From Wikipedia, the free encyclopedia
Began operation March 28, 1996
System length In service: 74.4 km
No. of lines 8
No. of stations 67
Daily ridership 1,214,728 (in November 2007)
Operator Taipei Rapid Transit Corporation (TRTC)
Taipei Rapid Transit System
Traditional Chinese: 台北大眾捷運系統
Estimated cost: US$ 32 billion (phase 1 and 2)
The Taipei Rapid Transit System, also known as the MRT (Metropolitan Rapid Transit), or by locals simply as the Metro Taipei is a rapid transit system connecting the Taipei metropolitan area. The system is currently operated by the Taipei Rapid Transit Corporation (TRTC).
Since Taipei Metro joined the Nova International Railway Benchmarking Group and the Community of Metros (Nova/CoMET) in 2002, it has started collecting and analyzing data of the 33 Key Performance Indicators set by Nova/CoMET in order to compare them with those of other metro systems around the world, as a reference to improve its operation. Taipei Metro also has gained keys to success from case studies on different subjects such as safety, reliability, and incidents, and from the operational experiences of other metro systems.
According to a study conducted by the Railway Technology Strategy Centre of Imperial College, and data gathered by Nova/CoMET, the Taipei Metro has ranked number 1 in the world for three consecutive years in terms of reliability, safety and quality standards.
The Taipei Metro is one of the most expensive rapid transit systems ever constructed.
Since its completion, the TRTS has reduced travel time from one end of Taipei to the other from up to three or more hours to less than an hour, and has been effective in relieving some of Taipei's traffic congestion problems.
The TRTS also includes several public facilities such as Maokong Gondola, underground shopping malls, parks, and public squares. Modifications to existing railway lines to integrate into the MRT are underway.
Friday, December 28, 2007
Taxi Fares for 5 km trip
Here is a rough comparison of taxi fares for a 5 km trip during the peak hours.
Taxi fares are no longer cheap in Singapore. The most expensive is London.
London GBP 9 SGD 30
Sydney AUD 12 SGD 16
New York USD 8 SGD 12
Singapore SGD 7 (plus ERP and CBD)
Hong Kong HKD 40 SGD 8
Taipei NT 160 SGD 8
Taxi fares are no longer cheap in Singapore. The most expensive is London.
Thursday, December 27, 2007
Shops in Hualien
Hualien is a tourist town in the east of Taiwan. The shops are closed in the day. The roads are almost deserted. There are only a few cars moving around.
The shops open for business at night. The streets are busy.
I have never seen a town operate like this before. In many places in Europe, the shops are open during the day and closed at night.
The shops open for business at night. The streets are busy.
I have never seen a town operate like this before. In many places in Europe, the shops are open during the day and closed at night.
Taxi Fares in London
Taxi fares in London are quite complicated.
The meter calculates the maximum fare based on:
Time of day
Distance travelled
Taxi speed
The passenger will be expected to pay the full fare displayed on the meter at the end of the journey unless the driver and passenger agree on the final fare to be charged before the start of the journey.
Taxi fares
There are three tariffs, as follows:
Tariff code 1: Monday to Friday 06:00 - 20:00
Tariff code 2: Monday to Friday20:00 - 22:00, Saturday and Sunday 06:00 - 22:00
Tariff code 3: Every night 22:00 - 06:00 and Public holidays
Fare for tariff code 1:
1 mile £4.20 - £6.20
2 miles: £6.60 - £9.40
4 miles: £11 - £15
6 miles: £14 - £20
For tariff code 2 and 3, the fare is upto 20% higher than tariff code 1.
There is a minimum fare of £2.20 at all times.
Extra charges
Extra charges must be added on the meter at the start of the journey. There are no extra charges for luggage or additional passengers.
Telephone Bookings: up to £2 if the taxi is booked by telephone
Heathrow extra: £2 for journeys that start from Heathrow Airport ranks
Christmas and New Year: £4 for journeys
Bank cards: 10 per cent and 15 per cent of the metered fare
The meter calculates the maximum fare based on:
Time of day
Distance travelled
Taxi speed
The passenger will be expected to pay the full fare displayed on the meter at the end of the journey unless the driver and passenger agree on the final fare to be charged before the start of the journey.
Taxi fares
There are three tariffs, as follows:
Tariff code 1: Monday to Friday 06:00 - 20:00
Tariff code 2: Monday to Friday20:00 - 22:00, Saturday and Sunday 06:00 - 22:00
Tariff code 3: Every night 22:00 - 06:00 and Public holidays
Fare for tariff code 1:
1 mile £4.20 - £6.20
2 miles: £6.60 - £9.40
4 miles: £11 - £15
6 miles: £14 - £20
For tariff code 2 and 3, the fare is upto 20% higher than tariff code 1.
There is a minimum fare of £2.20 at all times.
Extra charges
Extra charges must be added on the meter at the start of the journey. There are no extra charges for luggage or additional passengers.
Telephone Bookings: up to £2 if the taxi is booked by telephone
Heathrow extra: £2 for journeys that start from Heathrow Airport ranks
Christmas and New Year: £4 for journeys
Bank cards: 10 per cent and 15 per cent of the metered fare
Taxi Fares in Sydney
Current Fares - Effective From 27 August 2007
Hiring Charges: $3.00
Distance Rate:
Tariff 1: $1.79 per kilometre Between 6 a.m. and 10 p.m. daily
Tariff 2: Tariff 1 + 20% Between 10 p.m. and 6 a.m. daily
Radio Booking fee: $1.60 surcharge in addition to the fare.
Waiting time: $46.20 per hour (72.17c per minute - less than 25.77 KPH)
Luggage Rates:
First 25kg no charge - then 10c for each subsequent 25kg or part thereof. Maximum payable 55c
Toll and ferry Charges:
The hirer must pay all road, bridge, ferry, tunnel and airport tolls that apply to the journey.
Maxi Cabs:
Except in the case of a multiple hiring, where 75% of the authorised fare applies, all the above maximum fares and charges apply only in the case of the maxi-cab hire from a taxi zone or hailed on the street to carry up to 5 passengers. For any other hiring (except a multiple hiring) up to 150% of the above maximum fares and charges may be charged.
Note: A return toll is payable on the Sydney Harbour Bridge and in the Sydney Harbour Tunnel. Any electronic toll administration fee is not payable by the hirer.
Hiring Charges: $3.00
Distance Rate:
Tariff 1: $1.79 per kilometre Between 6 a.m. and 10 p.m. daily
Tariff 2: Tariff 1 + 20% Between 10 p.m. and 6 a.m. daily
Radio Booking fee: $1.60 surcharge in addition to the fare.
Waiting time: $46.20 per hour (72.17c per minute - less than 25.77 KPH)
Luggage Rates:
First 25kg no charge - then 10c for each subsequent 25kg or part thereof. Maximum payable 55c
Toll and ferry Charges:
The hirer must pay all road, bridge, ferry, tunnel and airport tolls that apply to the journey.
Maxi Cabs:
Except in the case of a multiple hiring, where 75% of the authorised fare applies, all the above maximum fares and charges apply only in the case of the maxi-cab hire from a taxi zone or hailed on the street to carry up to 5 passengers. For any other hiring (except a multiple hiring) up to 150% of the above maximum fares and charges may be charged.
Note: A return toll is payable on the Sydney Harbour Bridge and in the Sydney Harbour Tunnel. Any electronic toll administration fee is not payable by the hirer.
Taxi Fares in New York
Taxi FaresCabs are cash only. While cabs are relatively expensive for a single person, they can actually be a bargain with 3 or more riders. The rates for taxicabs are as follows (last updated 2007-07):
Initial fare.............$2.50
Each 1/5 mile (4 blocks).$0.40
Each 1 minute idle.......$0.40
Peak surcharge...........$1.00 (after 4pm until 8pm Mon-Fri)
Night surcharge..........$0.50 (after 8pm until 6am)
Tolls....................$extra
Additional riders........FREE
Pay only what's on the meter, plus a 15-20 percent gratuity. There are additional charges for crossings outside the metropolitan area and New Jersey. Passengers are required to pay one way. If you are going to airports, there are set fees plus toll and tip.
Initial fare.............$2.50
Each 1/5 mile (4 blocks).$0.40
Each 1 minute idle.......$0.40
Peak surcharge...........$1.00 (after 4pm until 8pm Mon-Fri)
Night surcharge..........$0.50 (after 8pm until 6am)
Tolls....................$extra
Additional riders........FREE
Pay only what's on the meter, plus a 15-20 percent gratuity. There are additional charges for crossings outside the metropolitan area and New Jersey. Passengers are required to pay one way. If you are going to airports, there are set fees plus toll and tip.
Easy to get a taxi from Taipei Main Station
On returning from Hualien, my wife and I hailed a taxi at the roadside outside Taipei Main Station. Although this was a busy time of the night, a taxi picked us within 1 minute. Surprising, but it is true.
The journey to our apartment in Taipei was 6 km. It cost NT 180 (about SGD 9). Most of the journey was on the expressway, which was fast flowing (unlike the congested expressways in Singapore).
The traffic system in Taipei is definitely much better than Singapore. It is time for us to learn from Taipei.
The journey to our apartment in Taipei was 6 km. It cost NT 180 (about SGD 9). Most of the journey was on the expressway, which was fast flowing (unlike the congested expressways in Singapore).
The traffic system in Taipei is definitely much better than Singapore. It is time for us to learn from Taipei.
Train from Taipeh to Hualien
I took the train from Taipei to Hualien. It was an interesting experience.
My train ticket showed the train number and time of departure from Taipei Main Station. I asked the station staff for the platform and was given clear direction.
At the platorm, a passenger advised me to look at the coach and seat number printed on the ticket and to locate the right section of the platform to board the coach. There is a number in the platorm to indicate the coach number.
There is a digital sign to indicate the departure time of the train that is currently on the platform.
In case the previous train is late, the sign will indicate that the train is the previous train and the passenger can be alerted to avoid boarding the wrong train.
On the return journey from Hualien to Taipei, I have no dificulty in getting the right platform, train and coach. I enjoyed the journey.
My train ticket showed the train number and time of departure from Taipei Main Station. I asked the station staff for the platform and was given clear direction.
At the platorm, a passenger advised me to look at the coach and seat number printed on the ticket and to locate the right section of the platform to board the coach. There is a number in the platorm to indicate the coach number.
There is a digital sign to indicate the departure time of the train that is currently on the platform.
In case the previous train is late, the sign will indicate that the train is the previous train and the passenger can be alerted to avoid boarding the wrong train.
On the return journey from Hualien to Taipei, I have no dificulty in getting the right platform, train and coach. I enjoyed the journey.
Wednesday, December 26, 2007
Taxi fares in Singapore
Fares and surcharges
Applicable to CityCab, Comfort, Yellow-Top Cab, SMRT Taxis. Different fares apply to other operators
Flagdown fare: S$2.80 (≤ 1 km)
Meter fare
S$0.20 (every 385 m thereafter or less > 1 km and ≤ 10 km)
S$0.20 (every 330 m thereafter or less > 10 km)
Waiting: S$0.20 (every 45 seconds or less)
Booking
S$3.50 (0730 - 0930 and 1700 - 2300 hours Monday - Friday)
S$2.50 (all other times including public holidays)
S$5.20 (advance)
Peak hours
35% of metered fare (0700 - 0930 and 1700 - 2000)
Late night
50% of meter fare (0000 - 0559 hours)
Public holidays
S$1.00 (1800 hours eve to 2400 hours of New Year's Day, Hari Raya Puasa, Deepavali, Christmas Day, first and second day of Chinese New Year.
Should public holiday fall on a Sunday, the surchage will be imposed till 2400 hrs on Monday)
CBD
S$3.00 (1700 - 0000 hours, Monday - Saturday, except public holidays)
Locations
S$5.00 (Singapore Changi Airport: Friday - Sunday from 1700 to 0000 hours)
S$3.00 (Singapore Changi Airport: all other times)
S$3.00 (Seletar Airport)
S$2.00 (Singapore Expo)
Higher flag-down rates for certain models.
All Electronic Road Pricing charges incurred on the trip are to be borne by the customer. An additional 10% administrative charge on the total fare is also incurred when payment is made on credit or charge cards. Higher fares apply for premium taxi services that employ premium vehicles, such as CityCab's Presido and MaxiCab, Yellow-Top Cab's Sovereign limousines, SMRT's Prestige and London Taxi and Airport Transfer service, and so on.
Observation: Singapore must win the award for the most complicated taxi fare structure in the world.
Applicable to CityCab, Comfort, Yellow-Top Cab, SMRT Taxis. Different fares apply to other operators
Flagdown fare: S$2.80 (≤ 1 km)
Meter fare
S$0.20 (every 385 m thereafter or less > 1 km and ≤ 10 km)
S$0.20 (every 330 m thereafter or less > 10 km)
Waiting: S$0.20 (every 45 seconds or less)
Booking
S$3.50 (0730 - 0930 and 1700 - 2300 hours Monday - Friday)
S$2.50 (all other times including public holidays)
S$5.20 (advance)
Peak hours
35% of metered fare (0700 - 0930 and 1700 - 2000)
Late night
50% of meter fare (0000 - 0559 hours)
Public holidays
S$1.00 (1800 hours eve to 2400 hours of New Year's Day, Hari Raya Puasa, Deepavali, Christmas Day, first and second day of Chinese New Year.
Should public holiday fall on a Sunday, the surchage will be imposed till 2400 hrs on Monday)
CBD
S$3.00 (1700 - 0000 hours, Monday - Saturday, except public holidays)
Locations
S$5.00 (Singapore Changi Airport: Friday - Sunday from 1700 to 0000 hours)
S$3.00 (Singapore Changi Airport: all other times)
S$3.00 (Seletar Airport)
S$2.00 (Singapore Expo)
Higher flag-down rates for certain models.
All Electronic Road Pricing charges incurred on the trip are to be borne by the customer. An additional 10% administrative charge on the total fare is also incurred when payment is made on credit or charge cards. Higher fares apply for premium taxi services that employ premium vehicles, such as CityCab's Presido and MaxiCab, Yellow-Top Cab's Sovereign limousines, SMRT's Prestige and London Taxi and Airport Transfer service, and so on.
Observation: Singapore must win the award for the most complicated taxi fare structure in the world.
Taxi fares in Hong Kong
Here are the taxi fares in Hong Kong (red taxi)
1. First 2 km, HK 15 (SGD $3)
2. Every 0.2 km or 1 min of idling, HK $1.4 ($0.30)
3. Call a taxi HK 4 ($0.80)
Lower taxi fares apply for travel within New Territories (green taxi) or Launtau (blue taxi).
Average fare for 5 km including telephone calling, HK 40 ($8)
Observation: The fares are simpler and cheaper compared to Singapore. There are cheaper form of public transport.
1. First 2 km, HK 15 (SGD $3)
2. Every 0.2 km or 1 min of idling, HK $1.4 ($0.30)
3. Call a taxi HK 4 ($0.80)
Lower taxi fares apply for travel within New Territories (green taxi) or Launtau (blue taxi).
Average fare for 5 km including telephone calling, HK 40 ($8)
Observation: The fares are simpler and cheaper compared to Singapore. There are cheaper form of public transport.
Taxi fares in Taipei
Taxi fares are charged as follows:
1. Starting fare for first 1250 m, NT 70 (SGD $3.50)
2. Surcharge after midnight, NT20 ($1)
3. Calling a taxi - no charge
4. Distance fare for 250 m or 84 secs of idling, NT5 ($0.25)
Fare for 5.11 km daytime, NT157 ($8)
The new fares, which took effect recently, was decided by the Taipei City Government based on three proposals submitted by interested parties. The decision was accepted by the taxi operators. The revised fare was necessary based to cover higher operating cost, due to higher oil prices.
Observation: The taxi fares in Taipei are much simpler than Singapore. The fares are regulated and produce a satisfactory outcome for commuters and taxi drivers.
1. Starting fare for first 1250 m, NT 70 (SGD $3.50)
2. Surcharge after midnight, NT20 ($1)
3. Calling a taxi - no charge
4. Distance fare for 250 m or 84 secs of idling, NT5 ($0.25)
Fare for 5.11 km daytime, NT157 ($8)
The new fares, which took effect recently, was decided by the Taipei City Government based on three proposals submitted by interested parties. The decision was accepted by the taxi operators. The revised fare was necessary based to cover higher operating cost, due to higher oil prices.
Observation: The taxi fares in Taipei are much simpler than Singapore. The fares are regulated and produce a satisfactory outcome for commuters and taxi drivers.
Tuesday, December 25, 2007
CPF Dependent Protection Scheme
Dear Mr. Tan,
May I know what is the difference between DPS (Dependent Protection Scheme) and ordinary term insurance? Why does CPF board limit the coverage to a maximum of $46,000? It seems that I cannot opt for higher sum assured.
REPLY
DPS is a yearly renewable Term. The premium rate depends on the age in each year. It is lower when you are young and increases when you grow older.
An ordinary Term fixes the premium rate for the selected term, say 10 or 20 years.
As DPS is a developed as a national scheme, the Government decided to fix the coverage at a certain level that is applicable to everyone.
If you wish to have a higher coverage, you have to buy a Term insurance to supplement it.
May I know what is the difference between DPS (Dependent Protection Scheme) and ordinary term insurance? Why does CPF board limit the coverage to a maximum of $46,000? It seems that I cannot opt for higher sum assured.
REPLY
DPS is a yearly renewable Term. The premium rate depends on the age in each year. It is lower when you are young and increases when you grow older.
An ordinary Term fixes the premium rate for the selected term, say 10 or 20 years.
As DPS is a developed as a national scheme, the Government decided to fix the coverage at a certain level that is applicable to everyone.
If you wish to have a higher coverage, you have to buy a Term insurance to supplement it.
Walkway connecting buildings
There is a second level walkway connecting many buildings in the district around the Taipei City Hall. It takes the pedestrians off the street level and brings them to many large stores and offices.
The walkway is broad and can take many people. It is almost like walking on the street, but without cars. As the climate is cool during winter in Taipei, it is quite pleasant to walk along the walkways.
Some people said that it is expensive to build the elevated workway. In my view, it is relative. I believe that the cost is only a small fraction of the money that is spent to build the expensive buildings.
I hope, one day, that many cities and towns will have elevated walkways like this. It encourages people to walk a long distance to the train station or bus terminal.
The walkway is broad and can take many people. It is almost like walking on the street, but without cars. As the climate is cool during winter in Taipei, it is quite pleasant to walk along the walkways.
Some people said that it is expensive to build the elevated workway. In my view, it is relative. I believe that the cost is only a small fraction of the money that is spent to build the expensive buildings.
I hope, one day, that many cities and towns will have elevated walkways like this. It encourages people to walk a long distance to the train station or bus terminal.
Property Agent's Commission on Extending a Lease
Hi Mr. Tan,
I like to seek your advice on the commission payable to the property agent for extending a lease.
Two years ago, I leased out my apartment through an agent. The agent charged me 1 month of rental, which was a lot of money.
I am now negotiating with my tenant to extend the lease. I was shocked to find that the property agent had included in the lease agreement (without my knowledge) a clause that requires me to pay commission for extending the lease.
I have never agreed to this condition. Am I required to pay this commission? In my case, the agent provided bad service to me and the tenant during the past two years. Why should I continue to pay commission again?
I hope that you can advise me.
REPLY
I understand that the standard tenancy agreement does not have this clause. It seems that some property agent inserted the clause to give them additional income, but it is unfair to the owner.
I suggest that you negotiate a new agreement with the tenant. You can agree with the tenant on whether any commission is to be paid to the agent, and which party is required to pay the commission. Quite likely, the tenant will prefer to deal directly with you, and avoid this additional cost.
As you do not have any agreement with the agent on this matter, you are not bound by the terms of the old tenancy agreement, as it has been superceded.
I hope that you find this to be helpful. As this is a legal matter, you may wish to get the opinion of a lawyer as well.
I like to seek your advice on the commission payable to the property agent for extending a lease.
Two years ago, I leased out my apartment through an agent. The agent charged me 1 month of rental, which was a lot of money.
I am now negotiating with my tenant to extend the lease. I was shocked to find that the property agent had included in the lease agreement (without my knowledge) a clause that requires me to pay commission for extending the lease.
I have never agreed to this condition. Am I required to pay this commission? In my case, the agent provided bad service to me and the tenant during the past two years. Why should I continue to pay commission again?
I hope that you can advise me.
REPLY
I understand that the standard tenancy agreement does not have this clause. It seems that some property agent inserted the clause to give them additional income, but it is unfair to the owner.
I suggest that you negotiate a new agreement with the tenant. You can agree with the tenant on whether any commission is to be paid to the agent, and which party is required to pay the commission. Quite likely, the tenant will prefer to deal directly with you, and avoid this additional cost.
As you do not have any agreement with the agent on this matter, you are not bound by the terms of the old tenancy agreement, as it has been superceded.
I hope that you find this to be helpful. As this is a legal matter, you may wish to get the opinion of a lawyer as well.
Feeder Bus
There is high demand for taxis in Singapore due to the difficulty of taking public transport in places that are not served by the MRT trains.
There are many bus services in Singapore. Commuters who wish to take a bus for a short journey find the services to be confusing and overwhelming. There are too many buses travelling in different directions.
In my view, we need to introduce feeder bus. These are services that travel within a a town, such as Toa Payoh, Ang Mo Kio or Bedok and take commuters to the town center, MRT station or bus terminal.
It is easy for the commutter to understand this system. Each town needs only two or three feeder services.
I understand that the light buses in Hong Kong acts like a feeder service to take people to the train station. Many people consider the public transport in Hong Kong to be very convenient.
There are many bus services in Singapore. Commuters who wish to take a bus for a short journey find the services to be confusing and overwhelming. There are too many buses travelling in different directions.
In my view, we need to introduce feeder bus. These are services that travel within a a town, such as Toa Payoh, Ang Mo Kio or Bedok and take commuters to the town center, MRT station or bus terminal.
It is easy for the commutter to understand this system. Each town needs only two or three feeder services.
I understand that the light buses in Hong Kong acts like a feeder service to take people to the train station. Many people consider the public transport in Hong Kong to be very convenient.
A good time to invest in equities
Hi Mr. Tan,
You advised people to invest in an diversified, low cost equity fund for the long term. What is the best time to make this investment? Is it safe to invest now? Will there be a recession in the USA next year? Will it affect the Asian countries and Singapore?
REPLY
If you are investing for the long term, i.e. 10 years or longer, it does not matter if there is a recession next year.
At the current level, Singapore equities are about 15% lower than the peak. I think that this is a good level to start investing a lump sum. There is still a risk that it may go down, but it does not matter for a long term investor.
If you are investing a monthly sum, you can start at any time as you will be "averaging" the cost of your investments.
You advised people to invest in an diversified, low cost equity fund for the long term. What is the best time to make this investment? Is it safe to invest now? Will there be a recession in the USA next year? Will it affect the Asian countries and Singapore?
REPLY
If you are investing for the long term, i.e. 10 years or longer, it does not matter if there is a recession next year.
At the current level, Singapore equities are about 15% lower than the peak. I think that this is a good level to start investing a lump sum. There is still a risk that it may go down, but it does not matter for a long term investor.
If you are investing a monthly sum, you can start at any time as you will be "averaging" the cost of your investments.
MRT in Taipei
The mass rapid transit system(MRT) in Taipei, together with the metropolitan area's dedicated bus route network, forms a convenient transportation system.
The MRT currently has five lines in operation:
Brown Line (Mucha)
Red Line (Tamshui)
Orange Line (Chungho)
Green Line (Hsintien)
Blue Line (Kunyung to Hsinpu).
The five lines are dotted with a variety of attractions and scenic spots. As a result, visitors can take a leisurely journey through the northern part of Taiwan employing the MRT services.
The MRT currently has five lines in operation:
Brown Line (Mucha)
Red Line (Tamshui)
Orange Line (Chungho)
Green Line (Hsintien)
Blue Line (Kunyung to Hsinpu).
The five lines are dotted with a variety of attractions and scenic spots. As a result, visitors can take a leisurely journey through the northern part of Taiwan employing the MRT services.
Helpful cashier
My daughter went to a drug store in Taipei to look for a specific medication. She could not find it on ths shelf. She approached the cashier.
The cashier said that the medication is not sold in the store. Without being asked, she immediately told he customer where she can buy it from another nearby store. That is helpfulness.
Why is it possible for the cashier to be helpful?
1. She is a local person, who knows the customers and their lifestyle
2. She has worked there for a few years and acquired good knowledge of the product.
I shall do some research to find out if the cashier earns an adequate salary. This will encourage her to stay in the same job for a long time.
There are lessons to be applied in Singapore, if we still aim to be a gracious society.
The cashier said that the medication is not sold in the store. Without being asked, she immediately told he customer where she can buy it from another nearby store. That is helpfulness.
Why is it possible for the cashier to be helpful?
1. She is a local person, who knows the customers and their lifestyle
2. She has worked there for a few years and acquired good knowledge of the product.
I shall do some research to find out if the cashier earns an adequate salary. This will encourage her to stay in the same job for a long time.
There are lessons to be applied in Singapore, if we still aim to be a gracious society.
Beware of bad products
Hi Mr. Tan,
Someone described in your blog, that life insurance as "legalised rip-off". Is this a fair statement?
REPLY:
There are many insurance products that give good value to consumers. They serve a need and are priced fairly. Read this FAQ:
http://www.tankinlian.com/faq/choice.html
There are other products that are bad for consumers, as follows:
1. They are designed to maximise profit for the insurance company
2. They pay high commission to the agent to sell the product
3. The agent are trained to use emotion to sell the product
4. The product has many complicated features that have doubtful value
5. The agent worked hard to push the product
6. The agent and the insurance executive will not buy the product for themselves
You should identify and avoid the bad products (including bad products sold by banks).
Someone described in your blog, that life insurance as "legalised rip-off". Is this a fair statement?
REPLY:
There are many insurance products that give good value to consumers. They serve a need and are priced fairly. Read this FAQ:
http://www.tankinlian.com/faq/choice.html
There are other products that are bad for consumers, as follows:
1. They are designed to maximise profit for the insurance company
2. They pay high commission to the agent to sell the product
3. The agent are trained to use emotion to sell the product
4. The product has many complicated features that have doubtful value
5. The agent worked hard to push the product
6. The agent and the insurance executive will not buy the product for themselves
You should identify and avoid the bad products (including bad products sold by banks).
Monday, December 24, 2007
Taipei 101
I visited Taipei 101 after dinner in a nearby building. Here is the description of this building from Wikipedia.
Taipei 101 (台北101) is a 101-floor landmark skyscraper located in Taipei, Taiwan. The building, designed by C.Y. Lee & Partners and constructed by KTRT Joint Venture, is the world's tallest completed skyscraper.
Taipei 101 received the Emporis Skyscraper Award in 2004. It has been hailed as one of the Seven New Wonders of the World (Newsweek magazine, 2006) and Seven Wonders of Engineering (Discovery Channel, 2005).
The building serves as an icon of Taipei and Taiwan as a whole. Fireworks launched from the tower feature prominently in international New Year's Eve broadcasts, and the landmark appears frequently in films, television shows, print publications, anime media, games, and other elements of popular culture.
Taipei 101 is managed by the International division of Urban Retail Properties Corporation based in Chicago USA.[1]
The name of the building reflects its location in Taipei's 101 business district along with its floor count. The number is pronounced in English simply as One Oh One.
On 2007-07-21 Taipei 101 was overtaken in height by the Burj Dubai in Dubai, UAE, upon the completion of that building's 141st floor.[2] Taipei 101 retains its title until the Burj Dubai is completed, though, as international architectural standards define a "building" as a structure that can be occupied.
Taipei 101 (台北101) is a 101-floor landmark skyscraper located in Taipei, Taiwan. The building, designed by C.Y. Lee & Partners and constructed by KTRT Joint Venture, is the world's tallest completed skyscraper.
Taipei 101 received the Emporis Skyscraper Award in 2004. It has been hailed as one of the Seven New Wonders of the World (Newsweek magazine, 2006) and Seven Wonders of Engineering (Discovery Channel, 2005).
The building serves as an icon of Taipei and Taiwan as a whole. Fireworks launched from the tower feature prominently in international New Year's Eve broadcasts, and the landmark appears frequently in films, television shows, print publications, anime media, games, and other elements of popular culture.
Taipei 101 is managed by the International division of Urban Retail Properties Corporation based in Chicago USA.[1]
The name of the building reflects its location in Taipei's 101 business district along with its floor count. The number is pronounced in English simply as One Oh One.
On 2007-07-21 Taipei 101 was overtaken in height by the Burj Dubai in Dubai, UAE, upon the completion of that building's 141st floor.[2] Taipei 101 retains its title until the Burj Dubai is completed, though, as international architectural standards define a "building" as a structure that can be occupied.
Set limit on commission
Dear Mr. Tan,
I am quite shocked to learn from your blog that up to 21 months of savings can be taken away to pay the agent to sell an investment-linked policy. If the monthly saving is $500, the total deduction is $10,500. Why should the agent earn so much money to sell a policy?
I am sure that the consumer is not aware about the total cost. Which consumer is willing to give away so much of the hard earned savings to pay commission to the agent?
I understand that the consumer is provided with a lot of information about the insurance product, including the charges. Many consumers are overwhelmed by the information, so they blindly trust the agent. When they find out the truth, it is too late.
Surely, the Government should set some reasonable limit to protect the consumer?
REPLY
I agree that there is a need for consumers to be better protected in Singapore. The commission rates for life insurance policies are too high.
In many countries, the regulators imposed certain limits on the commission rates, to protect the interest of the consumers. I hope that a similar practice can be adopted in Singapore.
I am quite shocked to learn from your blog that up to 21 months of savings can be taken away to pay the agent to sell an investment-linked policy. If the monthly saving is $500, the total deduction is $10,500. Why should the agent earn so much money to sell a policy?
I am sure that the consumer is not aware about the total cost. Which consumer is willing to give away so much of the hard earned savings to pay commission to the agent?
I understand that the consumer is provided with a lot of information about the insurance product, including the charges. Many consumers are overwhelmed by the information, so they blindly trust the agent. When they find out the truth, it is too late.
Surely, the Government should set some reasonable limit to protect the consumer?
REPLY
I agree that there is a need for consumers to be better protected in Singapore. The commission rates for life insurance policies are too high.
In many countries, the regulators imposed certain limits on the commission rates, to protect the interest of the consumers. I hope that a similar practice can be adopted in Singapore.
Sufficient funds for retirement
According to a recent survey, 80% of Singaporeans want to retire at age 60. Do they have suffiicient funds to retire? How much money do they need to retire?
I carried out a survey with the participants in a class on financial planning. Most of them come from the lower income group. The results surprised me.
To cover food, utilities and other essentials, a couple needs about $1,000 a month. This assumes that they have a home that is fully paid for. It may be possible to get by with $800 a month, but this does not leave any margin for unexpected expenses.
To provide a monthly sum of $1000, with adjustment for inflation, a person retiring at age 65 needs accumulated savings of $200,000 to last an average remaining lifespan of 20 years. If the person wishes to retire at 60, he will need $230,000.
If you wish to have a more comfortable lifestyle, you will need $2,000 a month. Your accumulated savings has to be $400,000 when you retire at 65, or $460,000 when you retire at 60.
If you do not have this sum of accumulated savings (that is needed for the bare minimum or a comfortable lifestyle), you have the following options:
a) Extend your retirement age to 65 to 70 years.
b) Retire from full time work at 60 to 65, and continue to work part time to earn a supplementary income.
To ensure that you have sufficient savings to last a lifetime, in case you live a very long life, you need to buy a life annuity (which provides pooling of longevity risk).
When you are working, it is important for you to make adequate savings for retirement. You must save 10% to 15% of your earnings, and invest in a low cost investment fund that can earn you a good rate of return.
Do not spend too much money on unnecessary insurance that depletes your savings for retirement. Do not buy financial products that give a poor return, due to high expenses.
Read this FAQ:
http://www.tankinlian.com/faq/fptips.html
http://www.tankinlian.com/faq/life.html
I carried out a survey with the participants in a class on financial planning. Most of them come from the lower income group. The results surprised me.
To cover food, utilities and other essentials, a couple needs about $1,000 a month. This assumes that they have a home that is fully paid for. It may be possible to get by with $800 a month, but this does not leave any margin for unexpected expenses.
To provide a monthly sum of $1000, with adjustment for inflation, a person retiring at age 65 needs accumulated savings of $200,000 to last an average remaining lifespan of 20 years. If the person wishes to retire at 60, he will need $230,000.
If you wish to have a more comfortable lifestyle, you will need $2,000 a month. Your accumulated savings has to be $400,000 when you retire at 65, or $460,000 when you retire at 60.
If you do not have this sum of accumulated savings (that is needed for the bare minimum or a comfortable lifestyle), you have the following options:
a) Extend your retirement age to 65 to 70 years.
b) Retire from full time work at 60 to 65, and continue to work part time to earn a supplementary income.
To ensure that you have sufficient savings to last a lifetime, in case you live a very long life, you need to buy a life annuity (which provides pooling of longevity risk).
When you are working, it is important for you to make adequate savings for retirement. You must save 10% to 15% of your earnings, and invest in a low cost investment fund that can earn you a good rate of return.
Do not spend too much money on unnecessary insurance that depletes your savings for retirement. Do not buy financial products that give a poor return, due to high expenses.
Read this FAQ:
http://www.tankinlian.com/faq/fptips.html
http://www.tankinlian.com/faq/life.html
Christmas is not a public holiday
I arrived in Taipei on December 24. It is a working day. Tomorrow, 25 December is also a working day. Christmas is not a public holiday in Taiwan.
People working in American companies take one or two days of annual leave to celebrate Christmas.
People working in American companies take one or two days of annual leave to celebrate Christmas.
Politeness in Taipei
During her previous visit to Taipeh, my wife observed that the people in Taipei are polite and helpful. Their culture has improved considerably in recent years.
I am now in Taipei. My experience over a few encounters with the local people has been positive.
I am now in Taipei. My experience over a few encounters with the local people has been positive.
Save for child's education
Dear Mr. Tan,
I have read comments from many people in your blog. Some people recommended that parents should save for their child's tertiary education. An education is the best gift for your child. Other people said that the priority is for one's own retirement needs. What are your views?
REPLY
The first priority is to have adequate savings for your own retirement needs. You need $200,000 to $400,000 at age 65 to retire comfortably. Do you have this sum?
If you have more than adequate savings, you can set aside the excess savings for your child's tertiary education. The saving can be made in your own account. You can decide on the amount to be set aside for your child's education when the time comes..
You should do a cost benefit analysis for the education expenses. How much are you spending? What additional income can your child earn from the overseas education? What is the payback period? Are there other options to get a more affordable education?
I usually recommend students to study in university in Singapore, as it is highly subsidised. A student can study in an overseas university, if you are on scholarship. Do not spend half of your retirement savings on your child's education. It is not wise.
I have read comments from many people in your blog. Some people recommended that parents should save for their child's tertiary education. An education is the best gift for your child. Other people said that the priority is for one's own retirement needs. What are your views?
REPLY
The first priority is to have adequate savings for your own retirement needs. You need $200,000 to $400,000 at age 65 to retire comfortably. Do you have this sum?
If you have more than adequate savings, you can set aside the excess savings for your child's tertiary education. The saving can be made in your own account. You can decide on the amount to be set aside for your child's education when the time comes..
You should do a cost benefit analysis for the education expenses. How much are you spending? What additional income can your child earn from the overseas education? What is the payback period? Are there other options to get a more affordable education?
I usually recommend students to study in university in Singapore, as it is highly subsidised. A student can study in an overseas university, if you are on scholarship. Do not spend half of your retirement savings on your child's education. It is not wise.
High speed train in Taiwan
The distance from Taipeh to Kaoshiung is 340 kilometers. It takes 5 hours by ordinary train and 1.5 hours by fast train. The speed of the fast train is 300 km per hour.
The distance from Singapore to Kuala Lumpur is 300 km and now takes 7 hours. I hope that there will, in the near future, be a fast train from Singapore to Kuala Lumpur that can cut down the travel time to 1.5 hour.
We are supposed to be good neighbours. Yet, it is so difficult to have a project that will benefit the people of both countries.
The distance from Singapore to Kuala Lumpur is 300 km and now takes 7 hours. I hope that there will, in the near future, be a fast train from Singapore to Kuala Lumpur that can cut down the travel time to 1.5 hour.
We are supposed to be good neighbours. Yet, it is so difficult to have a project that will benefit the people of both countries.
Sunday, December 23, 2007
Excellent signage at Vivocity
I visited Vivocity for the first time today. On leaving the train, I could see the signage leading all the way to Vivocity. This is the best signage that I have seen, among all the MRT stations.
I have travelled to other MRT stations and found that the signage to the nearby buildings and shopping malls to be inadequate. This applies to Bishan, Bugis, Tiong Bahru and Raffles Place stations. I got the impression that there was a reluctance at these stations to show the commercial buildings. Why?
Generally, I find the signages at MRT stations and buildings in Singapore to be inadequate and not friendly to commuters. I was quite refreshing to see a change at Vivocity.
I have travelled to other MRT stations and found that the signage to the nearby buildings and shopping malls to be inadequate. This applies to Bishan, Bugis, Tiong Bahru and Raffles Place stations. I got the impression that there was a reluctance at these stations to show the commercial buildings. Why?
Generally, I find the signages at MRT stations and buildings in Singapore to be inadequate and not friendly to commuters. I was quite refreshing to see a change at Vivocity.
Avoid traffic congestion
I attended an community event at Vivocity today. I decided to drive to the MRT station near my home and take the MRT to Vivocity.
The guest of honour came a little late, due to traffic congestion. I told her that I did not have any problem, as I took the train. I was able to read a book on the journey.
The organiser told me that he just returned from Hong Kong. The public transport system there is much better than Singapore. I have received similar comments from other people who are familiar with the system there.
The guest of honour came a little late, due to traffic congestion. I told her that I did not have any problem, as I took the train. I was able to read a book on the journey.
The organiser told me that he just returned from Hong Kong. The public transport system there is much better than Singapore. I have received similar comments from other people who are familiar with the system there.
Like a swan
Look at the posture of the ballet dancer in this picture.
http://www.singaporedancetheatre.com/performance/swanlake.asp
She looks like a graceful swan.
This is the magic of dance. The dancer's movements follow the movement of a particular character. This is the art of the chereographer.
http://www.singaporedancetheatre.com/performance/swanlake.asp
She looks like a graceful swan.
This is the magic of dance. The dancer's movements follow the movement of a particular character. This is the art of the chereographer.
Holiday in Taiwan
I will be travelling to Taiwan tomorrow for 12 days. I am staying with my daughter who works there, but may be travelling to various cities in Taiwan. This will be the first time that I am spending Christmas and the New Year outside of Singapore
I shall continue to update my blog, but it will not be as regular as when I am in Singapore. I wish all my visitors, season's greetings all the best for 2008.
I shall continue to update my blog, but it will not be as regular as when I am in Singapore. I wish all my visitors, season's greetings all the best for 2008.
Last minute ticket sales for Swan Lake
Ticket sales for Swan Lake picked up considering for the last three nights. Many people buy tickets at the last minute. Tonight is the last chance for you to watch this ballet at the Esplanade.
http://www.singaporedancetheatre.com/performance/swanlake.asp
http://www.singaporedancetheatre.com/performance/swanlake.asp
Lower price for your motor insurance
What is an easy way to get a lower price for your motor insurance, without having to go through a lot of trouble?
Read the tip in this FAQ:
http://www.tankinlian.com/faq/motor.html
And this FAQ:
http://www.tankinlian.com/faq/motord.html
Read the tip in this FAQ:
http://www.tankinlian.com/faq/motor.html
And this FAQ:
http://www.tankinlian.com/faq/motord.html
Charges of an Investment Linked Policy (ILP)
Are you aware about the various charges that you have to pay under an Investment Linked policy?
Are they big or small? Will they eat into your savings and investments? Which ILP have the lowest charges?
Read about the charges in:
http://www.tankinlian.com/faq/ilp.html
Are they big or small? Will they eat into your savings and investments? Which ILP have the lowest charges?
Read about the charges in:
http://www.tankinlian.com/faq/ilp.html
Improve the taxi situation
I wanted to write my thoughts on how to improve the taxi service in Singapore.
I decided to start with some research. Other people have written about the subject before. I found the following article in the internet.
Yawning Bread: Taxi problem is not a taxi problem
http://www.yawningbread.org/arch_2006/yax-638.htm
I find the analysis of the problem to be useful. I agree with most of the points.
And here are som exchange of views
http://ybsampler1.blogspot.com/2006/08/taxi-problem-is-not-taxi-problem.html
I shall be writing more on this topic.
I decided to start with some research. Other people have written about the subject before. I found the following article in the internet.
Yawning Bread: Taxi problem is not a taxi problem
http://www.yawningbread.org/arch_2006/yax-638.htm
I find the analysis of the problem to be useful. I agree with most of the points.
And here are som exchange of views
http://ybsampler1.blogspot.com/2006/08/taxi-problem-is-not-taxi-problem.html
I shall be writing more on this topic.
Saturday, December 22, 2007
Different Types of Investment Funds
I advocate investing in a large, well diversified fund with low charges. Examples are the Combined Fund from NTUC Income and the STI Exchange Traded Fund (available through the Singapore Exchange).
Some people asked for my opinion on selecting actively managed funds. There are more than 500 of these funds available for investments. These funds that are country specific (e.g. China, India) or sector specific (e.g. energy, technology, financial). They usually have high expense ratio (of 1.5% to 3% per annum).
If you wish to invest in these funds, you have to seek the advise of a financial adviser. They charge a annual wrap fee (between 0.5% to 1%) to help you pick the funds. They will monitor the funds for you. The wrap fee is on top of the fund management fee.
I am not familiar with these actively managed, narrowly focused funds. I will not be able to advise you on these funds or on how to select the adviser.
A good approach is:
a) Invest 80% of your retirement savings in diversified, low cost funds
b) Invest 20% in actively managed funds (through an adviser).
Read these FAQ:
http://www.tankinlian.com/faq/returns.html
http://www.tankinlian.com/faq/savings.html
All the best in your investment decision.
Some people asked for my opinion on selecting actively managed funds. There are more than 500 of these funds available for investments. These funds that are country specific (e.g. China, India) or sector specific (e.g. energy, technology, financial). They usually have high expense ratio (of 1.5% to 3% per annum).
If you wish to invest in these funds, you have to seek the advise of a financial adviser. They charge a annual wrap fee (between 0.5% to 1%) to help you pick the funds. They will monitor the funds for you. The wrap fee is on top of the fund management fee.
I am not familiar with these actively managed, narrowly focused funds. I will not be able to advise you on these funds or on how to select the adviser.
A good approach is:
a) Invest 80% of your retirement savings in diversified, low cost funds
b) Invest 20% in actively managed funds (through an adviser).
Read these FAQ:
http://www.tankinlian.com/faq/returns.html
http://www.tankinlian.com/faq/savings.html
All the best in your investment decision.
A marketing tool
Hi Mr. Tan,
I have read the material about the WWAng Instant Target. I am not clear about how can I use it for my marketing?
Reply: Some property agents bought the database to select the occupiers living in a certain block or street. They print personalised letters to be sent to the occupiers. In some cases, they follow up with a telephone call. The database provides the names, address and telephone numbers of the occupiers.
Insurance agents and other marketing people can also use the database to market to people living in a locality.
Why is it called WWang?
Reply: It was a name created by my friend. He said that "Wang" means "money". So, perhaps you can make a lot of money in using the database for marketing.
For more information:
http://www.tankinlian.com/database/index.html
I have read the material about the WWAng Instant Target. I am not clear about how can I use it for my marketing?
Reply: Some property agents bought the database to select the occupiers living in a certain block or street. They print personalised letters to be sent to the occupiers. In some cases, they follow up with a telephone call. The database provides the names, address and telephone numbers of the occupiers.
Insurance agents and other marketing people can also use the database to market to people living in a locality.
Why is it called WWang?
Reply: It was a name created by my friend. He said that "Wang" means "money". So, perhaps you can make a lot of money in using the database for marketing.
For more information:
http://www.tankinlian.com/database/index.html
Agent to source for quotes
Dear Mr. Tan,
Thank you for you tips on how to get quotations from several insurance companies on motor insurance. Do you think that an insurance agent can source the quote for me?
REPLY:
You can ask the insurance agent to source the quote for you. They are familiar with the insurance companies, so it is easier for them to get the information and save you from the hassle.
However, the agent needs to be paid for the service. They will probably earn 10% to 15% commission from the insurance company. But, if they are able to get you a lower quote, then it is worth to let them earn this commission.
Make sure that the agent is able to get the quote from several companies, so that you really enjoy a lower premium.
Thank you for you tips on how to get quotations from several insurance companies on motor insurance. Do you think that an insurance agent can source the quote for me?
REPLY:
You can ask the insurance agent to source the quote for you. They are familiar with the insurance companies, so it is easier for them to get the information and save you from the hassle.
However, the agent needs to be paid for the service. They will probably earn 10% to 15% commission from the insurance company. But, if they are able to get you a lower quote, then it is worth to let them earn this commission.
Make sure that the agent is able to get the quote from several companies, so that you really enjoy a lower premium.
Invest for the long term
Hi Mr. Tan,
In your opinion, how long will the subprime crisis continue to haunt the global stockmarket? Will Asian be affected and how seriously? Is it safe to invest in stocks now?
REPLY
The experts are still uncertain. I can only give my personal gut feel.
I believe that the bad news on the subprime have mostly been disclosed. The large banks have made big provisions for their subprime losses.
Several large soverign funds, including GIC and possibly Temasek, have taken large stakes in the big American banks and stockbrokers. Perhaps they recognise that the current prices have fully reflected the bad news.
It may be a good time to make a long term investment as most stockmarkets have corrected more than 10%.
The challenge next year is a slowdown or a possible recession in the American and other economies and the high oil price. This is likely to be manageable as the central banks will adjust the interest rate to keep the economy moving along.
We have to accept these cycles and invest for the long term.
In your opinion, how long will the subprime crisis continue to haunt the global stockmarket? Will Asian be affected and how seriously? Is it safe to invest in stocks now?
REPLY
The experts are still uncertain. I can only give my personal gut feel.
I believe that the bad news on the subprime have mostly been disclosed. The large banks have made big provisions for their subprime losses.
Several large soverign funds, including GIC and possibly Temasek, have taken large stakes in the big American banks and stockbrokers. Perhaps they recognise that the current prices have fully reflected the bad news.
It may be a good time to make a long term investment as most stockmarkets have corrected more than 10%.
The challenge next year is a slowdown or a possible recession in the American and other economies and the high oil price. This is likely to be manageable as the central banks will adjust the interest rate to keep the economy moving along.
We have to accept these cycles and invest for the long term.
Friday, December 21, 2007
Family Insurance
Mr. Tan,
I am over 45 years old, got married last year and has a new born baby. Is it advisable for me to buy the Family Insurance Policy from NTUC Income for my family?
REPLY
This product is suitable for your family. It provides good coverage (death, disability, critical illness and medical expenses) at an affordable cost.
I am over 45 years old, got married last year and has a new born baby. Is it advisable for me to buy the Family Insurance Policy from NTUC Income for my family?
REPLY
This product is suitable for your family. It provides good coverage (death, disability, critical illness and medical expenses) at an affordable cost.
Invest in Bonds
Dear Mr. Tan,
I'm an avid reader of your blog. Thanks for sharing your insights at your blog.
I will like to find out from you about corporate bonds. Given the volatility in the stock market, is it better to invest in SGS and corporate bonds? Is the average returns for corporate bonds about 5%?
How do i go about buying corporate bonds?
REPLY
You should consider the Singapore Bond fund that is offered by NTUC Income. It is invested in Singapore Government securities and corporate bonds.
You can find out more information from NTUC Income or read this webpage:
http://www.income.com.sg/fund/frame.asp?fundid=6
If you are investing for the long term, it is better to choose an equity fund, as it can give a higher return.
I'm an avid reader of your blog. Thanks for sharing your insights at your blog.
I will like to find out from you about corporate bonds. Given the volatility in the stock market, is it better to invest in SGS and corporate bonds? Is the average returns for corporate bonds about 5%?
How do i go about buying corporate bonds?
REPLY
You should consider the Singapore Bond fund that is offered by NTUC Income. It is invested in Singapore Government securities and corporate bonds.
You can find out more information from NTUC Income or read this webpage:
http://www.income.com.sg/fund/frame.asp?fundid=6
If you are investing for the long term, it is better to choose an equity fund, as it can give a higher return.
Happy Holidays
Season's Greetings
from Tan Kin Lian and family:
Snowball fight
http://www.jibjab.com/sendables/view/N8CaKHrzwITtYjyoweeTH5yG
Office party
http://www.jibjab.com/sendables/view/sEd48avZftSdUKP26qaGk6mc
Logic Quiz
Technique
http://www.tankinlian.com/quiz/index.html
More quizzes:
http://www.tankinlian.com/logicquiz/
from Tan Kin Lian and family:
Snowball fight
http://www.jibjab.com/sendables/view/N8CaKHrzwITtYjyoweeTH5yG
Office party
http://www.jibjab.com/sendables/view/sEd48avZftSdUKP26qaGk6mc
Logic Quiz
Technique
http://www.tankinlian.com/quiz/index.html
More quizzes:
http://www.tankinlian.com/logicquiz/
Top up your relatives CPF accounts
From 1 Jan 2008, you can top up your and your relatives' Special, Medisave and Retirement accounta in the CFP (i.e. SMRA accounts). Relatives include parents, grandparents, spouse and siblings (brothers and sisters).
Last year, top-ups was allowed only for spouses and has to be made by cash.
Two new rules:
(i) You can now top-up using CPF money
(ii) if you use cash, you can usually claim tax relief.
My view: If you make the top up with cash, your relative can earn 4% plus 1% interest. This is the best "risk free" rate that can be earned today.
Last year, top-ups was allowed only for spouses and has to be made by cash.
Two new rules:
(i) You can now top-up using CPF money
(ii) if you use cash, you can usually claim tax relief.
My view: If you make the top up with cash, your relative can earn 4% plus 1% interest. This is the best "risk free" rate that can be earned today.
How to make your CPF money work HARDER
Larry Haverkamp (Doc Money) explain how you can take advantage of the recent change in CPF.
Read his tips on:
1) The first $20,000 in OA
2) The next $40,000 in SMRA
3) Top up relatives' SMRA
4) Defer your payout
Click here:
http://newpaper.asia1.com.sg/columnists/story/0,4136,144298,00.html?
http://www.tankinlian.com/drmoney/
Read his tips on:
1) The first $20,000 in OA
2) The next $40,000 in SMRA
3) Top up relatives' SMRA
4) Defer your payout
Click here:
http://newpaper.asia1.com.sg/columnists/story/0,4136,144298,00.html?
http://www.tankinlian.com/drmoney/
A new way to publish a book
My friend published a book on http://www.lulu.com/. It operates on an entirely new model, as follows:
1. The author puts up a soft copy of the book on the website.
2. The author decides on the royalty.
3. The price of the book is the printing charges plus the royalty
4. The buyer can order the book.
5. The book is printed based on demand and is mailed to the buyer
6. The unit cost is lower for a large print volume.
7. The author can request for the book to appear on several online bookstores.
This is a wonderful new way to publish a book. I will be publishing a book on Logic Quiz and on Logic 9 (Sudoku).
Lesson: The internet allows new way to do all types of business.
1. The author puts up a soft copy of the book on the website.
2. The author decides on the royalty.
3. The price of the book is the printing charges plus the royalty
4. The buyer can order the book.
5. The book is printed based on demand and is mailed to the buyer
6. The unit cost is lower for a large print volume.
7. The author can request for the book to appear on several online bookstores.
This is a wonderful new way to publish a book. I will be publishing a book on Logic Quiz and on Logic 9 (Sudoku).
Lesson: The internet allows new way to do all types of business.
Reverse Mortgage
Greetings, Mr. Tan,
I am currently doing a research on reverse mortgages in Singapore. I hope that you can help me with the answers to the following:
1. Whi is reverse mortgages not popular with Singaporeans and financial institutions?
2. How is NTUC Income able to provide RM while the banks are sitting back?
REPLY
When I was head of NTUC Income, I took the following view:
1. It is safe to lend money on the mortgage of a property
2. We can lend out a small monthly sum and allow the interest to accumulate with the loan
3. We can project the accumulated borrowings and compare it with the value of the property.
4. We will aim to keep the value of the borrowings to be less than 70% of the projected value at a future date, when the borrower is likely to repay the loan, e.g. on death or sale of the property
5. If the property reaches the 70% threshold earlier, for example due to a drop in property value, we will stop the lending and ask the borrower to repay the loan within 6 to 12 months.
NTUC Income was able to give out a few hundred reverse mortgage loans over a period of 10 years. There were only a small number of cases, where the owner had to sell the property prematurely, due to a collapse in the property value.
I believe that the market for reverse mortgage can be developed in Singapore. I hope that the other financial institutions will enter into this market.
Why were they not interested? Perhaps they feel that the market is too small at this time and will wait for it to be developed. Perhaps, they feel that the risk is difficult to manage (which is not the case, in my opinion).
All the best in your research.
I am currently doing a research on reverse mortgages in Singapore. I hope that you can help me with the answers to the following:
1. Whi is reverse mortgages not popular with Singaporeans and financial institutions?
2. How is NTUC Income able to provide RM while the banks are sitting back?
REPLY
When I was head of NTUC Income, I took the following view:
1. It is safe to lend money on the mortgage of a property
2. We can lend out a small monthly sum and allow the interest to accumulate with the loan
3. We can project the accumulated borrowings and compare it with the value of the property.
4. We will aim to keep the value of the borrowings to be less than 70% of the projected value at a future date, when the borrower is likely to repay the loan, e.g. on death or sale of the property
5. If the property reaches the 70% threshold earlier, for example due to a drop in property value, we will stop the lending and ask the borrower to repay the loan within 6 to 12 months.
NTUC Income was able to give out a few hundred reverse mortgage loans over a period of 10 years. There were only a small number of cases, where the owner had to sell the property prematurely, due to a collapse in the property value.
I believe that the market for reverse mortgage can be developed in Singapore. I hope that the other financial institutions will enter into this market.
Why were they not interested? Perhaps they feel that the market is too small at this time and will wait for it to be developed. Perhaps, they feel that the risk is difficult to manage (which is not the case, in my opinion).
All the best in your research.
Book on Logic Quiz
I met a few relatives during a family gathering. I printed the Logic Quiz and asked them to solve it. They were engrossed on the quiz.
You can learn the technique:
http://www.tankinlian.com/quiz/index.html
And try more quizzes:
http://www.tankinlian.com/logicquiz/
I will be publishing a book
You can learn the technique:
http://www.tankinlian.com/quiz/index.html
And try more quizzes:
http://www.tankinlian.com/logicquiz/
I will be publishing a book
Swan Lake at the Esplanade
I watched Swan Lake at the Esplanade.
I enjoyed the stage props, dancing, music, story line. It came out well.
It will be staged over the next three days, from Friday to Sunday.
http://www.singaporedancetheatre.com/performance/swanlake.asp
I enjoyed the stage props, dancing, music, story line. It came out well.
It will be staged over the next three days, from Friday to Sunday.
http://www.singaporedancetheatre.com/performance/swanlake.asp
Thursday, December 20, 2007
Investing in each other's products
My friend in America sent me this explanation on why the banks and stockbrokers have so much money in sub-prime assets.
1. The originating banks were not allowed to hold their own products.
2. They buy each other’s products and used them to increase the value of their earnings.
3. The products are quite complex; no one could figure out how to value them
4. Each separate mortgage has a different set of rules regarding a change in interest rates.
5. Most of the mortgages originate from brokers whose only interest is to earn a mortgage fee.
6. The lenders do not carry out due diligence; they package the loans and pass the risk to the investors.
7. There is a complex set of events which finally lead to this crisis
He told this old story. A buyer got a rotten Herring and complained about it to the broker who sold it to him. The broker said. "Oh that was a trading Herring not an eating Herring.”
1. The originating banks were not allowed to hold their own products.
2. They buy each other’s products and used them to increase the value of their earnings.
3. The products are quite complex; no one could figure out how to value them
4. Each separate mortgage has a different set of rules regarding a change in interest rates.
5. Most of the mortgages originate from brokers whose only interest is to earn a mortgage fee.
6. The lenders do not carry out due diligence; they package the loans and pass the risk to the investors.
7. There is a complex set of events which finally lead to this crisis
He told this old story. A buyer got a rotten Herring and complained about it to the broker who sold it to him. The broker said. "Oh that was a trading Herring not an eating Herring.”
Term with critical illness cover
Hi Mr Tan,
I am 30 year old, looking to buy life insurance. I understand that you advocate buying Term and investing the difference.
I wish to buy Term and also cover critical illness. However, my insurance agent think there is no point in buying this product. What is your advice?
REPLY
Your agent wants you to buy "whole life" critical illness policy for a large sum, so that he or she can earn a high commission on the policy.
Read this FAQ to make the best choice.
http://www.tankinlian.com/faq/choice.html
You can also read another posting in this blog to show how much you can get by investing the difference, compared to the cash value under the whole life policy.
I am 30 year old, looking to buy life insurance. I understand that you advocate buying Term and investing the difference.
I wish to buy Term and also cover critical illness. However, my insurance agent think there is no point in buying this product. What is your advice?
REPLY
Your agent wants you to buy "whole life" critical illness policy for a large sum, so that he or she can earn a high commission on the policy.
Read this FAQ to make the best choice.
http://www.tankinlian.com/faq/choice.html
You can also read another posting in this blog to show how much you can get by investing the difference, compared to the cash value under the whole life policy.
Big writeoffs for sub-prime losses
Mr Tan,
Why are there so much writeoff for bad loans by the big American banks and brokers?
I thought that they package the products to sell to other investors. It seems that they are stuck with a lot of these products in their own funds. Surely, they know the risk and the defaults with the sub-prime mortgages?
REPLY
In a large institution, there are many layers of people:
1. the managers who create and handle the loans
2. the top managers and CEO
3. the board of directors
4. the shareholders.
Under the profit sharing system, the managers and directors received big bonuses and share options during good times by "creating shareholder value". The sub-prime mortgages did contribute to a lot of profit during the past years, which is why the business has grown to be so big.
I do not know at what level the managers should know what is going on. It is difficult to say, when the institution is so big and complex.
When the "crunch" comes, these institutions have to write off several billion dollars of losses. Some of the key managers have to leave their jobs for "destroying shareholder value". But they are not required to pay back the big bonuses that they earn during the good years. The shareholders have to shoulder the losses.
This is not fair, but it is the system of the free market.
Why are there so much writeoff for bad loans by the big American banks and brokers?
I thought that they package the products to sell to other investors. It seems that they are stuck with a lot of these products in their own funds. Surely, they know the risk and the defaults with the sub-prime mortgages?
REPLY
In a large institution, there are many layers of people:
1. the managers who create and handle the loans
2. the top managers and CEO
3. the board of directors
4. the shareholders.
Under the profit sharing system, the managers and directors received big bonuses and share options during good times by "creating shareholder value". The sub-prime mortgages did contribute to a lot of profit during the past years, which is why the business has grown to be so big.
I do not know at what level the managers should know what is going on. It is difficult to say, when the institution is so big and complex.
When the "crunch" comes, these institutions have to write off several billion dollars of losses. Some of the key managers have to leave their jobs for "destroying shareholder value". But they are not required to pay back the big bonuses that they earn during the good years. The shareholders have to shoulder the losses.
This is not fair, but it is the system of the free market.
Horrified by shark attacks?
Are you horrified by shark attacks? Especially in Australia? If you read stores in the media, you will not dare to swim in Australian waters!
According to a report, more people in Australia die each year from lightning strikes or bee stings than shark attacks.
Lesson: Do not over-insure for risks that have a low chance of occurring. If you wish to insure against shark attacks, you should also insure against lightning strikes, bee stings, air crash and traffic accidents. A low cost personal accident policy will cover these risks.
Do not pay too much for insurance, as you will not have enough money for your retirement (which is more likely to occur to you than the insured event)!
According to a report, more people in Australia die each year from lightning strikes or bee stings than shark attacks.
Lesson: Do not over-insure for risks that have a low chance of occurring. If you wish to insure against shark attacks, you should also insure against lightning strikes, bee stings, air crash and traffic accidents. A low cost personal accident policy will cover these risks.
Do not pay too much for insurance, as you will not have enough money for your retirement (which is more likely to occur to you than the insured event)!
Insurance agents who look after your interest
Dear Mr Tan,
After reading your blog for the past few months and comments posted by insurance agents, and based on my personal encounters with agents over the past years, I have come to the following conclusions (please correct me if I am wrong):
1. Insurance agents made a good fortune by earning high commissions on insurance policies
2. Many drive expensive cars and travel in style for overseas trips and holidays.
3. They oversell on critical illness and other insurance policies and push customers to buy big policies.
4. They push customers to buy the most expensive medical insurance (is it to earn a higher commission?)
5. The insurance policies give a poor return and locks up the customer for many years.
6. The scare us with horror stories of how people are devasted by prolonged sickness or death.
Are they behaving ethically?
REPLY:
You have described one category of insurance agents. They look after themselves at the expense of their customers.
There is another category of insurance agents who serve their customers well and look after the interest of their customers. They sell insurance products that give good value to the customers (compared to similar products sold in the market). They work very hard to earn a modest income.
You should select an ethical agents who can look after your interest.
After reading your blog for the past few months and comments posted by insurance agents, and based on my personal encounters with agents over the past years, I have come to the following conclusions (please correct me if I am wrong):
1. Insurance agents made a good fortune by earning high commissions on insurance policies
2. Many drive expensive cars and travel in style for overseas trips and holidays.
3. They oversell on critical illness and other insurance policies and push customers to buy big policies.
4. They push customers to buy the most expensive medical insurance (is it to earn a higher commission?)
5. The insurance policies give a poor return and locks up the customer for many years.
6. The scare us with horror stories of how people are devasted by prolonged sickness or death.
Are they behaving ethically?
REPLY:
You have described one category of insurance agents. They look after themselves at the expense of their customers.
There is another category of insurance agents who serve their customers well and look after the interest of their customers. They sell insurance products that give good value to the customers (compared to similar products sold in the market). They work very hard to earn a modest income.
You should select an ethical agents who can look after your interest.
Logic9
My website for the Logic9 game is temporarily down, due to a change of the hosting server. It will be fixed in a few days time.
Charges of an Investment Linked Plan (ILP)
Dear Mr Tan,
What are the charges that I have to pay, when I invest through an ILP?
REPLY
If you buy an investment-linked plan (ILP) through an insurance company, you have to bear the following charges:
1) Lump sum investment (i.e. Single premium)
You pay the Spread, which is the difference between the Offer Price and the Bid Price of the fund. This difference is usually between 3% to 5%. The spread can be reduced during promotions.
You buy the units at the Offer Price and sell at the Bid Price. So, you lose out on the Spread.
There is a minimum amount for a lump sum investment, for example, $5,000. You will be allowed to top up your investments at any time with "recurring single premiums" subject to a certain minimum.
In addition, there is an annual charge that is deducted from the fund. This charge can take from 1% to 2% of the fund, and is deducted from the yield.
You may also have to incur an initial and annual policy fee. The amounts tend to be quite small. It may be waived if you have a larger investment.
You have to pay for the mortality charge separtely, In some cases, this charge may be waived. In other cases, it can be quite costly. A journalist describes it like "a time bomb".
2) Regular investments (i.e. monthly investments)
You have to pay all of the charges described above (for the lump sum investment) plus an additional Distribtion Cost.
The Distribution Cost is used primarily to pay the commission to the agent and other marketing expenses. This cost is shown indirectly as an "allocation".
For example, the ILP policy will state that 20% of the premium is allocated for investment during the first year, and 50% is allocated during the second and third year. 100% is allocated from the fourth year onwards.
This means that 80% is taken away during the first year, 50% during the second year and 50% during the third year. The total is 180% or 21 months.
This website shows the additional Distribution Cost from various ILP plans in the market
http://www.askdrmoney.com/Ins_ILP_RP.htm.
The Flexi Link plan from NTUC Income has the lowest charge among the various ILP plans (apart from Do It Yourself). You do not have to pay the additional Distribution Cost. The expense ratio of the Combined Fund from NTUC Income is among the lowest of all the funds.
Some savvy investors can enjoy low cost by buying unit trusts directly from the internet portals, such as Fundsupermart or DollarDex. However, the expense ratios of many unit trusts are quite high (i.e. more than 1.5% per annum).
What are the charges that I have to pay, when I invest through an ILP?
REPLY
If you buy an investment-linked plan (ILP) through an insurance company, you have to bear the following charges:
1) Lump sum investment (i.e. Single premium)
You pay the Spread, which is the difference between the Offer Price and the Bid Price of the fund. This difference is usually between 3% to 5%. The spread can be reduced during promotions.
You buy the units at the Offer Price and sell at the Bid Price. So, you lose out on the Spread.
There is a minimum amount for a lump sum investment, for example, $5,000. You will be allowed to top up your investments at any time with "recurring single premiums" subject to a certain minimum.
In addition, there is an annual charge that is deducted from the fund. This charge can take from 1% to 2% of the fund, and is deducted from the yield.
You may also have to incur an initial and annual policy fee. The amounts tend to be quite small. It may be waived if you have a larger investment.
You have to pay for the mortality charge separtely, In some cases, this charge may be waived. In other cases, it can be quite costly. A journalist describes it like "a time bomb".
2) Regular investments (i.e. monthly investments)
You have to pay all of the charges described above (for the lump sum investment) plus an additional Distribtion Cost.
The Distribution Cost is used primarily to pay the commission to the agent and other marketing expenses. This cost is shown indirectly as an "allocation".
For example, the ILP policy will state that 20% of the premium is allocated for investment during the first year, and 50% is allocated during the second and third year. 100% is allocated from the fourth year onwards.
This means that 80% is taken away during the first year, 50% during the second year and 50% during the third year. The total is 180% or 21 months.
This website shows the additional Distribution Cost from various ILP plans in the market
http://www.askdrmoney.com/Ins_ILP_RP.htm.
The Flexi Link plan from NTUC Income has the lowest charge among the various ILP plans (apart from Do It Yourself). You do not have to pay the additional Distribution Cost. The expense ratio of the Combined Fund from NTUC Income is among the lowest of all the funds.
Some savvy investors can enjoy low cost by buying unit trusts directly from the internet portals, such as Fundsupermart or DollarDex. However, the expense ratios of many unit trusts are quite high (i.e. more than 1.5% per annum).
Wednesday, December 19, 2007
Innovative, animated, e-greeting card
My son-in-law Vital sent me this innovative, animated e-greeting for Christmas. It featured his family and included me and my wife in a snowball fight. You can also see my grand-daughter Vera.
http://www.jibjab.com/sendables/view/N8CaKHrzwITtYjyoweeTH5yG
Here is another of my family:
http://www.jibjab.com/sendables/view/sEd48avZftSdUKP26qaGk6mc
To all visitors to my blog: Merry Christmas and best wishes for 2008.
http://www.jibjab.com/sendables/view/N8CaKHrzwITtYjyoweeTH5yG
Here is another of my family:
http://www.jibjab.com/sendables/view/sEd48avZftSdUKP26qaGk6mc
To all visitors to my blog: Merry Christmas and best wishes for 2008.
Living policy actively promoted in the past
Mr Tan,
When you were CEO of NTUC Income, you actively promoted the Living policy. It was the best selling policy for many years. Why did you promote this plan, when the charges are high (as you said now in your blog) ?
REPLY
The Living policy was launched about 20 years ago (if I remember correctly). During that time and for many years after, it offered fairly good value to the customer, as the charges were much lower than similar plans offered by other insurance companies.
During those years, the alternative of investing in investment funds was not well developed.
Today, the market for investment funds is well developed. It is now better for customers to invest in the Combined Fund from NTUC Income and the STI Exchange Traded Fund. They have fairly low charges and the potential to give a higher long term return.
Read this FAQ:
http://www.tankinlian.com/faq/savings.html
When you were CEO of NTUC Income, you actively promoted the Living policy. It was the best selling policy for many years. Why did you promote this plan, when the charges are high (as you said now in your blog) ?
REPLY
The Living policy was launched about 20 years ago (if I remember correctly). During that time and for many years after, it offered fairly good value to the customer, as the charges were much lower than similar plans offered by other insurance companies.
During those years, the alternative of investing in investment funds was not well developed.
Today, the market for investment funds is well developed. It is now better for customers to invest in the Combined Fund from NTUC Income and the STI Exchange Traded Fund. They have fairly low charges and the potential to give a higher long term return.
Read this FAQ:
http://www.tankinlian.com/faq/savings.html
ILP and Unit Trust
Dear Mr. Tan,
Why do I have to bear the upfront charge of 15 to 18 months on investing in ILP, when I could have invested in a regular saving unit trust without this charge?
REPLY
Insurance agents are used to receive high commission on selling an endowment, whole life or critical illness policy.
When the insurance company introduced investment-linked plan (ILP), they have to pay similar commission to get their agents to sell these products. This requires 15 to 18 months of premium to be deducted to pay the commission and other charges.
Some insurance company such as NTUC Income have lower charges. See the comparison in this webpage:
http://www.askdrmoney.com/Ins_ILP_RP.htm
If you invest in a unit trust, you do not have to bear this upfront cost. But, the unit trust may deduct a higher management fee, which is reflected in the higher expense ratio. Most people prefer to pay a higher annual fee, rather than suffer a large upfront deduction. The exception is the STI Exchange Traded Fund, where the annual fee is very low, at only 0.3% per annum.
If you invest in the Flexi-Link from NTUC Income, provided you have a minimum starting investment of $5,000, you do not have to pay incur the upfront charge for a regular saving plan. You still have to bear 3.5% spread for each investment.
The best options are:
1. Invest in the STI Exchange Traded Fund
2. Invest in the Combined Fund from NTUC Income through Flexi-Link.
Why do I have to bear the upfront charge of 15 to 18 months on investing in ILP, when I could have invested in a regular saving unit trust without this charge?
REPLY
Insurance agents are used to receive high commission on selling an endowment, whole life or critical illness policy.
When the insurance company introduced investment-linked plan (ILP), they have to pay similar commission to get their agents to sell these products. This requires 15 to 18 months of premium to be deducted to pay the commission and other charges.
Some insurance company such as NTUC Income have lower charges. See the comparison in this webpage:
http://www.askdrmoney.com/Ins_ILP_RP.htm
If you invest in a unit trust, you do not have to bear this upfront cost. But, the unit trust may deduct a higher management fee, which is reflected in the higher expense ratio. Most people prefer to pay a higher annual fee, rather than suffer a large upfront deduction. The exception is the STI Exchange Traded Fund, where the annual fee is very low, at only 0.3% per annum.
If you invest in the Flexi-Link from NTUC Income, provided you have a minimum starting investment of $5,000, you do not have to pay incur the upfront charge for a regular saving plan. You still have to bear 3.5% spread for each investment.
The best options are:
1. Invest in the STI Exchange Traded Fund
2. Invest in the Combined Fund from NTUC Income through Flexi-Link.
Promoting Swan Lake
Mr. Tan,
Why are you promoting Swan Lake?
REPLY
There are two reasons.
1. It is the most popular ballet. Many people enjoy it. I am sure that Singaporeans will also enjoy it. The music by Peter Tsaichovsky is enchanting. The dance will be spectacular. The ticket price is modest. Do not miss it.
2. I have been on the board of the Singapore Dance Theatre for more than 10 years. The SDT is putting up this performance. I want to help their ticket sales.
Why are you promoting Swan Lake?
REPLY
There are two reasons.
1. It is the most popular ballet. Many people enjoy it. I am sure that Singaporeans will also enjoy it. The music by Peter Tsaichovsky is enchanting. The dance will be spectacular. The ticket price is modest. Do not miss it.
2. I have been on the board of the Singapore Dance Theatre for more than 10 years. The SDT is putting up this performance. I want to help their ticket sales.
Visitors to my blog
During the past week, the day visitors to my blog increased significantly. But the night visitors have dropped. The total has increased to about 720. Are more people visiting during the day now?
I am still short of my target of 1,000 visitors!
I am still short of my target of 1,000 visitors!
Buy Term Insurance Directly
Mr. Tan
My insurance agent discourages me from buying Term insurance. But I like to buy Term insurance and invest the difference. Where can I get it?
REPLY
Read this FAQ:
http://www.tankinlian.com/faq/termd.html
My insurance agent discourages me from buying Term insurance. But I like to buy Term insurance and invest the difference. Where can I get it?
REPLY
Read this FAQ:
http://www.tankinlian.com/faq/termd.html
Swan Lake - tell your friends
Please help me to tell your friends about Swan Lake. Do not miss it.
http://www.singaporedancetheatre.com/performance/swanlake.asp
http://www.singaporedancetheatre.com/performance/swanlake.asp
Critical Illness Policy for $250,000
Insurance agents like to their clients to insure $250,000 for a "whole life" critical illness policy. The tell the clients that you need $250,000 to provide loss of income for 10 years. Why?
The answer: About 18 months of premium goes to pay the commission to the agent and his managers, and the expenses and profit of the insurance company. To insure $250,000, the monthly premium is $500 for a person at age 30. About $9,000 is taken away from your savings to pay the various parties.
If the monthly premium of $500 is invested to earn 5% per annum, it will accumulate to $250,000 within 23 years. You can be 100% sure of getting this sum in 23 years (based on 5% investment return). Compared to this certainty, the proportion of people likely to suffer a critical illness within 23 years (and make a claim of $250,000) is between 5% to 10%.
If you buy the "whole life" critical illness policy, how much is the cash value at the end of 23 years? My estimate is $180,000 (but you can check it out). The cost to you over 23 years is a staggering $70,000.
If you wish to insure for critical illness, take a low cost insurance (like Term insurance but extend to include critical illness) to cover 25 years only. The premium is quite small.
Note: The charges under the Living policy from NTUC Income is lower than the market, so the cost is lower than the example shown above. But, it is still quite high, compared to the "Buy low cost insurance and invest the difference".
The answer: About 18 months of premium goes to pay the commission to the agent and his managers, and the expenses and profit of the insurance company. To insure $250,000, the monthly premium is $500 for a person at age 30. About $9,000 is taken away from your savings to pay the various parties.
If the monthly premium of $500 is invested to earn 5% per annum, it will accumulate to $250,000 within 23 years. You can be 100% sure of getting this sum in 23 years (based on 5% investment return). Compared to this certainty, the proportion of people likely to suffer a critical illness within 23 years (and make a claim of $250,000) is between 5% to 10%.
If you buy the "whole life" critical illness policy, how much is the cash value at the end of 23 years? My estimate is $180,000 (but you can check it out). The cost to you over 23 years is a staggering $70,000.
If you wish to insure for critical illness, take a low cost insurance (like Term insurance but extend to include critical illness) to cover 25 years only. The premium is quite small.
Note: The charges under the Living policy from NTUC Income is lower than the market, so the cost is lower than the example shown above. But, it is still quite high, compared to the "Buy low cost insurance and invest the difference".
Sudoku Workshop at Bishan
The Sudoku (Logic9) workshop at Bishan was packed. There were almost 40 participants in the classroom. Some participants had to sit by the side. Most of them came from Bishan and Toa Payoh Community Club, due to active promotion by the managers.
One participant came to tell me that he reads my blog every morning. He enjoyed my blog because it contains the real life questions faced by many people. I did not ask the other participants if they came in response to the posting in my blog.
The participants thoroughly enjoyed the workshop. One participant said that it is "better than mahjong".
One participant came to tell me that he reads my blog every morning. He enjoyed my blog because it contains the real life questions faced by many people. I did not ask the other participants if they came in response to the posting in my blog.
The participants thoroughly enjoyed the workshop. One participant said that it is "better than mahjong".
SuperSIV Bailout Fund
Dec. 18 (Bloomberg) -- The SuperSIV' fund, set up to provide cash to structured investment vehicles hurt by the collapse of the subprime-mortgage market, plans to start buying assets within weeks,' its sponsors said today.
The fund's size, originally envisioned at about $80 billion, will be based on SIVs' needs and evolving market circumstances, Citigroup Inc., Bank of America Corp., JPMorgan Chase & Co. and BlackRock Inc. said in an e-mailed statement. The banks are raising money for the fund while BlackRock will manage its assets.
The urgency that led to the SuperSIV's creation eased after separate SIV bailouts by banks including Citigroup and London- based HSBC Holdings Plc. New York-based Citigroup said last week it would take over seven SIVs with $58 billion of debt. Banks want to avoid forced assets sales to repay SIV borrowings because that would further roil credit markets and reduce the value of their own debt holdings.
The fund, also known as the Master Liquidity Enhancement Conduit, or M-LEC, can still provide ``an optional source of liquidity for eligible high-quality assets,'' the banks said in the statement.
SIVs, which sell short-term debt and invest the proceeds in higher-yielding securities, have cut their holdings by more than 25 percent since August to $298 billion, according to Moody's Investors Service in New York. That's when investors started shunning SIV commercial paper and medium-term notes amid increasing losses on subprime mortgages.
Question: Will this SuperSIV fund help to stabilise the markets?
The fund's size, originally envisioned at about $80 billion, will be based on SIVs' needs and evolving market circumstances, Citigroup Inc., Bank of America Corp., JPMorgan Chase & Co. and BlackRock Inc. said in an e-mailed statement. The banks are raising money for the fund while BlackRock will manage its assets.
The urgency that led to the SuperSIV's creation eased after separate SIV bailouts by banks including Citigroup and London- based HSBC Holdings Plc. New York-based Citigroup said last week it would take over seven SIVs with $58 billion of debt. Banks want to avoid forced assets sales to repay SIV borrowings because that would further roil credit markets and reduce the value of their own debt holdings.
The fund, also known as the Master Liquidity Enhancement Conduit, or M-LEC, can still provide ``an optional source of liquidity for eligible high-quality assets,'' the banks said in the statement.
SIVs, which sell short-term debt and invest the proceeds in higher-yielding securities, have cut their holdings by more than 25 percent since August to $298 billion, according to Moody's Investors Service in New York. That's when investors started shunning SIV commercial paper and medium-term notes amid increasing losses on subprime mortgages.
Question: Will this SuperSIV fund help to stabilise the markets?
Tuesday, December 18, 2007
Flexi Link and CPF policies
Dear Mr Tan,
I've been reading your blog for more than a year and have thoroughly enjoyed it. Can you help me with the following queries.
1) I bought a Living policy for my daughter 4 years ago. I have read your articles which encourage investment in large, low cost fund. I am thinking of terminating the living policy and using the surrender value to invest in NTUC Income's Flexi-Link plan. I guess the better, long term return should exceed the loss of about $1,000 loss on surrendering the living policy. Appreciate your advice.
Reply: I agree with you. It is probably better to make the switch and get a better long term return. However, the stockmarket is still quite volatile. Perhaps you can wait until it stabilises before you make this change?
2) My husband also bought two endowment policies some 10 years ago and he has been using his CPF fund to pay for the yearly premiums. With the new CPF changes, I read that members can continue to service their regular premium insurance policies but NOT recurring single premium insurance policies even if their CPF balance falls below $20,000. May I know whether the yearly premiums for my husband's policies are considered as regular or recurring single premiums?
Reply: An endowment policy is considered as regular premium. So, your husband should be able to continue to get the annual premium paid through CPF.
I've been reading your blog for more than a year and have thoroughly enjoyed it. Can you help me with the following queries.
1) I bought a Living policy for my daughter 4 years ago. I have read your articles which encourage investment in large, low cost fund. I am thinking of terminating the living policy and using the surrender value to invest in NTUC Income's Flexi-Link plan. I guess the better, long term return should exceed the loss of about $1,000 loss on surrendering the living policy. Appreciate your advice.
Reply: I agree with you. It is probably better to make the switch and get a better long term return. However, the stockmarket is still quite volatile. Perhaps you can wait until it stabilises before you make this change?
2) My husband also bought two endowment policies some 10 years ago and he has been using his CPF fund to pay for the yearly premiums. With the new CPF changes, I read that members can continue to service their regular premium insurance policies but NOT recurring single premium insurance policies even if their CPF balance falls below $20,000. May I know whether the yearly premiums for my husband's policies are considered as regular or recurring single premiums?
Reply: An endowment policy is considered as regular premium. So, your husband should be able to continue to get the annual premium paid through CPF.
Logic Quiz A-8
There are five houses in a row. In each house lives a person with a different occupation, drinks a different beverage, plays a different sport and keeps a different pet.
1. The person who drinks beer lives to the left of the person who drinks milk.
2. The person who keeps fish lives to the left of the person who keeps cats.
3. John lives to the left of the person who drinks beer.
4. Robert lives next to the accountant.
5. Mary keeps birds.
6. The teacher drinks coffee.
7. Susan is the lawyer.
8. The person who plays golf lives next to the doctor.
9. The person who plays badminton lives to the left of Albert.
10. The person who drinks water plays bowling.
11. The person who keeps hamsters drinks tea.
12. The person who plays chess lives to the left of the person who keeps cats.
13. The person who drinks tea lives in the last house.
14. Mary lives next to the salesman.
15. The person who keeps dogs lives in the second house.
Question: Who plays tennis?
Post your answer, time taken and name in this blog.
Answer can be found at:
http://www.tankinlian.com/logicquiz/qs.html
More quiz can be found at:
http://www.tankinlian.com/logicquiz/
1. The person who drinks beer lives to the left of the person who drinks milk.
2. The person who keeps fish lives to the left of the person who keeps cats.
3. John lives to the left of the person who drinks beer.
4. Robert lives next to the accountant.
5. Mary keeps birds.
6. The teacher drinks coffee.
7. Susan is the lawyer.
8. The person who plays golf lives next to the doctor.
9. The person who plays badminton lives to the left of Albert.
10. The person who drinks water plays bowling.
11. The person who keeps hamsters drinks tea.
12. The person who plays chess lives to the left of the person who keeps cats.
13. The person who drinks tea lives in the last house.
14. Mary lives next to the salesman.
15. The person who keeps dogs lives in the second house.
Question: Who plays tennis?
Post your answer, time taken and name in this blog.
Answer can be found at:
http://www.tankinlian.com/logicquiz/qs.html
More quiz can be found at:
http://www.tankinlian.com/logicquiz/
Taxi service in Singapore
I read that the taxi situation remained unsatsifactory, in spite of the recent increase in fares. Commuters have to wait for one hour to get a taxi. Many taxis refuse to pick up passengers at the taxi stand. They wait for a booking.
My friend made this observation. The taxi fares and surcharges in Singapore are confusing. The taxi driver knows how to take the best advantage of the situation. The passengers are helpless.
What is wrong with the taxi service in Singapore? How can the situation be improved? I shall give my suggestions in my website in one or two weeks' time.
My friend made this observation. The taxi fares and surcharges in Singapore are confusing. The taxi driver knows how to take the best advantage of the situation. The passengers are helpless.
What is wrong with the taxi service in Singapore? How can the situation be improved? I shall give my suggestions in my website in one or two weeks' time.
Light buses in Hong Kong
My friend told me about the light bus system in Hong Kong. This is how it worked a few years ago. He is not sure if it has changed in recent years.
* The light bus runs on specific routes
* It provides a feeder service to the train
* It carries 14 to 16 passengers
* It can pick up and drop passengers anywhere on the route (i.e. no designated stops)
* The fare is between $1 to $2, converted to Singapore dollars.
* It is more expensive than a train ride, but cheaper than a taxi.
Many people find the public transport in Hong Kong to be more convenient than Singapore. It is among the best in the world.
* The light bus runs on specific routes
* It provides a feeder service to the train
* It carries 14 to 16 passengers
* It can pick up and drop passengers anywhere on the route (i.e. no designated stops)
* The fare is between $1 to $2, converted to Singapore dollars.
* It is more expensive than a train ride, but cheaper than a taxi.
Many people find the public transport in Hong Kong to be more convenient than Singapore. It is among the best in the world.
CEO uses public transport
My friend, originally from Hong Kong, worked as CEO of a venture capital fund in Singapore for more than 10 years. He is used to taking public transport in Singapore. He finds it to be more convenient than driving a private car. When I asked him to take the train to a meeting, he said, "Of course!"
How much to insure for critical illness?
Dear Mr Tan,
You recommend that $50,000 is sufficient for critical illness cover. May I know how you derive this amount?
In my opinion, if I am diagnosed with a critical illness eg cancer, I would have to stop working. I would probably need $2,000 a month to support myself for 5 years, while waiting to see if the cancer would go into remission. Thus, the amount of my critical illness cover should be $2,000 x 5 years = $120,000.
Please advise if my scenario is realistic and reasonable?
REPLY
Critical illness coverage is expensive. A significant portion of the premium goes for marketing and other expenses. If you spend too much on it, you have less money to save for your other needs.
If you spend less on critical illness insurance, you will have more money to save and invest. This will allow you to accumulate savings which can be drawn down for all kinds of emergency (including critical illness), and also for retirement.
I am not aware of many people who have to suffer a critical illness for 5 years. Have you come across many people in this situation?
If the illness is serious, they will pass away and the family can claim under the life insurance policy. If the critical illness is not serious, they can be cured within a shorter time.
However, if you feel that there is a need to insure for a larger sum, it is all right. It is a question of getting the right balance.
You recommend that $50,000 is sufficient for critical illness cover. May I know how you derive this amount?
In my opinion, if I am diagnosed with a critical illness eg cancer, I would have to stop working. I would probably need $2,000 a month to support myself for 5 years, while waiting to see if the cancer would go into remission. Thus, the amount of my critical illness cover should be $2,000 x 5 years = $120,000.
Please advise if my scenario is realistic and reasonable?
REPLY
Critical illness coverage is expensive. A significant portion of the premium goes for marketing and other expenses. If you spend too much on it, you have less money to save for your other needs.
If you spend less on critical illness insurance, you will have more money to save and invest. This will allow you to accumulate savings which can be drawn down for all kinds of emergency (including critical illness), and also for retirement.
I am not aware of many people who have to suffer a critical illness for 5 years. Have you come across many people in this situation?
If the illness is serious, they will pass away and the family can claim under the life insurance policy. If the critical illness is not serious, they can be cured within a shorter time.
However, if you feel that there is a need to insure for a larger sum, it is all right. It is a question of getting the right balance.
Money Market Fund
1. Is it safe to invest all my money in the money market fund. Is it risk free or not?
It has risk, like all investments, but extremely low. I have a fairly significant sum invested in the money market fund under NTUC Income.
2. After reading your postings, I have started doing some research on the money market fund. There are a few such products on the market, such as NTUC Income, Lion Capital, Philips Securities. Is there any particular reasons why you suggest NTUC instead of the rest ?
I am familiar with the money market fund under NTUC Income. It is invested in safe assets and have low annual charge.
I am not familiar with the investments and charges of the other funds. But, I think that they should be quite safe. Their annual charge is probably higher. However, you have to do your own research.
It has risk, like all investments, but extremely low. I have a fairly significant sum invested in the money market fund under NTUC Income.
2. After reading your postings, I have started doing some research on the money market fund. There are a few such products on the market, such as NTUC Income, Lion Capital, Philips Securities. Is there any particular reasons why you suggest NTUC instead of the rest ?
I am familiar with the money market fund under NTUC Income. It is invested in safe assets and have low annual charge.
I am not familiar with the investments and charges of the other funds. But, I think that they should be quite safe. Their annual charge is probably higher. However, you have to do your own research.
Invest the year-end bonus
Hi Mr Tan,
I've been following your blog for a while. I enjoy your articles and Irecommend it to my friends. Some of them who wanted to improve on their financials are reading your blog too.
This is the first time I'm writing to you. I've been reading a lotabout the USA recession that may be coming, hence I'm hesitant about investing my bonus on global equity funds or the STI ETF.
Is bonds a better option in a pending recession? Or should I continue investing in the STI ETF?
I also read that stocks of food and utitlities companies are more resistant to cyclical movements in a recession. Are these good options?
Or should I leave my money in the bank (unfortunately, annual interest is 0.125%) and wait until the recession sets in, then go about stock picking?
REPLY
I suggest that you put your bonus in the Money Market Fund from NTUC Income for the next 6 to 12 months. You can earn 2% to 2.5% per annum. Wait until the global economic situation becomes clearer.
I've been following your blog for a while. I enjoy your articles and Irecommend it to my friends. Some of them who wanted to improve on their financials are reading your blog too.
This is the first time I'm writing to you. I've been reading a lotabout the USA recession that may be coming, hence I'm hesitant about investing my bonus on global equity funds or the STI ETF.
Is bonds a better option in a pending recession? Or should I continue investing in the STI ETF?
I also read that stocks of food and utitlities companies are more resistant to cyclical movements in a recession. Are these good options?
Or should I leave my money in the bank (unfortunately, annual interest is 0.125%) and wait until the recession sets in, then go about stock picking?
REPLY
I suggest that you put your bonus in the Money Market Fund from NTUC Income for the next 6 to 12 months. You can earn 2% to 2.5% per annum. Wait until the global economic situation becomes clearer.
Monday, December 17, 2007
Swan Lake - the story
Synopsis: from Wikipedia
Act 1
Swan Lake begins at a royal court. Prince Siegfried, heir to the kingdom, must declare a wife at his birthday ball. Upset that he cannot marry for love, Siegfried escapes into the forest at night. As he sees a flock of swans flying overhead, he sets off in pursuit
Act 2
Sigfried aims his crossbow and readies himself for their landing by the lakeside. When one comes into view, however, he stops; before him is a beautiful creature dressed in white feathers, more woman than swan. Enamoured, the two dance and Siegfried learns that the swan maiden is the princess Odette. An evil sorcerer, Von Rothbart, captured her and used his magic to turn Odette into a swan by day and woman by night.
A retinue of other captured swan-maidens attend Odette in the environs of Swan Lake, which was formed by the tears of her parents when she was kidnapped by Von Rothbart. Once Siegfried knows her story, he takes great pity on her and falls in love. As he begins to swear his love to her - an act that will render the sorcerer's spell powerless - Von Rothbart appears. Siegfried threatens to kill him but Odette intercedes; if Von Rothbart dies before the spell is broken, it can never be undone.
Act 3
The Prince returns to the castle to attend the ball. Von Rothbart arrives in disguise with his own daughter Odile, making her seem identical to Odette in all respects except that she wears black while Odette wears white. The prince mistakes her for Odette, dances with her, and proclaims to the court that he intends to make her his wife. Only a moment too late, Siegfried sees the real Odette and realizes his mistake. The method in which Odette appears varies: in some versions she arrives at the castle, while in other versions Von Rothbart shows Siegfried a magical vision of her.
Act 4
In the fourth act, versions of the ballet diverge. In the original version, Odette and Siegfried, realizing that the spell can never be broken, drown themselves by leaping into the lake. This causes Von Rothbart to lose his power over them, and he dies as a result. But many different endings exist, ranging from romantic to tragic.
In a version danced by the Mariinsky Ballet in 2006, the true love between Siegfried and Odette defeats Von Rothbart, who dies after the prince breaks one of his wings. Odette is restored to human form to unite happily with the prince. This version has often been used by Russian and Chinese ballet companies.
In a version which has an ending very close to the original danced by American Ballet Theatre in 2005, Siegfried's mistaken pledge of fidelity to Odile consigns Odette to eternal swanhood.
Realizing that her last moment of humanity is at hand, Odette commits suicide by throwing herself into the lake. The Prince does so as well. This act of sacrifice and love breaks Von Rothbart's power, and he is destroyed. In the final tableau, the lovers are seen rising together to heaven in apotheosis.
In a version danced by New York City Ballet in 2006 (with choreography by Peter Martins after Lev Ivanov, Marius Petipa, and George Balanchine), the Prince's declaration that he wishes to marry Odile constitutes a betrayal that condemns Odette to remain a swan forever. Odette is called away into swan form, and Siegfried is left alone in grief as the curtain falls.
Act 1
Swan Lake begins at a royal court. Prince Siegfried, heir to the kingdom, must declare a wife at his birthday ball. Upset that he cannot marry for love, Siegfried escapes into the forest at night. As he sees a flock of swans flying overhead, he sets off in pursuit
Act 2
Sigfried aims his crossbow and readies himself for their landing by the lakeside. When one comes into view, however, he stops; before him is a beautiful creature dressed in white feathers, more woman than swan. Enamoured, the two dance and Siegfried learns that the swan maiden is the princess Odette. An evil sorcerer, Von Rothbart, captured her and used his magic to turn Odette into a swan by day and woman by night.
A retinue of other captured swan-maidens attend Odette in the environs of Swan Lake, which was formed by the tears of her parents when she was kidnapped by Von Rothbart. Once Siegfried knows her story, he takes great pity on her and falls in love. As he begins to swear his love to her - an act that will render the sorcerer's spell powerless - Von Rothbart appears. Siegfried threatens to kill him but Odette intercedes; if Von Rothbart dies before the spell is broken, it can never be undone.
Act 3
The Prince returns to the castle to attend the ball. Von Rothbart arrives in disguise with his own daughter Odile, making her seem identical to Odette in all respects except that she wears black while Odette wears white. The prince mistakes her for Odette, dances with her, and proclaims to the court that he intends to make her his wife. Only a moment too late, Siegfried sees the real Odette and realizes his mistake. The method in which Odette appears varies: in some versions she arrives at the castle, while in other versions Von Rothbart shows Siegfried a magical vision of her.
Act 4
In the fourth act, versions of the ballet diverge. In the original version, Odette and Siegfried, realizing that the spell can never be broken, drown themselves by leaping into the lake. This causes Von Rothbart to lose his power over them, and he dies as a result. But many different endings exist, ranging from romantic to tragic.
In a version danced by the Mariinsky Ballet in 2006, the true love between Siegfried and Odette defeats Von Rothbart, who dies after the prince breaks one of his wings. Odette is restored to human form to unite happily with the prince. This version has often been used by Russian and Chinese ballet companies.
In a version which has an ending very close to the original danced by American Ballet Theatre in 2005, Siegfried's mistaken pledge of fidelity to Odile consigns Odette to eternal swanhood.
Realizing that her last moment of humanity is at hand, Odette commits suicide by throwing herself into the lake. The Prince does so as well. This act of sacrifice and love breaks Von Rothbart's power, and he is destroyed. In the final tableau, the lovers are seen rising together to heaven in apotheosis.
In a version danced by New York City Ballet in 2006 (with choreography by Peter Martins after Lev Ivanov, Marius Petipa, and George Balanchine), the Prince's declaration that he wishes to marry Odile constitutes a betrayal that condemns Odette to remain a swan forever. Odette is called away into swan form, and Siegfried is left alone in grief as the curtain falls.
Investing in volatile market conditions
Mr, Tan,
I like to seek your advise on investing in SRS accounts. Under today's economic and voilatile stituation in the financial market that might drag on for a year or more, what kind of funds should I invest for SRS?
I am looking for a return of about 10% or more per annum if possible to beat the inflation aspect in Singapore.
REPLY
I do not know any safe investment that can give a return of 10%. I keep my money in the money market fund to earn 2% to 2.5%.
I like to seek your advise on investing in SRS accounts. Under today's economic and voilatile stituation in the financial market that might drag on for a year or more, what kind of funds should I invest for SRS?
I am looking for a return of about 10% or more per annum if possible to beat the inflation aspect in Singapore.
REPLY
I do not know any safe investment that can give a return of 10%. I keep my money in the money market fund to earn 2% to 2.5%.
Swan Lake, 20 - 23 December, Esplanade
The first classical music that I heard was Swan Lake by Peter Tsaikovsky. That was more than 50 years ago. I can still remember the magical tunes to this day.
You can now watch the performance of Swan Lake by the Singapore Dance Theatre during this week at the Esplanade. Swan Lake is considered to be the most well known ballet in the world. You must not miss it.
The story of Swan Lake revolves around a love story between a beautiful princess, Odette, and a prince, Siegfried. Odette is cursed to appear in the form of a swan in the day and can only revert to her human self at night. Siegfried, while fleeing his castle to escape an arranged marriage, chances upon Odette and falls in love with her.
Swan Lake relates the beautiful tale of their love and will mesmerize audiences with stunning sets and breath-taking choreography.
Tickets prices: $88, $68, $58, $48, and $38.
SPECIAL: Sweet Sixteen tickets at $16 per ticket (inclusive of $1 SISTIC fee) available to all full-time students and NSmen.
http://www.singaporedancetheatre.com/performance/swanlake.asp
You can now watch the performance of Swan Lake by the Singapore Dance Theatre during this week at the Esplanade. Swan Lake is considered to be the most well known ballet in the world. You must not miss it.
The story of Swan Lake revolves around a love story between a beautiful princess, Odette, and a prince, Siegfried. Odette is cursed to appear in the form of a swan in the day and can only revert to her human self at night. Siegfried, while fleeing his castle to escape an arranged marriage, chances upon Odette and falls in love with her.
Swan Lake relates the beautiful tale of their love and will mesmerize audiences with stunning sets and breath-taking choreography.
Tickets prices: $88, $68, $58, $48, and $38.
SPECIAL: Sweet Sixteen tickets at $16 per ticket (inclusive of $1 SISTIC fee) available to all full-time students and NSmen.
http://www.singaporedancetheatre.com/performance/swanlake.asp
Renewal of motor insurance
Mr. Tan,
Can I wait for the insurance company to remind me about the renewal of the motor insurance, and then I can go and source for quotations?
REPLY
Sometimes the insurance company sends the renewal notice to you rather late, or you may have overlook it, if you are busy. You may not have sufficient time to source for the best quote. It is better to have a reminder in your diary.
Can I wait for the insurance company to remind me about the renewal of the motor insurance, and then I can go and source for quotations?
REPLY
Sometimes the insurance company sends the renewal notice to you rather late, or you may have overlook it, if you are busy. You may not have sufficient time to source for the best quote. It is better to have a reminder in your diary.
Forward Pricing of Unit Trust
Hi Mr Tan,
I'm really glad that I had the chance to come across your blog and gain so many valuable information from your posting. Your effort in your blog really inspired me and many others. I sincerely hope more people, include myself, can benefits from you and putting forward our gains, to build a better sociality.
As I am not well educated, there are lots of financial terms that I really hope to understand. What does "Forward Price" means and how it works?
I have searched the websites but none of them looks simple to me. I have been struggling with those terms and conditions, regulations and report statements given to me by the investment agent.
REPLY
If you buy or sell shares through a stock exchange, you transact based on the price that the other party is willing to transact with you.
When you buy or sell units in a unit trust, there is no party that is transacting with you through an exchange. The price that you will transact will be based on the price of the units computed by the fund manager (usually based on the net asset value of the fund) at the end of the current or following day. This is called "forward pricing". It means that you are using a price at a future time. Usually, the unit trust will tell you how the forward price is computed.
Do not be shy that you are not familiar with this concept. I was not familiar with it, until recently.
I'm really glad that I had the chance to come across your blog and gain so many valuable information from your posting. Your effort in your blog really inspired me and many others. I sincerely hope more people, include myself, can benefits from you and putting forward our gains, to build a better sociality.
As I am not well educated, there are lots of financial terms that I really hope to understand. What does "Forward Price" means and how it works?
I have searched the websites but none of them looks simple to me. I have been struggling with those terms and conditions, regulations and report statements given to me by the investment agent.
REPLY
If you buy or sell shares through a stock exchange, you transact based on the price that the other party is willing to transact with you.
When you buy or sell units in a unit trust, there is no party that is transacting with you through an exchange. The price that you will transact will be based on the price of the units computed by the fund manager (usually based on the net asset value of the fund) at the end of the current or following day. This is called "forward pricing". It means that you are using a price at a future time. Usually, the unit trust will tell you how the forward price is computed.
Do not be shy that you are not familiar with this concept. I was not familiar with it, until recently.
Buy Motor Insurance Directly
Here are the tips to pay less for your motor insurance.
1. Put a reminder in your diary two months before the expiry date of your motor insurance policy.
2. Get the following particulars of your motor car:
Particulars of car (model, engine capacity*, year of registration, market value*)
Particulars of owner (age, years of driving experience, occcupation)
Type of cover (comprehensive, third party only, third party with fire and theft)
No-claim discount for past year
Any claims during the current year?
Previous year's premium
* these data are optional and may not be asked by some insurers (as they can figure them out using your car model).
Normally, you ask for Comprehensive cover. If your car is too old, the insurer may offer Third Party cover only.
3. Get the hotline number of the top motor insurers, e.g. NTUC Income, AIG, AXA
4. Give a call to the hotline and ask for a quote. Ask them if you give you a discount for calling them directly. If they charge a higher premium than for your previous year, ask them why they are charging more. (They may give you a discount to attract your business).
5. If you are not sure about the quality of the claim service, call the claim hotline now (i.e. do not wait until you have an accident) and see if it is easy to get through and if the staff is polite and friendly.
6. Make your decision two weeks before expiry.
Here are the contact numbers of the insurance companies that are active in motor insurance. You can send a fax to them or call their hotline to ask for a quote for your motor insurance.
American Home (AIG), Tel No. 6419 1000 Fax No. 6835 7401http://www.aig.com.sg/
AXA Insurance, Tel: 6338 7288 Fax: 6338 2522 http://www.axa.com.sg/
China Insurance Tel: 6389 6111 Fax: 6222 1033 http://www.chinainsurance.com.sg/
HSBC Insurance, Tel: 6225 6111Fax : 6732 0743 http://www.hsbc.com.sg/
India International, Tel: 6347 6100 Fax: 6225 7743 6224 4174 http://www.iii.com.sg/
Mitsui Sumitomo, Tel: 6220 9644 Fax: 6225 6371 http://www.ms-ins.com.sg/
NTUC Income, Tel No. 6336 3322 Fax No. 6338 1500 http://www.income.com.sg/
Tenet Insurance, Tel: 6221 2211 Fax: 6221 3302 http://www.tenetinsurance.com/
Tokio Marine, Tel: 6221 6111 Fax: 6224 0895 http://www.tokiomarine.com.sg/
1. Put a reminder in your diary two months before the expiry date of your motor insurance policy.
2. Get the following particulars of your motor car:
Particulars of car (model, engine capacity*, year of registration, market value*)
Particulars of owner (age, years of driving experience, occcupation)
Type of cover (comprehensive, third party only, third party with fire and theft)
No-claim discount for past year
Any claims during the current year?
Previous year's premium
* these data are optional and may not be asked by some insurers (as they can figure them out using your car model).
Normally, you ask for Comprehensive cover. If your car is too old, the insurer may offer Third Party cover only.
3. Get the hotline number of the top motor insurers, e.g. NTUC Income, AIG, AXA
4. Give a call to the hotline and ask for a quote. Ask them if you give you a discount for calling them directly. If they charge a higher premium than for your previous year, ask them why they are charging more. (They may give you a discount to attract your business).
5. If you are not sure about the quality of the claim service, call the claim hotline now (i.e. do not wait until you have an accident) and see if it is easy to get through and if the staff is polite and friendly.
6. Make your decision two weeks before expiry.
Here are the contact numbers of the insurance companies that are active in motor insurance. You can send a fax to them or call their hotline to ask for a quote for your motor insurance.
American Home (AIG), Tel No. 6419 1000 Fax No. 6835 7401http://www.aig.com.sg/
AXA Insurance, Tel: 6338 7288 Fax: 6338 2522 http://www.axa.com.sg/
China Insurance Tel: 6389 6111 Fax: 6222 1033 http://www.chinainsurance.com.sg/
HSBC Insurance, Tel: 6225 6111Fax : 6732 0743 http://www.hsbc.com.sg/
India International, Tel: 6347 6100 Fax: 6225 7743 6224 4174 http://www.iii.com.sg/
Mitsui Sumitomo, Tel: 6220 9644 Fax: 6225 6371 http://www.ms-ins.com.sg/
NTUC Income, Tel No. 6336 3322 Fax No. 6338 1500 http://www.income.com.sg/
Tenet Insurance, Tel: 6221 2211 Fax: 6221 3302 http://www.tenetinsurance.com/
Tokio Marine, Tel: 6221 6111 Fax: 6224 0895 http://www.tokiomarine.com.sg/
Buy Term Insurance Directly
You can buy Term Insurance directly from the life insurance companies.
A list of the companies, with their fax and telephone numbers is shown below. You can try NTUC Income, UOB Life, Asia Life and Aviva. They are likely to be interested to reply to you.
Send a fax to them, asking them to quote the premium for you. You have to specify the
following:
1. Your age and gender
2. Sum assured
3. Term (level or reducing)
Some of them may send a quote to you. You can compare the quote with the benchmark premiums shown in my website:
http://www.tankinlian.com/faq/term.html
If the quoted premium is within 20% of my benchmark rates, they will represent good value to you.
All the best in your search. Share your results in my blog.
American International, Tel 6291 8000 Fax 6298 6000, http://www.aia.com.sg/
Aviva, Tel 6827 7988 Fax 6827 7900, http://www.aviva-singapore.com.sg/
AXA Life, Tel 6880 5500 Fax 6880 5501, http://www.axa.com.sg/
Friends Provident, Tel 6327 4019 Fax 6327 4020, http://www.fpinternational.com/
Great Eastern Life, Tel 6248 2000 Fax 6532 2214, http://www.lifeisgreat.com.sg/
HSBC Insurance. Tel 6225 6111 Fax 6221 2188, http://www.insurance.hsbc.com.sg/
Manulife, Tel 6737 1221 Fax 6737 8488, http://www.manulife.com.sg/
NTUC Income, Tel 6336 3322 Fax 6338 1500, http://www.income.com.sg/
Overseas Assurance, Tel 6248 2000 Fax 6532 2214, http://www.oac.com.sg/
Prudential Assurance, Tel 6535 8988 Fax 6532 4043, http://www.prudential.com.sg/
TM Asia Life, Tel 6224 3181 Fax 6223 9120, http://www.tmasialife.com/
Transamerica Life, Tel 6236 2366 Fax 6236 2123, http://www.transamerica.com.sg/
UOB Life, Tel 6227 8477 Fax 6224 3012, http://www.uoblife.com.sg/
A list of the companies, with their fax and telephone numbers is shown below. You can try NTUC Income, UOB Life, Asia Life and Aviva. They are likely to be interested to reply to you.
Send a fax to them, asking them to quote the premium for you. You have to specify the
following:
1. Your age and gender
2. Sum assured
3. Term (level or reducing)
Some of them may send a quote to you. You can compare the quote with the benchmark premiums shown in my website:
http://www.tankinlian.com/faq/term.html
If the quoted premium is within 20% of my benchmark rates, they will represent good value to you.
All the best in your search. Share your results in my blog.
American International, Tel 6291 8000 Fax 6298 6000, http://www.aia.com.sg/
Aviva, Tel 6827 7988 Fax 6827 7900, http://www.aviva-singapore.com.sg/
AXA Life, Tel 6880 5500 Fax 6880 5501, http://www.axa.com.sg/
Friends Provident, Tel 6327 4019 Fax 6327 4020, http://www.fpinternational.com/
Great Eastern Life, Tel 6248 2000 Fax 6532 2214, http://www.lifeisgreat.com.sg/
HSBC Insurance. Tel 6225 6111 Fax 6221 2188, http://www.insurance.hsbc.com.sg/
Manulife, Tel 6737 1221 Fax 6737 8488, http://www.manulife.com.sg/
NTUC Income, Tel 6336 3322 Fax 6338 1500, http://www.income.com.sg/
Overseas Assurance, Tel 6248 2000 Fax 6532 2214, http://www.oac.com.sg/
Prudential Assurance, Tel 6535 8988 Fax 6532 4043, http://www.prudential.com.sg/
TM Asia Life, Tel 6224 3181 Fax 6223 9120, http://www.tmasialife.com/
Transamerica Life, Tel 6236 2366 Fax 6236 2123, http://www.transamerica.com.sg/
UOB Life, Tel 6227 8477 Fax 6224 3012, http://www.uoblife.com.sg/
Investment-linked plan with high distribution cost
Hi Mr. Tan
I just purchased an invesment linked plan from company X. It covers death, disability and crisis cover with terminal illness. The annual premuim is $3,000.
I want protection and saving for my retirement. I am Y yrs old and self employed with little CPF. The agent said this is the best plan out of all.
Can I take up this plan first as it is much cheaper in premium for my protection coverage and reduce it later to convert it into purely investment? The policy is now within the 14 days free look period.
REPLY
Can you find out how much of your premium is invested in the fund for the first few years, and when will 100% be invested?
I understand that the disctribution cost (to pay commission to the agent) from company X can take away 16 months of your premium. That is a lot of your savings to be taken away. You can look at this webpage, http://www.askdrmoney.com/Ins_ILP_RP.htm
I suggest that you cancel this policy immediately, i.e. within the 14 day free look period, until this matter is cleared up.
I just purchased an invesment linked plan from company X. It covers death, disability and crisis cover with terminal illness. The annual premuim is $3,000.
I want protection and saving for my retirement. I am Y yrs old and self employed with little CPF. The agent said this is the best plan out of all.
Can I take up this plan first as it is much cheaper in premium for my protection coverage and reduce it later to convert it into purely investment? The policy is now within the 14 days free look period.
REPLY
Can you find out how much of your premium is invested in the fund for the first few years, and when will 100% be invested?
I understand that the disctribution cost (to pay commission to the agent) from company X can take away 16 months of your premium. That is a lot of your savings to be taken away. You can look at this webpage, http://www.askdrmoney.com/Ins_ILP_RP.htm
I suggest that you cancel this policy immediately, i.e. within the 14 day free look period, until this matter is cleared up.
NTUC Income's Money Market Fund
Hi Kin Lian,
My thanks for all your contributions to financial education for your readers. May I ask your opinion on whether the NTUC Money Market Fund is safe, in view of the subprime problems please?
REPLY
I have checked the investments of this fund.
It is safe because the fund is invested in very short-term papers, average less than 6 months, mainly in interbank deposits with banks licensed to operate in Singapore. There is no exposure to subprime risk.
Personally, I have a significant investment in this fund.
My thanks for all your contributions to financial education for your readers. May I ask your opinion on whether the NTUC Money Market Fund is safe, in view of the subprime problems please?
REPLY
I have checked the investments of this fund.
It is safe because the fund is invested in very short-term papers, average less than 6 months, mainly in interbank deposits with banks licensed to operate in Singapore. There is no exposure to subprime risk.
Personally, I have a significant investment in this fund.
Government Bonds
FIRST POSTED IN JULY 2007
Hi Mr Tan,
Due to the low fixed deposit interest rate, I intend to buy bonds issued by Singapore Government.
1) How many different types of bond we can buy as an individual?
2) Is there a minimum amount to buy?
3) How to buy and what risks do we have to take?
-------------------------------------
REPLY:
You can approach your bank or stockbroker. You can also view from the MAS website. Government bonds have the lowest risk, ie they are more secure than bank deposits.
Hi Mr Tan,
Due to the low fixed deposit interest rate, I intend to buy bonds issued by Singapore Government.
1) How many different types of bond we can buy as an individual?
2) Is there a minimum amount to buy?
3) How to buy and what risks do we have to take?
-------------------------------------
REPLY:
You can approach your bank or stockbroker. You can also view from the MAS website. Government bonds have the lowest risk, ie they are more secure than bank deposits.
Search my blog
Someone sent an e-mail to ask my views about "Traded Endowment policies". I replied that I had written about it in my blog.
Here is how you can search my blog for a topic of your interest. Go to the top of my blog and look for the box called "Search Blog". Type in the keyword, such as "Traded Endowment" or "Land Banking". You will get postings in my blog on your selected subject.
Someone sent an e-mail to ask me, "Where to buy Government bonds". I searched my blog for "Government bonds" and found a posting in July 2007. I re-dated this posting to appear at the top.
Here is how you can search my blog for a topic of your interest. Go to the top of my blog and look for the box called "Search Blog". Type in the keyword, such as "Traded Endowment" or "Land Banking". You will get postings in my blog on your selected subject.
Someone sent an e-mail to ask me, "Where to buy Government bonds". I searched my blog for "Government bonds" and found a posting in July 2007. I re-dated this posting to appear at the top.
Logic Quiz A-7
There are five houses in a row. In each house lives a person with a different occupation, drinks a different beverage, plays a different sport and keeps a different pet.
1. The person who plays chess lives next to Albert.
2. The lawyer lives to the left of the teacher.
3. The person who plays chess lives next to the person who drinks tea.
4. The accountant lives to the left of the person who keeps cats.
5. The teacher plays golf.
6. The person who plays badminton lives to the left of the person who plays bowling.
7. The teacher lives next to Susan.
8. The salesman drinks beer.
9. The person who plays tennis lives in the second house.
10. Mary lives to the left of the person who drinks water.
11. John keeps birds.
12. The doctor lives in the third house.
13. The person who keeps birds lives to the left of the person who keeps dogs.
14. The person who plays tennis lives next to the salesman.
15. The person who keeps fish lives to the left of the person who keeps hamsters.
16. Robert drinks milk.
Question: Who drinks coffee?
Post your answer, time taken and name in this blog.
Answer can be found at:
http://www.tankinlian.com/logicquiz/qs.html
More quiz can be found at:
http://www.tankinlian.com/logicquiz/
1. The person who plays chess lives next to Albert.
2. The lawyer lives to the left of the teacher.
3. The person who plays chess lives next to the person who drinks tea.
4. The accountant lives to the left of the person who keeps cats.
5. The teacher plays golf.
6. The person who plays badminton lives to the left of the person who plays bowling.
7. The teacher lives next to Susan.
8. The salesman drinks beer.
9. The person who plays tennis lives in the second house.
10. Mary lives to the left of the person who drinks water.
11. John keeps birds.
12. The doctor lives in the third house.
13. The person who keeps birds lives to the left of the person who keeps dogs.
14. The person who plays tennis lives next to the salesman.
15. The person who keeps fish lives to the left of the person who keeps hamsters.
16. Robert drinks milk.
Question: Who drinks coffee?
Post your answer, time taken and name in this blog.
Answer can be found at:
http://www.tankinlian.com/logicquiz/qs.html
More quiz can be found at:
http://www.tankinlian.com/logicquiz/
Logic Quizzes at my website
Here is a treat for enthusiasts of the Logic Quiz.
You can have more quizzes from my website:
http://www.tankinlian.com/logicquiz/
Enjoy.
You can have more quizzes from my website:
http://www.tankinlian.com/logicquiz/
Enjoy.
Answers to 6J16, 6A19
ANSWERS TO QUIZ 6J-17
Question: Who plays drum Answer: Alice
1 2 3 4
student Margaret John Peter Alice
eats banana papaya apple orange
plays trumpet violin piano drum
keeps dog cat parrot tortoise
ANSWERS TO QUIZ 6A-19
Question: Who drives Mercedes Answer: scientist
1 2 3 4 5
house grey purple pink maroon brown
is a professor marketeer scientist engineer manager
drinks coffee tea water wine beer
plays tennis badminton golf basketball soccer
drives Volvo Nissan Mercedes Honda Totota
Sunday, December 16, 2007
Good chance to win the Sudoku Challenge
Someone sent an email to ask me if they have a good chance to win the competition by attending my workshop in Bishan.
The answer is "yes". After learning the four tips, you still have to practice hard with many puzzles (say 4 booklets with 500 puzzles). You will be able to do the puzzles very fast.
If you can solve the difficult puzzes within 10 minutes, your chance is quite good. Most of the participants take a longer time.
The answer is "yes". After learning the four tips, you still have to practice hard with many puzzles (say 4 booklets with 500 puzzles). You will be able to do the puzzles very fast.
If you can solve the difficult puzzes within 10 minutes, your chance is quite good. Most of the participants take a longer time.
Bid and Offer prices of Unit Trust
Hi Mr Tan,
Not really about specific financial product, but I'm keen to know the difference between Bid-offer spread to Single pricing Unit Trusts. Is there a better model or do they work out the same?
REPLY
Most unit trusts indicate the Offer price and Bid price separately. You buy at the Offer price and you sell at the Bid price. The difference is called the Spread. It may vary from 1% to 5%, depending on the fund.
For example, if the spread is 2% and the Bid price is $2,00, the Offer price will be $2.04.
Some unit trust, also called a "no load" fund, will use a single price. You buy or sell at the single price. In some cases, the fund manager may impose a separate charge when you sell the units, especially if the investment is for a short period.
Alternatively, a no-load fund may impose a higher annual charge. For example, if the typical fund charges charges an annual charge of 1.5%, a no load fund may charge 2% yearly.
Not really about specific financial product, but I'm keen to know the difference between Bid-offer spread to Single pricing Unit Trusts. Is there a better model or do they work out the same?
REPLY
Most unit trusts indicate the Offer price and Bid price separately. You buy at the Offer price and you sell at the Bid price. The difference is called the Spread. It may vary from 1% to 5%, depending on the fund.
For example, if the spread is 2% and the Bid price is $2,00, the Offer price will be $2.04.
Some unit trust, also called a "no load" fund, will use a single price. You buy or sell at the single price. In some cases, the fund manager may impose a separate charge when you sell the units, especially if the investment is for a short period.
Alternatively, a no-load fund may impose a higher annual charge. For example, if the typical fund charges charges an annual charge of 1.5%, a no load fund may charge 2% yearly.
Sudoku Challenge 6 and 13 January 2008
The Bishan Community Club is organizing a national Sudoku Challenge as follows:
Preliminary: 6 Jan 2008 at the Bishan Community Club multi purpose hall (to select 16 finalists)
Grand Finals: 13 Jan 2008 at Suntec City (in support of the "Silver Industry Conference & Exhibition 2008)
Eligibility: The competitions are open to all Singapore Citizens and Permanent Residents, who are 40 years old and above (as at 1 January 2008).
Prizes: Top and consolation prizes will be given to all Finalists.
Registration: $3 per person
Walk-in: Bishan Community Club or any Community Centres/Clubs
Internet: http://one.pa.gov.sg/CRMSPortal/CRMSPortal.portal?_nfpb=true&_windowLabel=CRMSPortal_1&_urlType=action&CRMSPortal_1_action=CMFAdvanceSearch&_pageLabel=CRMSPortal_page_1
Bishan CC's Telephone: 6259 4720.
Closing Date: 31 December 2007
Tips on how to play Sudoku (Logic9): attend a workshop at Bishan CC
----------------------------------------------
PRIZES FOR THE NATIONAL SUDOKU CHALLENGE (sponsored by OTO)
Champion : OTO PowerFoot worth $880
1st Runner-up : OTO Big Foot worth $698
2nd Runner-up : OTO Electro Reflexologist worth $438
3rd Runner-up : OTO Trimax worth $328
5th to 8th : 4 pcs OTO Spinex worth $108 (each)
9th to 16th : 8 pcs OTO Eye Motion worth $48 (each)
Preliminary: 6 Jan 2008 at the Bishan Community Club multi purpose hall (to select 16 finalists)
Grand Finals: 13 Jan 2008 at Suntec City (in support of the "Silver Industry Conference & Exhibition 2008)
Eligibility: The competitions are open to all Singapore Citizens and Permanent Residents, who are 40 years old and above (as at 1 January 2008).
Prizes: Top and consolation prizes will be given to all Finalists.
Registration: $3 per person
Walk-in: Bishan Community Club or any Community Centres/Clubs
Internet: http://one.pa.gov.sg/CRMSPortal/CRMSPortal.portal?_nfpb=true&_windowLabel=CRMSPortal_1&_urlType=action&CRMSPortal_1_action=CMFAdvanceSearch&_pageLabel=CRMSPortal_page_1
Bishan CC's Telephone: 6259 4720.
Closing Date: 31 December 2007
Tips on how to play Sudoku (Logic9): attend a workshop at Bishan CC
----------------------------------------------
PRIZES FOR THE NATIONAL SUDOKU CHALLENGE (sponsored by OTO)
Champion : OTO PowerFoot worth $880
1st Runner-up : OTO Big Foot worth $698
2nd Runner-up : OTO Electro Reflexologist worth $438
3rd Runner-up : OTO Trimax worth $328
5th to 8th : 4 pcs OTO Spinex worth $108 (each)
9th to 16th : 8 pcs OTO Eye Motion worth $48 (each)
Sudoku (Logic9) workshop
I am giving a 1.5 hour workshop at Bishan Community Club on Tuesday 18 December at 8 pm. If you are interested to attend, call the Club at 6259 4720. The fee is $5 only. You can pay on attendance at the workshop.
Special: You can buy 4 sets of puzzle books at a discounted price of $10 (normal $20).
If you are 40 years or older, you can register at the workshop to take part in the national Sudoku Challenge. Attractive prizes can be won. If you practice using my tips, you have a good chance to win the competition.
Special: You can buy 4 sets of puzzle books at a discounted price of $10 (normal $20).
If you are 40 years or older, you can register at the workshop to take part in the national Sudoku Challenge. Attractive prizes can be won. If you practice using my tips, you have a good chance to win the competition.
How long does it take to solve a Logic Quiz?
Dear Mr. Tan,
How much time should a person take to solve the Logic Quiz? How did you manage to create so many quizzes? It must have take a lot of time!
REPLY
When I first started to solve a 5X5 quiz (identified as type A), it took 30 minutes. After practicing many times, I am now able to solve it in 6 minutes. For the simple 4X4 quiz (identified as type J), I now take 3 minutes.
I wrote a computer program (using DOS BASIC language) to generate the quizzes. I am now able to produce 100 quizzes in 3 seconds. They follow different rule structures, and jumbles around the people and their characteristics. All the puzzles appear different.
If there is demand, I will print a book of puzzles. If not, I will publish in my website and let people exercise their minds.
You can try more quizzes at my website:
http://www.tankinlian.com/logicquiz/
How much time should a person take to solve the Logic Quiz? How did you manage to create so many quizzes? It must have take a lot of time!
REPLY
When I first started to solve a 5X5 quiz (identified as type A), it took 30 minutes. After practicing many times, I am now able to solve it in 6 minutes. For the simple 4X4 quiz (identified as type J), I now take 3 minutes.
I wrote a computer program (using DOS BASIC language) to generate the quizzes. I am now able to produce 100 quizzes in 3 seconds. They follow different rule structures, and jumbles around the people and their characteristics. All the puzzles appear different.
If there is demand, I will print a book of puzzles. If not, I will publish in my website and let people exercise their minds.
You can try more quizzes at my website:
http://www.tankinlian.com/logicquiz/
Lower the cost of insurance
1. Can the cost of insurance be reduced?
Yes. Insurers have to design and market low cost insurance to cover personal risks, such as death, accidents and medical expenses.
The product has to be kept simple. The cost of marketing should be reduced considerably.
2. What about customers who prefer to have a return on their premiums?
It is better for customers to separate their insurance from investments. They will get a higher return on their investments and greater flexibility.
3. Is there still a role for insurance agents?
Yes. The agent plays a useful role to help the customer to get a competitive rate and to handle the paperwork. The commission can be 10% of the low cost premium.
As the premium is small, the commission is small. The agent cannot spend time to visit the customer. The agent has to improve the productvity. Most of the transactions can be handled through the telephone. If the customer has to be seen by the agent, the customer should visit the agent's office.
This is similar to buying stocks through a stockbroker or consulting a doctor.
4. Why are endowment and whole life products still popular in the developed markets?
They are popular in the markets where the customer can reduce tax by buying these life insurance products. The marketing cost of these products can be covered by the tax savings and still give a net benefit to the customer. The insurance adviser has to find the right customer who can benefit from the tax savings.
This situation does not apply in Singapore, as there is negligble tax savings from life insurance products. The marketing expenses eats into the investment return. Hence, it is better for the investments to be separated from insurance.
Yes. Insurers have to design and market low cost insurance to cover personal risks, such as death, accidents and medical expenses.
The product has to be kept simple. The cost of marketing should be reduced considerably.
2. What about customers who prefer to have a return on their premiums?
It is better for customers to separate their insurance from investments. They will get a higher return on their investments and greater flexibility.
3. Is there still a role for insurance agents?
Yes. The agent plays a useful role to help the customer to get a competitive rate and to handle the paperwork. The commission can be 10% of the low cost premium.
As the premium is small, the commission is small. The agent cannot spend time to visit the customer. The agent has to improve the productvity. Most of the transactions can be handled through the telephone. If the customer has to be seen by the agent, the customer should visit the agent's office.
This is similar to buying stocks through a stockbroker or consulting a doctor.
4. Why are endowment and whole life products still popular in the developed markets?
They are popular in the markets where the customer can reduce tax by buying these life insurance products. The marketing cost of these products can be covered by the tax savings and still give a net benefit to the customer. The insurance adviser has to find the right customer who can benefit from the tax savings.
This situation does not apply in Singapore, as there is negligble tax savings from life insurance products. The marketing expenses eats into the investment return. Hence, it is better for the investments to be separated from insurance.
Types of Liability
I am familiar with liability due to negligence, but not clear about strict liability or absolute liability. Here is the explanation from an insurance book.
Type Description Example
No liability Defendant cannot be held Charitable institution in
liable some cases
.
Negligence Defendant is liable if Liability for damages caused
found to be negligent by motor accidents
.
Strict Defendant is liable Liability for damages resulting
liability even if not negligent from defective products
.
Absolute Defendent is always Liability for damages caused by
liability liability, no defence use of dynamite or dangerous
available animal
Corporate governance and risk management
In recent years, there has been a lot of attention on corporate governance and risk management. The aim was to get businesses to act responsibily and to avoid taking large risks that are not authorised by the shareholders.
Management consultants made a lot of money providing advice to boards of directors to teach them on these exotic matters. Regulators asked the boards to spend a lot of time and money on these matters.
What happened?
We still have the problem with the Special Investment Vehicles (SIV) set up by the large, "well managed" banks. These SIVs borrowed money on short term (where the interest rate is low) and invest them in long term risky assets (to get a high return). In good times, they made profit on the spread, i.e. the difference between the cost of funds and the return on risky assets.
When the subprime problem arose, investors did not want to refinance the short term borrowings. This caused a "credit crunch" to the SIVs. They were not able to pay their borrowings.
If the SIVs had to sell their assets to repay the borrowings, it would cause a collapse in the asset markets. The large banks that set up the SIVs decided to provide several billions of dollars of funding to take over the SIVs, and to write off billions of dollars in losses.
Lesson: After spending a lot of time and money on corporate governance and risk management, these banks still commit a large blunder in taking the risk of the SIVs.
A "common sense" approach would have prevented this mess. Do not borrow short and invest long. It does not require a complicated process of corporate governance or risk management.
Management consultants made a lot of money providing advice to boards of directors to teach them on these exotic matters. Regulators asked the boards to spend a lot of time and money on these matters.
What happened?
We still have the problem with the Special Investment Vehicles (SIV) set up by the large, "well managed" banks. These SIVs borrowed money on short term (where the interest rate is low) and invest them in long term risky assets (to get a high return). In good times, they made profit on the spread, i.e. the difference between the cost of funds and the return on risky assets.
When the subprime problem arose, investors did not want to refinance the short term borrowings. This caused a "credit crunch" to the SIVs. They were not able to pay their borrowings.
If the SIVs had to sell their assets to repay the borrowings, it would cause a collapse in the asset markets. The large banks that set up the SIVs decided to provide several billions of dollars of funding to take over the SIVs, and to write off billions of dollars in losses.
Lesson: After spending a lot of time and money on corporate governance and risk management, these banks still commit a large blunder in taking the risk of the SIVs.
A "common sense" approach would have prevented this mess. Do not borrow short and invest long. It does not require a complicated process of corporate governance or risk management.
Answer to J17, A17
ANSWERS TO QUIZ J-17
Question: Who enjoys reading Answer: Katherine
_
1 2 3 4
student Richard Alice Peter Katherine
eats pear orange pineapple apple
plays drum piano flute violin
enjoys swimming bicycling fishing reading
_
ANSWERS TO QUIZ A-17
Question: Who plays drum Answer: engineer
_
1 2 3 4 5
is a technician manager specialist engineer scientist
drive Mercedes Nissan Toyota Honda BMW
plays bass violin trumpet drum flute
eats orange banana durian papaya apple
enjoys music cards karaoke reading movies
Use credit card to buy shares?
This facility is being advertised by a bank. It looks appealling in a hot market. However, it comes with risks.
Read the advice from Dr Money.
http://newpaper.asia1.com.sg/columnists/story/0,4136,136759,00.html?
http://www.tankinlian.com/drmoney/
Read the advice from Dr Money.
http://newpaper.asia1.com.sg/columnists/story/0,4136,136759,00.html?
http://www.tankinlian.com/drmoney/
Logic Quiz 6A-19
There are five houses in a row with different colors. In each house lives a person with a different occupation, drinks a different beverage, plays a different sport and drives a different car.
1. The professor lives to the left of the person who drinks tea.
2. The engineer drives Honda.
3. The scientist lives to the left of the engineer.
4. The person who drives Honda lives to the left of the manager.
5. The brown house is occupied by the person who drinks beer.
6. The person who drives Totota lives in the last house.
7. The person who plays tennis drives Volvo.
8. The engineer plays basketball.
9. The marketeer lives in the second house.
10. The purple house is the second house.
11. The person who drinks water lives to the left of the person who drinks wine.
12. The grey house is to the left of the person who drives Nissan.
13. The person who drinks coffee lives next to the person who plays badminton.
14. The maroon house is to the left of the person who plays soccer.
15. The pink house is occupied by the person who plays golf.
Question: Who drives Mercedes
Give your answer, time taken and name in my blog.
1. The professor lives to the left of the person who drinks tea.
2. The engineer drives Honda.
3. The scientist lives to the left of the engineer.
4. The person who drives Honda lives to the left of the manager.
5. The brown house is occupied by the person who drinks beer.
6. The person who drives Totota lives in the last house.
7. The person who plays tennis drives Volvo.
8. The engineer plays basketball.
9. The marketeer lives in the second house.
10. The purple house is the second house.
11. The person who drinks water lives to the left of the person who drinks wine.
12. The grey house is to the left of the person who drives Nissan.
13. The person who drinks coffee lives next to the person who plays badminton.
14. The maroon house is to the left of the person who plays soccer.
15. The pink house is occupied by the person who plays golf.
Question: Who drives Mercedes
Give your answer, time taken and name in my blog.
Logic Quiz 6J-17
There are four students sitting in a row. Each student eats a different fruit, plays a different instrument and keeps a different pet.
1. The student who eats papaya sits in the second desk.
2. The student who eats apple sits to the left of the student who eats orange.
3. Margaret sits next to the student who plays violin.
4. Peter sits to the left of Alice.
5. John eats papaya.
6. The student who eats banana keeps dog.
7. The student who eats papaya sits to the left of the student who plays piano.
8. The student who plays trumpet sits to the left of the student who keeps cat.
9. The student who keeps parrot sits to the left of the student who keeps tortoise.
Question: Who plays drum
Give your answer, time and name in my blog.
1. The student who eats papaya sits in the second desk.
2. The student who eats apple sits to the left of the student who eats orange.
3. Margaret sits next to the student who plays violin.
4. Peter sits to the left of Alice.
5. John eats papaya.
6. The student who eats banana keeps dog.
7. The student who eats papaya sits to the left of the student who plays piano.
8. The student who plays trumpet sits to the left of the student who keeps cat.
9. The student who keeps parrot sits to the left of the student who keeps tortoise.
Question: Who plays drum
Give your answer, time and name in my blog.
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