FAQ Investment Linked Policy

Many consumers are confused with an investment-linked policy (ILP). I have explained the key features of this policy in a FAQ in my website, www.tankinlian.com. Search for "Investment-linked Policy".

Invest for the Long Term

I have given some tips on how you can choose suitable shares or funds to invest for the long term, when you decide to handle your own investment, instead of getting a low yield for your savings in an insurance policy.

Go to www.tankinlian.com, click on "Ask Mr. Tan" and search for "Invest for the Long Term".

Marketed Financial Product [2]

When someone approaches you to market a financial product to you, you have to be extra careful. It is likely that the financial product will be a bad deal for you. You should be careful, even if the marketing person is your friend.

Many people have lost large sums of money after they have bought bad financial product. The marketing person may not even be aware about the bad nature of the product. In their eagerness to close the sale and earn the commission, the marketing person may mis-present the product to you, either deliberately or through ignorance or negligence.

Read the article under this title under the "Ask Mr. Tan" tab in www.tankinlian.com.

Tan Kin Lian

Marketed Financial Products

When a marketing person approaches you to invest in a financial product, you have to be careful. Here is the reason.

You can also read the other FAQs in my website, www.tankinlian.com/ask.aspx

Read
Practical Guide on Financial Planning

Blue chip shares

Read about blue chip shares here
Investor Buddy
About.com

Blue chips are large, well managed companies that have a long history of giving good dividends to their shareholders. They are usually the companies that are selected to form the stock market index. Examples of blue chip shares in Singapore are Singapore Airlines, the three local banks, Singapore Press Holdings, SMRT, Singtel, Starhub, the large property companies and shipyards.

In the past, the asset mangers expect a yield of 7% to 10% on these blue chip shares. If a small investor were to buy into the shares at the market price, the expected yield is at this level, comprising of dividend (around 3%) and capital appreciation. There is volatility, i.e. the share price can go up or down by a large margin, but over the long term, this is averaged out to give a yield of expected long term yield.

Some blue chip shares can go bust, but the risk is much lower than the speculative or smaller shares in the stock market. You can diversify the risk by investing in an exchange traded fund (such as the STI ETF). In other countries, you can invest in an indexed fund (i.e. a unit trust that is invested in the stocks comprising the stock market index) but this is not available in Singapore.

Read the FAQ about investing in blue chip shares in www.tankinlian.com (Ask Mr. Tan)

Tan Kin Lian

Invest in Preference Shares

A consumer asked for my views about a 5 year single premium product that pays a guaranteed yield of 2% p.a. or 10% for 5 years. The investment showed an immediate 10% loss during the first year, a smaller loss during the next two years and will only produce the gain of 10% on maturity at the end of 5 years. I advised the consumer against this type of investment, as it locks up the money for 5 years and only gives a modest return.

I did some research on preference shares and REITS and have posted several articles in this blog. I have also written a FAQ on "investing in preference shares", which is posted in my website, www.tankinlian.com (click on Ask Mr. Tan). The preference shares issued by the local banks give a yield of 4.2% to 5.9% and should be relative safe.

Tan Kin Lian

Choose the right insurance policy

How do you choose the right insurance company to buy insurance from? Read this FAQ

FAQ - Land Banking

This article explains why you should avoid investing in land banking. You should also click on the label "Land Banking" to read other articles in this blog on this topic.

FAQ - Life Insurance, Past & Present

Have life insurance policies changed from the past to the present? Read here.

FAQ Structured Products

Read this article to understand the risks of structured products.

FAQ - Invest in Foreign Currency Deposit

Before you invest in foreign currency deposits to earn a higher interest rate, you should consider the points expressed in this article.

FAQ - Existing Life Policies

Many people asked for my advice on what to do with their existing life polciies, which has been giving a poor yield. My views are set out in this article.

FAQ - Shield insurance

This article contains some tips on how to decide on Medishield or a private Shield plan.

FAQ - Personal Accident Insurance

In this article, I explain the coverage under a personal accident policy and why it is better than buying an accident rider to a life policy.

If you find it difficult to buy a term insruance policy, you can start with a personal accident policy (for $300,000 or $500,000) and switch to a term insurance policy at a convenient time in the future.

FAQ - Financial planning for a retiree

I wish to give some tips on financial planning and insurance for a retiree, or a person approaching retirement. Read this article.

FAQ - Insurance for a child

I wish to give some tips to parents on how to save for a child's education and the type of insurance suitable for a child. Read this article.

FAQ - Benefit Illustration

This document explains what you have to look out for in a benefit illustration before you buy a life insurance policy.

FAQ - Term Insurance

Here is an updated guide on how to buy Term Insurance in Singapore.
http://www.easysearch.sg/Admin/File.aspx?id=56