle was modified, and the modification was not declared to them. The repudiation resulted in the motorist having to pay for the repairs of his own vehicle and also to pay for the repairs of the third party claim. The third party claim is usually inflated. The total bill can amount to more than $10,000.
In one case, the motorist claimed that the modification was done several years ago, due to some engine trouble. The vehicle had passed the annual inspection test yearly. However, the motorist was not able to provide evidence to support this statement. The insurer suspected that the unauthorized modification was done recently.
In the second case, the motorist had bought the car recently as a used car. The previous owner did not tell him about the unauthorized modification.
I asked the motorist to get a statement from the previous owner that he had made the modification and did not inform the buyer about it. Based on this statement, the insurance company (EQ Insurance) changed its decision and accepted the claim "out of goodwill". The owner was relieved.
I wish to share this story to inform motorist that they are not allowed to make unauthorized modification to their vehicles, without getting approval from the Land Transport Authority. If they buy a used vehicle, they should send it for inspection to identify if there were any unauthorized modification or defects. It is worth spending the fee for the inspection.
I also wish to compliment EQ Insurance for their magnanimous gesture. I hope that they get more support from the public.
I welcome the decision of the Workers Party to field Lee Li Lian as their candidate. It is refreshing to see candidates come from the working class to balance against the elites, scholars and generals that are usually recruited by the Peoples Action Party.
It is also nice to see that loyalty is recognized in the Workers Party and is considered to be just as important as academic qualifications.
If Ms Lee is elected, the residents of Punggol East is likely to get a full time MP. This would be much better than a MP who can only spend a small fraction of his time in the constituency.
To serve the needs of the residents in the constituency, it is important for MPs to be full time. I hope that the voters will make their choice clearly heard that they prefer a MP who can be full time.
There are some discussions on whether the Straits Times had breached the election law by publishing the results of a survey after the writ of election had been issued.
Questions were also raised on whether the candidates for the various political parties, including the Peoples Action Party, had breached the law by engaging in a campaign before the Nomination Day.
Due to these questions and uncertainties, one should ask, "Is the election law flawed in the first place? "
Why are we placing so much restriction for a potential candidate to make their views known to the voters? If the voters are to make the right choice, we should give more time and avenue for them to know the candidates.
I can see a scenario where unfettered campaigning can cause a public nuisance and disorder. There are existing laws that can deal with these matters, not only for nuisance caused by campaigning, but also for marketing and other commercial activities. Let these laws on public order deal with the potential risk.
Let us remove the restrictions on election campaigning and publishing of survey results.
I made a statement that it is wasteful for a person to be trained as an engineer and end up working in a bank to sell financial products. A few people used strong words to criticize me for this statement. They argued that the engineering training make them suitable for other types of jobs.
There is no need for these people to interpret my statement in an extreme manner and then to attack it. This behavior reflects an immature and bigoted mind. They should seek to clarify and understand the other point of view first, before criticizing or making their judgement. In any case, one should avoid being judgmental.
Education is costly and can be wasteful. We spend a large part of our budget in education. We should ask if the money is well spent and if we are getting the right product from our education system.
I believe that a good education system should produce people with good character, be broad minded and confident. It should also give them the skills that are useful for their future careers.
I find these qualities in my nephew who was educated in the Australian system. He had to struggle under the Singapore system before his family migrated to Australia. My nephew told me that he like the Australian education system, which is more balanced and enjoyable.
He studied as an engineer and is now looking forward to work as an engineer, the type of work that he has studied for and liked. He is also aware that there is plenty of new areas that he has to learn, in the years ahead, to be a good engineer.
In contrast, I find many people in Singapore work in a field that is outside of their study. They also jumped from one job to another, for various reasons - better pay and working conditions. The job-hopping and the work mismatch will not develop the right skills and will harm our competitiveness in the long term.
To offset the wastefulness, many Singaporeans have to work long hours and suffer job stress. They now have to face the competition from foreign workers.
I am not saying that the Singapore education system is entirely bad. It has its good points and does produce good academic results that put us high in the world rankings. But, we should also be aware of its negative aspects, and the wasted dollars that could be better spent in other ways,.
I quoted the anecdote of my nephew who expects to get a job as an engineer in Australia with a starting salary of A$60,000. This is a good salary, which actually surprised me.
A few people argued criticized me for not mentioning the high tax rate in Australia and claimed that the after tax, the salary in Australia is lower. I do not understand why some people have to make these type of statements that showed their immaturity.
My nephew did tell me that he had to pay a tax of about 20%, leaving him with a net pay close that is more than adequate to meet the cost of living. As an engineer, he would be earning more than other trades, due to his special skills.
He does not mind paying a tax of 20%. He has benefited from the system of high taxation. He did received a monthly allowance of A$1,000 from the Government while being an undergraduate for several years. This relieved his parents of the financial burden of paying his living expenses as a student.
The Government gave him a study loan to meet his university fees. He has to pay back the study loan, at his own time, at an interest rate that is pegged to inflation, currently at around 2% per annum.
He said that the lower income families and unemployed people also get an allowance from the Government to meet the cost of living.
He is happy to pay a higher rate of tax, because he knows that he will also be entitled to welfare, when he loses a job. He knows that some people are not able to get a job, not due to laziness but to other reasons.
He also pointed out that there is a minimum wage, which is quite high, so that after tax, the net pay is still quite adequate for most people. He was surprised to learn about how low the hourly rates in Singapore are, compared to Australia. He asked how these people can afford to live on the low wages.
My nephew did not criticize the system in Singapore. He did ask some questions, in a polite way. Although he was not convinced with the answers, he did not show any disrespect. He showed a mature attitude.
I have often advised elderly people to stay with Medishield. They should not upgrade to a Private Shield and pay a higher premium, when it is not necessary. Here is another case of someone who had upgraded and faced the trauma of having the claim rejected. The agent and the insurer had failed in their duty to the consumer.
The biggest risk facing most young people is loss of jobs and debts; not critical illness or premature death.
It is important for young people to set aside savings, and to keep them in a flexible form, so that the savings can be withdrawn in an emergency. They should buy a property that is affordable, not more than 5 years of income.
They should avoid putting their savings in an inflexible life insurance policy that imposes a penalty for early withdrawals.
My preference is for the leaders of the Workers Party to meet with the leaders of the Singapore Democratic Party and for both parties to come to an understanding of collaboration in future elections, and that the SDP should withdraw from the Punggol East by-election.
If this outcome does not materialize, and there is strong indication that this will be the case, we are likely to see a 3 or 4 corner fight. In this scenario, most people expect the Peoples Action Party to "win" the by-election.
Suppose the PAP win with 40% (or less) of the votes and the remaining 60% goes to the other three parties, how credible is this "win" ? Does it really matter whether the PAP win one more seat, when they already have 80 seats out of 87 seats?
A vote below 40% will bring a "terrifying message" for the PAP. It will tell them the voting pattern for the next general election.
Some people will draw a parallel between this by-election and the Presidential Election in 2011. If they are circumspect, they will recall that in June 2011, I was the only non-PAP candidate that offered to stand.At that time, I had the support of the non-PAP parties. If I did not, there was a risk that the election would have been another walkover.
The situation changed when Tan Jee Say entered the fray, with the unofficial support of the SDP. We are now seeing a repeat of that event in this by-election. Some people questioned why I did not withdraw from the 4 corner fight. This is a separate matter that I will talk about on another occasion in the future.
When I said that many Singaporeans are paranoid about security, I am not suggesting that security should be abandoned entirely. Only narrow minded people will interpret my statement in this extreme fashion.
We should have security, but must balance between what is necessary and unnecessary, practical and impractical. We must be "more thinking" in our approach and should not implement security blindly. We face risk in many activities of our life. We are afraid of terrorism in the airplanes, but that is not the only place that a terrorist can strike. They can also strike our mass transit trains, shopping malls, hotels and and restaurants.
We know that it is not possible to do screening of every one in all of these places. Why should the airports or office buildings be the subject of excessive screening?
While terrorism can be a latent threat to Singapore, we must not close our eyes to more imminent threats. With many foreigners in Singapore, and some who are unemployed and in debt, there is a real risk that they may turn to violent crimes to get by. I suspect that these violent crimes are under-reported in the media.
I like to see more policemen on patrol in the streets. I know that the Police Force has difficulty in finding people to work in these jobs, but they have to pay higher salaries in these jobs and get people away from doing other wasteful and unproductive work.
Someone asked me to state which country has a better system than Singapore and to show how their system is better. From the way he puts his question, it appears to me that is is a "challenge" rather than a "question".
No country has a perfect system. Each system has its strengths and weakness. The assessment varies from one person to another. One person may like the system of a specific country,while another person may dislike it.
Since I have been asked, I shall state my views. I welcome people to give their views, if they differ from my views, but they do not have the privilege to criticize or attack my views. Just state their views and give their own reasons.
I think that Australia has a better system. Here are some of my reasons:
a) They have a minimum wage b) They have a better work life balance c) They have high tax and are able to provide better education, health care, pension, unemployment benefit d) Their people are generally more board minded, confident and public spirited.
The Scandinavian countries and Canada also scored well in my view. Most of these countries have higher taxes and take better care of their "less competitive" citizens. Their people show better respect and empathy for people who are less well-off.
The Singapore system also has its good points, but I feel that the bad points are overwhelming.
The recent survey that showed the people in Singapore to be the "most unhappy" must be enough to open our eyes, even for those who accuse non-conformists of disloyalty to Singapore. We cannot continue to keep our heads in the sand.
My strongest indicator is the low birth rate in Singapore. There must be something wrong, when most people are afraid to start a family. And this has been going on for more than 25 years!