High insurance premium for school bus

Mr Tan
Currently for school buses insurance had gone up significantly and beside this NTUC are now selecting their customers i.e those with accident (be it only 1) during the year NTUC at the moment decide not to cover the policy instead of qouting a price. ( as being part Government shouldnt NTUC be helping instead of pushing them away and just drop them?)


Currently in the market we only have NTUC, AXA and Liberty for school buses insurance coverage. However, with NTUC choosing their customer the other two companies will increase their price higher and this vicious circle will cause a huge problem as drivers cannot afford it and their "rice bowl" will be a big issue as most of them have only lower primary level and without insurance there will be no road tax and no where to turn to for help.


Please Mr Tan, I would really like to help the drivers but could you point me to the right direction and what to do? On behalf of the drivers - We thank you for your advise and appreciate any help you are able to offer.


REPLY
I suggest that you write a letter to the newspapers (straits times or zhao bao) to highlight your dilemma. I hope that the public attention will get the authority (i.e. MAS or LTA) to find a solution.

Taking a mortgage

First of all, I'll like to thank you for some of the sound advice that you have posted on your blog. I'm an avid reader of your blog and also someone who had bought and like your financial planning book. I am currently staying in a 3 room HDB flat and planning to upgrade to a 5 room HDB this year. I have some questions that I would love to hear from your advice

1. Mortgage - floating vs fixed. What is your take on this given the current situation?

Reply: I think that the mortgages in Singapore are all on floating rates. I am not aware of any bank that offers fixed rate morgage. If you have found one ,give me the terms for analysis

2. Mortgage - lock period, is a short or long period better?\

Reply: same comment as for 1.


3. We are not sure if we should repay our loan as fast as possible (i.e. using our entire monthly cpf contribution for repayment) or if we should stretch our loan tenure for a longer period for reasons such as to use our CPF for any investments (e.g. NTUC growth, etc) with the hope of getting returns higher than our mortgage rate or to build a buffer in ordinary account for repayment in case anyone or both of us goes jobless, so that we do not need to fork out cash.

Reply: You should keep 6 months of repayment as a buffer in the CPF. If you have cash flow problem, you can pay from this buffer.


4. Is it better for us to deduct everything we have in our CPF for housing purchase or should we transfer some if not all of our CPF for investments such as NTUC growth, etc with the hope of getting returns higher than our mortgage rate?

Reply: Do not invest in a new Growth policy, as it is rigid and does not offer an attractive yield.


5. Me and my wife's used a sum of our CPF to purchase NTUC growth prior to buying our 3 room HDB. Now that we are planning to buy a 5 room HDB, should we terminate our NTUC growth plans and use that amount to pay for the HDB? We have sufficient CPF to pay for the 15% downpayment, but I'm thinking of paying more and borrowing less from the bank. Would you know for early termination, would I at least have my sum invested back? Is what I'm thinking of doing advisable?

Reply: You can a poor deal with you terminate the Growth policy. It is usually better to keep it to maturity, rather than terminate it early. You should ask them to quote you the cash value now, and the projected cash value on maturity to make a proper decision.

Principal Protected Investments

Read this article. These investments are not safe and do not offer an attractive yield.

My comment
My wife and daughter were sold several of these products during the past decade. They were told that they are "safe" and have the potential to earn a good return, if ........... In all cases, they just got back their capital after waiting for five years and lose the interest that could have been earned.

Avoid all structured products. Read the tips in my book, Practical Guide on Financial Planning.

Retirement age

Read this article about retirement age in several countries.

Best 40 cities to live in

Singapore is ranked #7 as follows:

1. New York
2. London
3. Paris
4. Tokyo
5. Los Angeles
6. Brussels
7. Singapore
8. Berlin
9. Beijing
10. Toronto

Knight Frank and Citi have put together a rankings of the world's best cities to live in, and have provided a truly global hit list of where you should consider moving to next.

http://www.businessinsider.com/best-cities-on-earth-2010-5

Fragile global economy

The Greek cisis is a bad sign for the global economy. Many countries have large budget deficit and depend on borrowings to finance the deficit. Lenders are now worried that these countries cannot repay their debt.

The crisis is now affecting Europe. It is likely to spread to other countries. The countries that have large budget deficits that depend on borrowings include the USA, UK and Japan. Investors may lose confidence in these countries and lead to another crisis.

Look at what happened to Dubai and now Greece. It is a matter of time before the loss of confidence spread to other countries.

The global economy is fragile. It is bad to depend on private money to fund government deficits.  A lot of the private money are in hedge funds. I consider these hedge funds to be financial terrorists. They can bring down a currency or a country, so as to make a large profit from the destruction. I think that hedge funds should be banned.

Tan Kin Lian

Think out of the box

20 people responded to the contest to find a "out of the box" solution shown here. Most of the suggestions are:
a) ask X to remarry
b) buy a single's flat
X is not prepared to remarry just to keep the flat. He finds it costly to sell his flat and buy a new flat under the single's scheme.

I wish to award my prize (Tangram book) to the person who submitted this suggestion:
Quote
1. Mr. X appears to be occupying the existing flat under Public Scheme with a CPF Housing Grant for Family which is $30,000. HDB will consider the case of married child moving out based on the case. See http://www.hdb.gov.sg/fi10/fi10326p.nsf/w/ChgOwnerMarriedChildMoving?OpenDocument
2. If (1) above does not work, appeal to HDB to change the scheme type to Single Singapore Citizen Scheme with CPF Housing Grant of $11,000. See http://www.hdb.gov.sg/fi10/fi10321p.nsf/w/BuyResaleFlatSingleScheme?OpenDocument and be willing to return (30000-11000)=$19,000 back to HDB.
3. If (1) and (2) does not work, the simplest solution is to move to the daughter's new flat. There will be lack of privacy and independence but guarantees to provide a roof for Mr. X without hassle.
Unquote
 
What can the HDB CEO do to help X? He could consider the appeal and do not take any decision for a long time. X can continue to live in the HDB flat while the appeal is being considered.
 
Tan Kin Lian

Case study - flexibility

12 people participated in the survey. Here are the results.

Case Study
X is the person in charge of convening a meeting of owners of a condominium that wishes to appoint a sales committee for an enbloc sales. The law requires 30% of the owners to be present for the meeting to start at the "appointed time". At the time of the meeting, the quorum of the meeting was not met. However, some owners appeared with the next 15 minutes and the quorum was met. The law did not state whether the meeting cound be extended beyond the appointed time, but also did not state that any extension was disallowed. Should X allowed the meeting to start later, when the quorum was met? Give your views in this survey

Expensive computerisation projects

I heard about companies spending several tens of million dollars in computerisation projects. This is far too expensive. Most of the money goes towards paying consultants to advice on workflow and customisation of system.

My friend, who worked in a large insurance company, told me that they spend more than 100 million to computerise their operations and the new computer system is still not working well. This is mind boggling. The money comes from the bonus of their policyholders!

Sometimes, I wonder if the board and top management is happy to spend so much money and if they are preapred to consider a lower cost option, if available. I believe that a large organisation can cut its computerisation budget by 50%, if they adopt a sensible approach towards computerisation. Apart from the cost savings, they will also be able to implement the new system more quickly, have less hassle and a higher chance of success.

But first, they must be keen to explore this possibility. If they prefer to spend big budget, there will always be the opportunity to make a big splash.

Tan Kin Lian

Resort World Sentosa

I attended a company dinner held at the conference center in Resort World Sentosa recently. This is my first visit to Sentosa after the integrated resort opened. Here are some photos (for the benefit of those who have not yet visited the resort).

I was quite surprised to see that the place was quite attractive and there was a large crowd in the hotels and shops. I did not enter the casino (as I refused to pay $100), so I don't know if it was very crowded inside as well.

Goh Keng Swee - The Star

Read this article by Seah Cheang Nee published in The Star, Malaysia. The writer was previously the editor of a newspaper in Singapore. He has a good knowledge of Singapore's history.

Web consultation (skin problems)

A skin specialist plans to set up an innovative service to provide consultation on skin problems through the internet. Details are shown here.

I am helping the specialist to find out the market acceptance for this type of service. Please participate in this survey.

UPDATE
I receive only 6 reponses. I hope to get more responses to refleclt a more reliable sample. Please participate.

Interacting with customers on feedback

I have posted articles on my experience as a customer interacting with a few large organisations (i.e. CISCO, Starhub, DBS and Singapore Airlines). CISCO took the trouble to contact me and talk to me. I did not hear from the other organisations.

Standard Chartered Bank

Dear Mr. Tan,
I have 4 banks personal account. I wish to highlight that SCB service is the best. I have encounter some transfer fund issue last year and due to the error of the bank. The SQ manager called me and followed up with a apology letter thereafter sending a wine hamper to my house.


I visited the branch in Tampines and Raffles Place, their staff is very attentive during my opening account and applying credit card I like their recent launch of internet payment of credit card to other bank credit card bills. This save me a lot of time rather issuing a cheques or queueing at the AXS machine for payment.

Further more, I can just do bill payment post dated before the due date once I login to the account. This can reduce oversight of payment and incurred interest fee and appealing process. I hope other local bank can think out of box rather than limited the credit card payment from their own bank.


I have also compared all the internet banking service, so far SCB is the simplest and easy to get transaction done within a few minutes.


FT

My comments
Well done to Standard Chartered Bank. I also observe that they did not sell any of the credit linked notes that caused losses to the bank customers. I like their advertisement on their commitment to look after the welfare of their customers. It sets a good goal for them to live up to.
 

MRT Circle Line

This is the display panel on the MRT train running on the Circle Line. It shows the time for most of the way. The display changes to the name of the station only close to arrival. This is not useful.

A useful system is: show the name of the next station and the side that the door will be opening. It should appear immediately on leaving the previous station.

Most commuters already have a watch and mobile phone that shows the time.

MRT NS Line

There are two systems to dispaly the name of the next station for trains on the North South line.

The display panel show the station name in words and also indicates the side where the door will open.

The lighted route map shows the lights for the stations that have passed.

Both display systems on the train has been out -of-order for over two weeks. See the photos.

I find the light route map to be unnecessary. The display panel should be sufficient for this purpose.

 A simpler system is less costly and less likely to fail.

Excellent service recovery by CISCO

I posted a blog to share my bad experience with replacing a faulty videocam. I received an e-mail from the customer advocacy senior manager of CISCO asking to talk to me. We had a conversation at the arranged time. He listened attentively and positively to my experience and suggestions. He found several of the suggestions to be practical and useful and will be implementing them.

From my past experience, this is one of the rare occasions that the customer service manager is interested to listen, and really listen, to the customer. I hope that this excellent example of service recovery will be emulated by other organisations. Well done to CISCO.

I also hope that CISCO will act promptly to simplify its process to make it easy for its customers to submit their feedback and claim for replacement of faulty products.

Tan Kin Lian

Why we should identifying ourselves as souls?

Extract from Tommy Wong's book, "Wisdom on How to Live Life"



Tom: What is the problem identifying ourselves as the body?
Guru: If we identify ourselves with the body only, then we won’t want the body to die because when the body dies, it’s also the end of our beings.
Tom: Yes, that’ll be a problem, because we don’t want to lose our beings.
Guru: Exactly! So the problem is after we’re born, there is no way not to die.
Tom: Sounds like we’re at a death trap. Is there any way out?
Guru: Humans are blessed beings. So how can the Divine lay a death trap for us?
Tom: But the body will die, and there is no way out!
Guru: Bingo, the secret is that we’re not the body.
Tom: Oh yes, you said that we’re the soul and not the body.
Guru: Well remembered!
Tom: How will that help us?
Guru: If we identify ourselves as souls and our souls continue to live even after the death of our bodies, then we’ll not be too concerned with the death of our bodies.

Tommy Wong



Tommy Wong's book can be purchased online here.

Customer Service Portal

I am developing a customer service portal for big organisations to put up their general enquiry form. This allows their customers to provide brief details of their queries and for the customer service officer to call the customer with the answer. This will reduce the waiting time at the call center during peak hours. It will also improve customer service. More details of this portal can be found here.

This portal can be used by many organisations. The customer will find it easy to contact many organisations at the same portal and be familiar with one standard interface.

Tan Kin Lian

SMS Response

If you wish to receive responses by SMS to a promotion, contest, event, registration or other activity, you can try this service. It is low cost and easy to set up. It can be used by a business or an individual.

Calling NTUC Income

Here is my experience in calling NTUC Income during a busy period. There was no pressing of button and irrelevant messages, so there is no hassle for the customer. I am told that I have to wait 3 minutes for my call to be attended. This is better than being put on hold for an unspecified period.  They also provide an option for the call center to call back the customer, which is a good feature.

I decided not to wait and to call back later, when the call center is free.

Easysearch Portal

There are several applications on this portal of general interest to the public. Try it.
http://www.easysearch.sg/Apps.aspx

Outsourcing

Many jobs in the private and public sector has been outsourced during the past decade. In the past, these organisations employ clearners, security guards and technicians and paid fair wages relative to the other "core workers" in their organisations. The workers are protected by the collective bargaining of wages in the organisations.

After outsourcing, these organisations were able to reduce their operating cost. The contractors who won the jobs were able to employ foreign workers or re-emply the retrenched workers at lower wages or to work for longer hours. This is a key contributor for the stagnation of wages in Singapore during the past decade.

The customers do not benefit much from the reduction in cost. Most of the benefits accrue to the shareholders and top managers of these organisations. This accounts for the widening gap between the high and low income earners.

While wages remain stagnant, the cost of living continues to increase. This makes life very difficult for many Singaporeans.

I hope that our top leaders will realise that this is a bad trend and that outsourcing is a source of this problem. To correct this situation, there should be a minimum wage for all workers and that the public sector should set an example by insisting on an expected standard of service and be willing to pay fair fees for outsourced work.

Tan Kin Lian

Restructuring of company

I know of a manager who recently lost his job (after 11 years) due to a change in top management. The new management wanted to resctructure the company (which is an excuse for bringing in his buddies) and asked him to leave. He was offered only 3 months of salary for 11 years of service. The retrenched manager had no option, but to accept this poor package. His termination was not due to poor performance, as he had received a good testimonial from the previous CEO (who has since retired) for his 11 years of service.

This is a need for better protection of workers (including managers) in Singapore from unfair employment practice. The law should provide a fair rate of retrenchment benefit for termination due to reasons other than poor performance.

Tan Kin Lian

SIA Krisflyer website

I spent more than 1 hour to reset the PIN for my Krisflyer account. I called the call center more than 5 times and got the assistance of the staff who was helpful and patient.

However, the website behaved erratically and baffled me and the staff. The problem with the website was worsened by the "security measures" introduced to "protect the interest of the customer". Actually, these measures were not necessary and made the website difficult to use. It also made it difficult to change the PIN. Some of these measures are:

a) freeze the login for 24 hours after 3 wrong entry of the PIN
b) verify the date of birth and IC (when the server record was wrong)
c) require the new PIN to be activated within 1 hour of being sent.
d) the website showed different information to me and to the staff who was assisting me.

The staff sent me a total of 4 new PINs to login after the earlier PINs did not work.

This video shows about 5 minutes of the 1 hour episode.

Experience on call centers

I have created some short videos (less than 5 mins) on my experience in calling the call centers of a few large organisations.

They can be viewed here:
http://www.easysearch.sg/videos/

I hope that the large organisations can understand the frustration and difficulty of their customers in navigating through their automated system, and in listening to irrelevant messages. They should simplify the system to make it easier for their customer to talk to a customer service officer. They should also provide an option in the website for the customer to submit a form and for the call center staff to call back with the answer.

I was quite surprised that the calls were answered quickly for SIA, DBS and Starhub. The customer service officers were helpful and competent.  Well done.

Tan Kin Lian

Take early action

An edited version of this letter was publised in the Straits Times on 19 May.

Editor, Forum page
In his letter “Do your checks before investing in land abroad”, Dr. Tan Tee Khoon gave a good description of the mode of operation of land banking schemes. He said “Potential investors may be misled about the prospects of obtaining planning permission or redevelopment”.

While investors should follow the advice of Dr. Tan in doing their checks before making such investments, there is also a need for the authority to play its part.

When the seller knowingly misrepresents a product that is sold to the public, it can be considered as “cheating”. When the cheating involves a large sum of money and many victims, it is necessary for the authority to investigate the complaints and gather evidence to charge the perpetuators in court.

It is better to take early action, before more victims fall into the trap. It is difficult for the public to be savvy in detecting misrepresentations in statements that are published in documents or advertisements.

We read about similar cases in other countries where action is taken by the authority to close down the operation of companies that are suspected of engaging in fraudulent activities. There is also adequate media publicity to warn the public about these operations.

I hope that our authority in Singapore take the appropriate action to prevent more people from being caught in these schemes.

Tan Kin Lian

Calling SIA Call Center

I called the SIA Call Center to enquire about my Krisflyer points. The experience with the call center was quite satisfactory. The waiting time was short. The automated messages was still frustrating, but not as bad as other large organisations.

However, the experience with the Krisflyer website was quite bad. Read this report.

Tan Kin Lian

Calling DBS Credit Card

I called the DBS call center to enquire about my credit card points. I find the automation system to be quite troublesome. I also get many irrelevant messages. It is quite frustrating.

After pressing the wrong option on 3 attempts, I was directed to a customer service officer. The waiting time was rather short - which was quite surprising.

Watch this video about my experience.

The CSO is helpful and provides good service. The automation system is what caused the trouble. (This comment applies to the automation system used by most large organisations, not just DBS). The system used by DBS to verify the customer is quite frustrating and should be changed.

Tan Kin Lian

Give better value to consumers

Some people, presumably insurance agents, dislike my postings on the bad practices of life insurance companies (i.e. cut in bonus, high charges, low yields, rejection of claims) and continue to make personal attacks against me in their anonymous postings.

It is better for these people to realise that the life insurance companies should change its bad practices and treat consumers fairly. This would be beneficial for the long term growth of the industry. Any business can thrive only when it offers value to its customers.

I also hope that my postings will prompt the insurance companies to change its products to offer a better return to its policyholders. Lately, I saw from some benefit illustrations that the distribution cost and effect of deduction has been reduced, i.e. give better value to consumers. Although they are still high, it is a step in the right direction.  More can be done.

REQUEST. Please do not use this posting as another opportunity to "bash" the insurance agents or products.


Tan Kin Lian

Congential conditions

Hi Mr. Tan,
My student was found to have a hole in the heart in an ECG program initiated by his secondary school. He subsequently underwent heart surgery. He has been active in sports all along so the condition was never detected before.
He has been insured medically since birth. However, the insurance company has refused to pay a single cent towards the medical costs citing congenital cause.
Even the medishield claims [with the same company] were also rejected. Have all the premiums paid by his parents been just money down the drain?
I would like to know if there is any recourse for his parents to relieve them at least a little of the medical expenses.



REPLY
Generally, health insurance policies exclude congenital conditions. The rationale is that people who knows that they have congenital condition are more likely to buy insurance, so the exclusion is to prevent what is called adverse selection.
In some countries, the government insists that congenital conditions must be covered. I think that this is one provision in the new health plan that has recently been passed in US Congress. Unfortunately, we do not have such a requirement by the regulators in Singapore. In my view, the Ministry of health should have insisted that all convenital conditions are covered under Medishiled and private Shield plans - but this was unfortunately not the case.
Although the health plan does not cover congenital conditions, it does cover all of the other illness that are not connected with the congenital conditions, such as infection, injury and others. The premium is used to cover these other conditions.

REPLY
Hi Mr. Tan
Thank you for your kind reply to my query. However, it seems that I can't really do anything to help my student.
I do agree with you that the MOH should look into making congenital cases covered by shield plans. I am sure my student isn't the only case which was not detected at birth and only surfaced much later in life.
However, I'm still upset that the insurance company didn't even bother to give a token sum to help the parents defray costs.

REPLY
Please ask the student to write to the insurance company to request for an ex-gratia payment to cover part of the bill, considering the premiums that have been paid over the years, for which there was (presumably) no claim. If the insurance company reject the request, ask the student to write to the Minister for Health, as the Medishield scheme comes under his Ministry.

Fraud Alert

Read this article. Be careful about investing in new schemes created to cheat the public.

Cut in policyholder's bonus

Read the letter.

My comment.
This criticism is not confined to one insurer. Many insurers have cut their bonus during a difficult time but are rather slow in restoring their bonus when the market recovered. This is unfair to policyholders, especially those whose policies have matured while the bonus are still not restored.

I agree with the call to MAS to investigate if the insurers have been fair in their treatment of the policyholders.

To avoid this type of unfair treatment, the public should invest in a low cost investment fund, which is transparent and give a better yield, over the long term. This is explained in my book, Practical Guide on Financial Planning.

Life insurance companies

This article explains that life insurance company works for shareholders and not for customers.

My comment
In the past, most life insurance companies are mutual companies (including cooperatives) that work for the interest of customers. In recent years, most of these companies have become de-mutualised or have started to think about maximising profits. It is dangerous to entrust your long term savings to these companies, especially if they have the discretion to pay a lower rate of bonus to customers.

It is better to invest in a low cost investment fund, which is within your control. This is explained in my book on financial planning.

Intelligence Quiz online

Try the updated version of the Intelligence Quiz online.

You can also play it on the smart phone by browsing the internet using this link projects.easyapps.sg/eiq. There is a bug when you click on "Answer" but this will be corrected soon.

You can learn the technique to play this puzzle from my book available here.

Give your views of this online game in this survey.

Tip for solving Intelligence Quiz.
1. Look for clues that indicate a fixed house, e.g. first house, second house, last house.
2. Look for clues that is related to an item that has already been identified.
3. Look for clues that exactly fit into the empty slots.
4. By following these steps, you can solve the Intelligence Quiz.

Portal on scams

Hi TKL,


Many Singaporeans I know, are always in the pursuit of material wealth and at times being complacement, only to realise later that they are victims of scams. How nice if we could have a similar portal like this, all under one roof:


http://www.scamwatch.gov.au/content/index.phtml/tag/InvestmentSeminarsRealEstateScams


LN

Starhub Call Center

I called Starhub at their call center to enquire about Open Net, the new national broadband. Here is my experience.

I am quite surprised that the call is answered quick quickly (after going through 3 minutes of navigating through their system) and the staff is quite knowledgeable. So, apart from the automated messages (which is quite frustrating and time wasting), the service is quite good. In the past, I have to wait a long time to be answered by a person, but on this occasion, it was quite fast.

Many large organisations require customers to suffer the hassle of navigating through their automated system, so this is not unique to Starhub.

Poor customer service (HP)

Here is another example of poor customer service. Most big organisations have a bad call center that makes life difficult for customers through the bad use of techbology.

Courage and dare to change

I have heard these phrases used on many occasions, "be careful" and "don't down the slippery slope". They usually come out from people who are extremely cautious and do not wish to change the status quo. This attitude reflects the mindset of many Singaporeans.

I wish to quote the words of Dr. Goh Keng Swee in his last speech to Parliament in 1984.

Quote
Prudence does not mean that one must always take counsel of one's fears. In the course of our political struggles, we learnt tht in a desperate situation timidity leads to disaster. Safety can be won only by daring."
Unquote

Dining Etiquette

Here are some pointers on dining etiquette.

Tips with your money

Here are 10 important tips.

My tips on insurance and finance can be found in Practical Guide on Financial Planning.

Medical expenses of parents

Dear Mr. Tan,
Thank you for your many insightful postings, I believe many people benefit from your blog.


My parents, who are current in their mid-sixties, are working class people, who worked hard to bring up my siblings and I. They don't have much savings, nor much in their medisave accounts. I don't believe their included under Eldershield.


Is there a good way to plan for their future medical needs? Based on some earlier posts on your blog, insurance for the elderly seems to be expensive. They'd probably exclude coverage on what my parents really need coverage on (my dad has a history of hypertension, so I believe all heart conditions are excluded?).


So far, I can only think of setting aside a lumpsum of cash in FD, as an emergency fund. However, being of limited means, I am not sure how much to set aside as well. I've taken a look at the MOH medical bills, and wonder which bills to take into consideration. I suppose I should also need to take into consideration my medisave savings, since they can be used for my parents.

REPLY
You can top up the Medisave account of your parents and enjoy some tax relief. Your parents can use the Medisave to buy Medishield or pay their medical bills out of Medisave, if they are not insured.

Most importantly, they should go to a subsidised ward if they fall ill, as the cost is much lower than a non-subsidised ward or private hospital. The medical care in the subsidised ward is of quite acceptable standard.

I hope that they can stay in good health and do not require hospitalisation.

Unfair practice of used car dealer

Dear Mr. Tan
I signed a purchase agreement to buy a used vehicle from a large used car dealer whic his a subsidiary of a large motor distributor.


They were unable to attain a loan approval for the vehicle I have purchased. I wanted to to pay in cash but they refuse to complete the deal. No where in the agreement does it that states that there must be a successful loan for the purchase agreement to be valid. I have also paid a $500 deposit.


As they are so big, they don't even need to be under the CASETRUST-SVTA accreditation. In addition, CASE says that they can mediate and if the dealer does not honour the deal, there is nothing CASE can do about it.


Should a consumer back out from a deal, the dealer would sue the the buyer. However, when the dealer refuses to complete the deal, they get away with it. I have spent much time and effort going through many different cars, it doesn't feel good to be taken advantage of.
This is akin to a new car dealer that sells you a "GUARANTEED COE" new car, and just walks away when COE rises.


The dealer knows that a helpless consumer will not pursue their rights if they are being bullied as it costs too much money and time. They are a big company and have the financial clout and legal personnel to corner the consumer into submission.

Hopefully, you can get highlight this on your website and help prevent other consumers from being cornered and bullied by a large MNC.


JS

Bad Customer Service (CISCO)

I bought a Flip videocam which was highly recommended on the user reviews. The videocam was easy to use and satisfactory. Unfortunately, it stopped working after two weeks.

I called the manufacturer CISCO on its warranty. I had a difficult time. Here is my experience:

a. It was difficult to communicate with the call center (which was outsourced overseas)
b. Much time was spent to spell out the details for the call center staff to record into their system.
c. I was asked later to detailed form on another website.
d. There was some fault in the computer system that garbled up the details.
e. When I appeared at their agent to get a replacement videocam, the staff was quite rude and unhelpful.

I do not know why a high-tech company like CISCO make it so troublesome to the customer to have a replacement of a faulty product. The technology is supposed to make life easier for the customer, but it actually made life more difficult by passing the hassle of the paperwork to the customer.

Compare it with the "old fashion" way. If I buy a product from a retail store and it is faulty, I bring it to the retail store. They will check the date of purchase and confirm that it is faulty and replace it. They will do the paper work later and does not involve the customer in this hassle.

Tan Kin Lian

Implementing I.T. systems

Comment posted in my blog.

Dear Mr Tan,

I have been involved in implementing IT Projects in the private sector since I started working 20 years ago. I am an Accountant by profession. I have gone thru implementing many kinds of IT systems. I find implementing the simple ones have the best chances of success.


IT systems have come a long way since then. Modern IT systems is able to cater to a lot of requirements. What is critical to the success of implementing IT systems is there must be a Project Manager handling the implementation full time. He must have enough experience implementing IT Projects and he must have approval to hire resources.


The Directors and the employees have an unrealistic expectation in implementing IT systems. They want the system to be able to do everything without lifting a finger because its a million dollar system. This is in turn compounded by the IT Consultants promising almost everything can be done without managing customers expectation. The IT Consultants charge their fees by project. So they will allocate a number of man hours to the project. If the project runs into difficulties, the IT Consultants will charge additional fees.


Another critical factor to the success of the project is the employees themselves. The question is are they willing to change their working habits and spent time to learn new skills to adapt to the system while also doing their job?


Thirdly, IT systems should be implemented by phases SLOWLY. This is so that the person working on the system has time to adapt to it. Implementing every thing at once brings the risk of multi-million dollar failure.
This is because there is huge resistance to change on the part of employees.


The consultancy firms will be happy that the hospitals want to implement all at once bec it will bring them huge revenues.  They of course hope that their clients will succeed in implementing the system as it will bring them recognition.


No one wants to hire and pay mature workers who have hands on experience adequately and who can get the job done well. Instead CEO's nowadays say pay the consultants WELL. IT Consultants are skilled in "Consulting and IT work". Not in actually implementing the system.


What is actually needed is a person in the Co. who understands IT, its strength and limitations, who understands the company employees and culture, what they can or cannot do and assist them and have adequate experience in implementing IT projects and have hands on experience utilising IT.
 

Customer Service at Call Centers

I will be using my videocam to record my experience in calling the call center of big organisations, such as the government agencies, banks, telcos, insurance companies and airlines. Each video will be for up to 5 minutes. I will upload the video showing my personal experience - which hopefully will be good, but could show the negative aspects.

I hope that these videos will be educational and will encourage the big organisations to make changes to their call centers to improve the customer experience.

Please share the call centers that you wish me to try, giving me the name and the telephone number.

Tan Kin Lian

Investing in land abroad

Read this letter.

My comment
When several people lodge complaints with the authority that they have been misled into purchasing these investments through misrepresentations of the facts, the authority should investigate if there were intent to  to defraud the public. The authority should also report the results of the investigation, even if no conclusive evidence could be found about the alleged misrepresentations. This would at least warn the public about the dangers of investing in these products.

This type of actions were taken in Malaysia and the UK leading to the closing down of the companies involved in the fraudulent activities and the prosecution of the perpetuators in court.

Taxi surcharges

Read this letter about taxi surcharges, which is getting out of hand.

My comment
It is better to raise the taxi fare and to remove all surcharges, such as the peak hour and location surcharges. All taxis plying the road should charge a standard taxi fare while premium taxi services (which charge a different fare, should be called by telephone or other means.

Excessive charge to repair a damage

Comment posted in my survey.

 My car ran into the parking barrier. Upon inspection only the arm was damaged. We both agreed to it and took photos respectively.  The car park management later sent me a letter asking for 1,571 SGD payment to repair the barrier arm.  The break down was like this:



• Labour to attend to ACCIDENT Case by the contractor $ 150.00
• 3M Magnetic Barrier Arm only $ 650.00
• Barrier arm Aluminium Bracket $ 80.00
• Delivery and installation charges $ 250.00
• Admin Charges 30% $ 339.00
7% GST $ 102.83
Total: $ 1,571.83


I disputed all the charges levied, especially the 30% admin charge that made no sense at all.  I replied them saying i would take responsibility for the accident. But only on reasonable grounds. That barrier arm is simple to install (held on by 4 nuts and bolts), and the market price for it is only around 300 SGD (unbranded).


I advised them to file a claim with the Singapore Courts, and we will appear in court, state our cases and let the judge decide. That was March. I am still waiting to hear from them.

My comment
It is a sad episode when the company wanted to make a profit from an unfortunate event. It would be a nice gesture for them to charge only the direct cost and not seek to recover the labour and admin charges.

Dr. Goh Keng Swee's immense contribution to Singapore

Many people are aware about the immense contribution that Dr. Goh Keng Swee had made to improve the life of millions of people in Singapore. He was the architect of our economy strategy that transformed Singapore from a developing country to a thriving developed economy. His strategy to attract the multinatinal companies into Singapore laid the foundation for our economic growth. The same strategy is now emulated by many other countries that desired to grow their economy.

There is another aspect of his contribution tht may not be well known. Dr. Goh was the keynote speaker at the historic seminar on the modernisation of the labour movement in 1969. He laid out a convincing case for the labour movement to set up coooperatives to take care of the needs of Singapore, in life insurance, savings and other economic ventures.

This strategy led to the formation of NTUC Income in 1970. Dr. Goh was the chairman of the board of trustees of NTUC Income for nearly 10 years and provided the guidance and advice for NTUC Income to establish a foothold in a challenging market environment.  Without his guidance, it may not be possible for NTUC Income to be what it is today.

Later, the labour movement set up a consumer cooperative (i.e. NTUC Fairprice) and a taxi cooperative (which has since been privatised). The lives of many people are improved by the the contribution of the insurance, supermarket and other coopertives.

I heard stories about the frugal habits of Dr. Goh. He does not believe in wasting money unnecessarily. In his last speech in Parliament in 1984, according to the Straits Times report (quoting Prime Minister Lee), Dr. Goh said about the importance of "public service". I hope that Dr. Goh's message about "public service" can be rekindled.

Tan Kin Lian

Read this report in the Straits Times.

Case study - think out of the box

Case Study.
My friend told me this case. Mr. X is a retiree widower (i.e his wife has passed away). He applied for a 2 room HDB flat with his daughter to form a family unit.

The daughter now wants to get married and apply for a larger flat. Mr. X wishes to live independently. The HDB wants to take back the flat as Mr. X is not able to form a family unit.

They asked him to sell his flat (which cost him $30,000 after grant) and apply for a studio apartment costing $80,000. Mr. X does not have the money to top up. He appealed many times to HDB to remain in his flat, but was declined. Mr. X is still fighting for permission to keep his flat.

What would you do to help Mr. X ,without changing the HDB rules on the family unit? Give your answer here. A prize will be given for an innovative answer.

Expensive computerisation projects

A knowledgeable insider told me that a few hospitals in Singapore each spent tens of million dollars to computerised their operations, after engaging big name consultancy firms. They abandoned their projects due to difficulty in implementation and wrote off their investments. It was very wasteful, and probably explains why hospital bills are expensive.

He said that this type of practice of paying a lot of money to consultants for computerisation projects happen in many government agencies as well.

I am not able to verify this information. I hope to get get confirmation from people who work in these places and are able to share their information.

Tan Kin Lian

Workload of teachers

Read this letter.

My comment
The workload of teachers can be reduced by employing more non-teachers for the support duties. There are many unemployed people who would love to have the opportunity for these support duties. I hope that the government will be willing to spend some money to create the employment and reduce the workload of teachers.

Claim for repairs to vehicle

Here are the results of the survey.

Dear Sir,
I would like your advice about a traffic accident involving my car colliding with a taxi. Both cars were at a traffic stop wainting for the light to turn green. When the light turn green, the taxi in front of me started to move but braked suddenly after a few feet. Because of the proxiity of the cars, a collision occured but the force of the collision was mild.


The taxi driver of the taxi and I both came out and inspected our cars but found no damage to both cars. The taxi driver and I both agreed that there were no damages to both cars as the force of the collison were mild.


The taxi claimed that he stopped the car suddenly to avoid a collision with a lorry but the taxi was making a U turn while the lorry was making a right turn at Alecandra road. However I did not see the lorry. From the traffic junction I found that it was not possible for the lorry to collide with the taxi as alleged.


As both cars were not damaged, I was surprised that the taxi send an invoice of the repairs to the taxi costing over $2000. to my insurance company. The officer of my insurance company said that the taxi has been repaired.  Who allowed the taxi to be repaired whe there was no damage as a result of the acxcident?


F

REPLY
You can tell the insurance company to reject the claim from the taxi as the damages were not caused by you. However, the taxi driver will get his lawyer to sue you directly. You must be prepared to get your lawyer to reject their claim and to fight the case in court, if they issue you a summons.

Puzzles to train your mind

Here are some testimonials on the use of the shape quiz and tangram to train the mind:

1. My son (age 13) often play tangram and shape quiz puzzle. Sometime, when he met quite difficult question while he doing his homework (for example : Math), he solved by "Out of box" way, but his answer is correct. I think this puzzle train his mind to find solution.


2. This shape-puzzles is more than just an engaging game. It actually helps tapping into your inner thinking cause in your pursuit to solve the problems, it pushes you to look at things from different angle

3. Fun puzzles that are suitable for a wide age range.


4. This shape-puzzles is more than just an engaging game. It actually helps tapping into your inner thinking cause in your pursuit to solve the problems, it pushes you to look at things from different angle
 
Order Online.

Case study - lower insurance premium

This is a case study. You are insured with an insurance company that has been operating fairly efficiently and has been providing satisfactory service. It incurs the following expenses and charges a premium of $1,000:

average claim per policy $550
expenses $200
commission to agents $150
profit margin $100
premium $1,000

Another insurance company offers you a lower premium of $900 but if the lower premium is due to any of the following factors:

a) they are more efficient in handling their claims
b) they are likely to be more difficult in paying claims due to inadequate premium
c) they may offer a lower quality of service
d) they are keen to gain market share and don't mind making a loss

Here are the results of the survey.

Countdown to 2 million visitors

The total visitors to my blog has just passed 1,900,000. I expect the count to reach 2 million by end of June 2010. By that time, my blog will be 40 months old. The average visitorship for this period is 1,700 visitors a day. The daily average has now reached 2,600 visitors.

Credit card charges

Hi Kin Lian,
I would like to share what I found out about this. Credit card companies charge an administrative fee of 1.25% onwards to card users for transactions in non SGD currencies. Maybank charges 1.25% as does RBS. I think the rate charged by Citibank and DBS are 1.5%. This is on top of the 1% charged by VISA/ Mastercard.


So let's say I buy something online in USD, and the exchange rate determined by VISA for the posted date is USD 1 = SGD 1.40. The charge I receive will be 2.25% on top of that.


Now, if I buy in a non USD currency say GBP, the GBP charge will be converted to USD first, then USD to SGD so resulting in an extremely unfavourable rate.


There's not much transparency regarding this and I obtained this information after I questioned my bank about it. Hoping you can help educate the public especially your blog readers on this. Thanks.
 
CC
 
REPLY
I am not able to verify this fact. Can other readers share you experience?

Fraudulent accident claim - aggravated damages

It is fraudulent for a motorist to submit a claim for repair to a vehicle where the damages have been aggravated or created after the accident. For example, if the orginal damage is a scratch and the repairs are for a major dent, the claimant is committing a fraud, i.e. cheating.

Many vehicle owners may not be aware that they are a party to this fraud. They leave the car to their workshop and sign an authority for the workshop to make a claim on their behalf. Some workshop, that specialises in inflating the claim, will aggravated the damage or inflict additional damages to the vehicle, and will take a photograph of the damages, to submit to the insurance company.

The insurance claim officer may not investigate the claim and will accept the claim as submitted. They are unwilling to challenge the claim, even if they were asked by the policyholders.

This fraud has been rampant for several decades. Large sums are being paid for the inflated claims. This results in higher premiums being charged for motor insurance.

Many people have lodged reports to the Police on this fraudulent activities in past years. If the Police is serious about  investigate the complaints and bring the culprits to court, this fraud can be contained. I hope that this action can be taken, to reduce the cost of motor insurance in Singapore.

Tan Kin Lian

Dilemma on language

Read this article by Seah Cheang Nee.

My comments
I prefer the allow the student to choose a second language, which may not be their mother tongue. Those who find Chinese difficult to learn can choose Malay or another language.

Withdrawal of Foreign Currency Deposit

Dear Mr. Tan,

I had a foreign currency account in NZ dollars with X Bank. On 16/04/10, I went to the X Bank to withdraw the foreign currency time deposit account. I was attended to by a Relationship Manager Ms Y. I had specifically asked her to quote how much would I get back in Sing dollars should I wish to withdraw the foreign currency account. She did some calculations and said the amount was $31,326.07. She did not at any time informed me that the amount she quoted was in NZ dollars. I assumed that the amount quoted was in Sing dollars. I did a quick mental calculation and I would gain $1,326.07 over my original investment of S$30,000. I then agreed to the withdrawal.


I was then asked to sign a foreign currency withdrawal form. Upon signing, I noticed that amount of $31,326.07 was not written on the form. She said the amount quoted was only an indicative price and therefore cannot be written down. I trusted her and X Bank wholeheartedly. That was my biggest mistake.


True enough, I was shocked to receive only $30,257.85 when I went back to X Bank to collect the cashier order on 22/04/10. I approached Ms Y for the shortfall of $1,068.22. She said that the amount she quoted on 16/04/10 was in NZ dollars and after conversion to Sing dollars, would be $30,257.85. I remembered vividly that she did not at any time on 16/04/10 informed me that the amount quoted was in NZ dollars. She insisted that she did. It was her words against my words. She then showed me a document with the word NZD written in blue beside the amount of $31,326.07. I told her that the word NZD was not written in my presence on 16/04/10. If it was written in my presence, I would have realised that the amount she quoted to me was in NZ dollars. My natural instinct would ask what would that amount be in Sing dollars.


I was naturally not happy and requested to see her Manager. The Manager listened to my explanation attentively. However, he insisted that Ms Y was absolutely correct to give the quote in NZ dollars. He further explained that it was the Bank's practice to quote their clients in the currency they invested in and not in Sing dollars. I re-emphasised to him that I specially told Ms Y that I wanted the money back in Sing dollars. I would have assumed that the amount she quoted was in Sing dollars. Moreover, she wrote the amount on a piece of paper as $31,326.07 without the NZD in front of the quoted amount. I therefore assumed that the amount quoted was in Sing dollars. On hind sight, I should have asked to make 100% sure. He could not help or advise me further. I left the bank with a heavy heart having lost $1,068.22.


I was inexperienced and had learnt a lesson, albeit any expensive one for a retired person . It would be my first and last time that I would do foreign currency investment. It was a case of poor communication or rather miscommunication. I requested the Bank Manager to advise all their Relationship Managers to inform their clients clearly on which currency the amount was quoted, especially to elderly clients who are not so financial savvy. The exchange rate would make a big difference.


I just want to share this unpleasant experience with your readers. Please remember to ask the Relationship Manager clearly on which currency the amount was quoted.

FL

Legal action for overcharging of fees

Read this report of a class action in Australia.

My comment
I hope that the banks are fairer in the charges that they levy on customers, and that the regulator will take the lead to get the banks to be reasonable in their charges.

Investigation of US banks by New York AG

Read this article.

My comment.
This investigation has relevance to the investors of the Mini-bond, Pinnacle notes and Jubilee notes. If the banks had acted fraudulently in getting the rating agencies to give a misleading rating, there is the possibility of recovering the loss in US courts.

I respect the AG of New Yrok. At the time that the alleged wrongdoings were happening, people were not aware. When they now know the facts, with the benefit of hindsight, they are willing to take the banks to court and let the court decide if there were any wrongdoing. The banks are likely to agree to some form of settlement and to make some compensation to the parties that were wronged.

I hope that our authority in Singapore will also consider similar action on behalf of the small investors that were hurt by these wrong doings.

Dr. Goh Keng Swee

Dr. Goh Keng Swee has passed away after a long period of illness. He was the architect of Singapore's economic success. He was also the founder of NTUC Income.

Taxi surcharges

Read this letter in the Straits Times Forum

My comment
I agree with the writer that we should simplify our system of taxi charges, and avoid the peak hour and location surcharges. It is better to have a standard flat fare applicable to all taxis. The mileage charge can be higher than the current fares to provide sufficient income for the taxi drivers.

The government can also reduce the charges levied for taxis so that the taxi fares can be lower across the board. If more people take taxis instead of their private cars, it will reduce the pressure on parking space.

Mother Tongue Language

Did the government make these commitments?

My view.
The purpose of education is to teach students to be literate, numerate, able to communicate and have social skills and values. A second language is useful. The approach towards any subject, including the second language, should be flexible and be changed according to future needs.

Why is life a struggle?

Extract from Tommy Wong's book, "Wisdom on How to Live Life"

Tom: I was told that life is a struggle.
Guru: Life is only a struggle because the world operates on the basis of competition rather than cooperation.
Tom: Can you elaborate?
Guru: You see like you and I, if we take a walk on the basis of cooperation, then we’ll walk at a pace that both of us are comfortable with. We can then also enjoy the scenery on the way.
Tom: Enjoy life.
Guru: So who is the winner?
Tom: We’re both winners.
Guru: But if we take the walk on the basis of competition, then we’ll walk as fast as we can. Both of us will find the walk a struggle and there’s no chance to enjoy the scenery.
Tom: Life becomes a struggle.
Guru: So who is the winner?
Tom: There’s no winner, we’re both losers.
Guru: Exactly, in the world of competitions, even winners are actually losers. That’s why the world is full of losers.
Tom: And that includes the rich and powerful?
Guru: And that includes the rich and powerful!

Tommy Wong's book can be ordered online here. The price is cheaper than ordering through Amazon.

Aviva Car Insurance

The website is http://www.avivia.com.sg/

It is quite easy to get a quote. I found that the quote for my car insurance is $1,015. My existing insurer charges $761. So, Aviva is more expensive. My daughter also checked and found that in her case, Aviva is more expensive than the existing insurer.

I like other readers to check their premium based on your existing cover. You can post the details of the premium (existing compraed to Aviva) here.

Freedom, fairness and responsibility

A new government has taken office in the UK. It is a coalition government formed by the Conservative and the Liberal Democratic party. The new Prime Minister David Cameron said, "It will be an administration based on three key principles - freedom, fairness and responsibility".

I am heartened by these key principles and hope that Singapore will also aspire towards them. Here are some changes that have to be done in Singapore:

1. Freedom: allow people to express their views freely, without being sued for damages when they give any honest, negative opinion.
2. Fairness: reduce the wide disparity in income and ensure that people can seek justice, even if they do not have the money to engage lawyers
3. Responsibilty: take action to correct any flaws, instead of pushing the responsibility from one agency to another.

Tan Kin Lian

Property bubble?

Read this article.

My view.
All bubbles will burst one day. What goes up must come down. Any investment, including property, can go up to an unrealistic high price, but cannot stay there forever. It can only be sustained at a level that is affordable to the buyers, i.e. relative to the average national income.

Like Singapore, Dubai also had limited land. It created a property bubble that has now collapsed. Singapore will not be exempted.

There is one key difference in Singapore, and that is the role of the HDB and the CPF. The savings in the CPF had been used not only to service the mortgage payment but also to prop up the property market (by taking second priority to bank mortgage). HDB had been tolerant in allowing unemployed owners to delay payment of their mortgage installments.

In the case of Singapore, I expect that the property market will not collapse, but will remain dormant for many years. It will not show the kind of appreciation that had happened in the past. The return on property, as an investment, will be low.

Someone sent me this link:
http://www.coverville500.com/real-estates/the-next-dubai-real-estate-property-bubble-mike-maloney-of-gold-and-silver-inc

Feedback on Business Simulation Game

Click here for more details of the Business Simulation Game (BEST)

AA: it's a fun and interesting game, and we can learn about business planning from playing it.

HMW: I noticed there are a few parameters, namely unit price, capacity, expenditure on marketing. I tried a premium pricing strategy, i.e. high price for high margin, and correspondingly putting a higher marketing expenditure and reducing capacity. The performance was dismal. Incurred big losses.

JA: Best Global is not only fun and interactive, it also allow us to develop good practical business sense. Some strategies, which I personally found quite useful.

a. Set the right price that generates sufficient margin to cover our overheads + some modest profit. Excessive price undercutting may gain us market share but at the expense of our overall profitability.

b. Over investment in infrastructure and over recruitment (capacity) is expensive. Manage our expense well.

c. Understand the market. If the market is not doing so well (i.e. in the red), we may wish to consider reducing our market share by increasing our price and reducing our capacity.

AG: Good and very user friendly.The guide is very informative and useful.  Overall the interface is much better than what we had previously. I also see new elements like capacity, market share and profitability which makes it more interesting.

Read the Player Guide here:

Building wealth

Read this article on savings, avoiding debt and investing.

My comment
The tips are similar to the points made in my book - Practical Guide on Financial Planning available online.

Mortgage on your home

This article explains how to pay off your mortage early. - but after you have built up an emergency fund and have set aside money for your children's education.

My comment
It is more important to avoid getting a large mortgage in the first place. You should buy a property within 5 years of your annual income, and pay it within 25 years with a monthly repayment of less than 25% of your income. This is explained in my book on financial planning.

Mother Tongue Language

There is much controversy over the issue of the mother tongue language. I do not have my personal view about whether the weightage should remain the same or be reduced.

I wish to express my concerns on two issues:

a) Some people hold strong views that the weightage should be maintained while others felt strongly that it should be reduced. I am concerned about the manner in which the views were expressed, without regard for the views of other people who may be in different circumstances.

b) There seem to be a loss of trust in the government leaders to find the right balance that takes into account the diverse views of the people. I believe that they have the responsibility to seek the right policy which accommodates the views and needs as many people as possible.

I believe that it is possible to encourage students to learn a second language, without forcing them to do it through the "weightage" in the PSLE.

Tan Kin Lian

Signs at MRT stations

The most important signs at a train station are the "Platform No" and the "Way Out" signs. In most train stations in other cities, these signs are large, standardised and are easily seen. At our MRT stations, these signs are small and non-standardised.  We have signs that show "Exit" and other signs that show "Way Out".

I hope that our signs can be standardised and displayed in large signs at a prominent place. This will be helpful to visitors and tourists, who are not familiar with our MRT system.

Education system in Singapore

Read this article by Ng E-Jay.

My comments
I prefer an education system that teaches our young to be literate, numerate, know how to communicate, interact and have values. They should not be required to compete for top positions in class - which teaches them to be selfish.

Security at Suntec City

I visited an office in Suntec City. They asked to scan my NRIC but as it was lost, I gave them another card with the bar code. They gave me a visitor pass, just to get through the barrier.

I do not know the purpose of recording all visitors to the offices. There must be several hundred thousand visitors to Suntec Mall every day. They are not recorded. So, what is the purpose of knowing who visits the office? How does it enhance the security of the office? If there is a bomb, it is likely to occur among the visitors to the mall.

Avoid being overcharged

This article explains about the legal but dishonest ways that you can be overcharged.

My comment
There are many similar cases in Singapore. As companies wish to maximise their profits, they are now using unethical means. Share your views here.

Focus of TKL blog

The focus of this blog, as stated in the header, is "insurance, finance and current affairs in Singapore". I wish to cover all three topics to be best of my ability. I appreciate the contribution of readers who direct me to other blog postings that are relevant to my blog.

My blog is aimed at the 2,500 daily visitors who find it to be useful and relevant to them.

Some people disagree with the views posted in my blog. They are welcomed to give your views, but should avoid engaging  in personal or malicious attacks. If they do not like the focus of my blog, they do not need to visit this blog. (Note: I continue to get malicious attacks regularly from two persons, and have blocked their comments).

Tan Kin Lian

Exchange Traded Funds (ETF)

There are two types of exchange traded fund (ETF).

a) An ETF that is invested in the shares that track the index
b) An ETF that is composed largely of deriviatives and have leverage.

You should invest in type (a), such as the STI ETF managed by StateStreet in SGX. This type of ETF is held by a trustee under the trust law.

You should avoid type (b), as it carries the risk that the issuer of this product may get insolvent, as has happend with Lehman Brothers.

Do not worry about the liquidity of the STI ETF. It is sufficient for ordinary investors, who wish to invest small sums of money for the long term and to withdraw small sums every one or two months for their expenditure. Liquidity is not an issue.

The STI ETF is NOT suitable for speculators who need the liquidity for trading. If you wish to trade, it is better to get a liquid stock.

If you are not sure about the structure of the ETF (i.e whether type a or b), you should ask the stockbroker or just stick to STI ETF (managed by State Street).

Tan Kin Lian

Investment Linked Policy

I have often been asked for my views about an investment-linked policy (ILP). It separates the term insurance and investments. Do they provide good value to the consumer?

In most cases, they provide poor value for the following reasons:

a) A large part of the savings for investments is taken away to pay the "distribution cost"
b) The premiums charged for the death benefit and riders are quite high
c) The distribution cost and effect of deduction are usually higher than the traditional policies
d) The projected returns are optimistically and potentially misleading.
e) Many consumers find the benefit illustration to be too complicated to understand.

In most cases, the consumer is better off in buying the death cover and riders in a separate policy and to get competitive quotes from several companies. The best cover is the group term insurance offered by SAF,  SAFRA and NTUC. Most people are eligible to participate in these policies.

It is better to invest in a low cost investment fund, such as the STI ETF available on SGX. This is explained in my book on financial planning, which is available here.

Tan Kin Lian

Gold and barter

Read this article.

My comment.
I always avoid paying a high price for an investment in high demand or in a bubble, including gold or property. Those who can get out early can make a profit. The other investors have to hold on to the investment for a long time to recover their cost of investment.

Bank charges

I have to pay USD100 to Hong Kong. The bank charge $20 for cable charge and $10 for handling fee. Western Union (through the Post Office) also charge $30. This amounts to 20% of the amount to be paid. I asked the supplier to collect by credit card or Paypal. I hope that they agree.

Survey: Puzzles to train your mind

If you have practiced on the shape quiz or tangram, please take part in this survey.

Feedback on my book

If you have bought my financial planning book, please give your feedback here.

Pricing of HDB flats

Read this article in The Online Citizen.

My comments
I prefer to give an option to the public to buy the HDB flats at cost plus or at market price (less subsidy). Both types are subject to their conditions. This is similar to executive condo (EC) flats that are subject to conditions which are different from private condos.

The option to buy HDB flat at cost plus may suit some young people who looks at the flat as a home, rather than as an investment. They want to pay a lower price to keep down the cost of living.

Visitors' ICs should not be retained

Publised in Straits Times Forum, 10 May 2010
MANY building owners in Singapore require a visitor to exchange his identity card (IC) for a visitor's pass.
The intent is to ensure that he returns the pass. It also serves as a security measure.
However, there is a risk of loss or mis-use of the IC when it is retained in this manner.
As a visitor, I have to take care of many other matters relating to my visit. Standing in a long queue to get back my IC adds to the hassle.
I hope building owners respect the right of people to visit their premises to conduct business. They should not be allowed to retain a visitor's IC.
Tan Kin Lian

Amount of Life Insurnace

This article explains the amount of life insruance that you need. In my book on financial planning, I suggest that the amount should be 5 to 10 years of your current income. You can buy a large amount of cover at a low cost by choosing term insurance for 25 years (not longer). If you can get decreasing term insurance, it is even cheaper.

Most people in Singapore can buy cheap term insurance through the SAF, SAFRA, NTUC or Public Officer's scheme.

Tan Kin Lian

Commission for life insurance agents

A life insurance agent argued that the agent has to incur high expenses and deserve the commission that is paid. This is only one part of the story, as seen from the perspective of the agent.

The agent should also see this issue from the perspective of their client. The agent has a duty to take care of the interest of the client. This includes recommending a suitable life insurance product that is good for the client. In the case of an investment plan, there is a duty to advice a plan that offers a fair return for the long term savings. In the case of a term insurance policy, the agent has to recommend a policy that charges a fair rate of premium (but does not need to be the lowest).

The problem arises when there is a conflict of interest. Many agents recommend a policy that pays a high  commission but this is at the expense of the client (who trusted the agent). The agent is trained to give the marketing  reasons to sell the policy, but they are not honest advice.

Some insurance agents behave worse. They approach the client every few years to get the client to stop an existing policy and take up a new "better" product. The agent earns the high commission once again, and the unsuspecting client is being taken "for a ride" and to incur a high cost again. This is how the financial future of many consumers are destroyed by the bad advice given by some unscrupulous agents.

There are some agents that behave ethically and recommend honest products that are good for consumers. The difficulty is for the consumer to tell one agent from another. This is why consumers have to be educated about insurance. My book on financial planning is aimed at achieving this goal. There is a chapter about dealing with financial advisers or insurance agents.

Several countries are now implementing legislation to ban the payment of commission on life insurance products. The agent has to earn a fee to provide financial advice to the consumer. Singapore should follow the same step, to safeguard the financial future of the ordinary people.

Tan Kin Lian

Doing things in Singapore

Comment posted in this blog. I invite readers to contribute to this topic.

We should compile a list of difficult and complicated ways to do simple things in Singapore. Here is my initial attempt to get the ball rolling:
1. Taxi fares
2. Buying a car
3. Buying an HDB lease
(legally, your HDB flat belongs to the government. What? You think the government is actually upgrading your flat/estate for free? It's you who is subsiding the estate upgrading since the estate and flat does not belong to you)
4. Our primary school textbooks and exams
5. getting a meaningful job when you are retrenched in your 40's
6. calculating the cost of constructing an HDB flat
7. listing and calculating the value of Singapore assets and reserves so that the Singapore President will know how to protect them

Life today compared to four years ago

This article by Lucky Tan compares life in Singapore now and four years ago.

Free lance "sales manager"

I searched for a GPS tracker from the Alibaba website and found many suppliers in China. I sent an e-mail to a few suppliers. I received two replies on Sunday from the same person, replying on behalf of two different companies in Shenzhen.

I suspect that this person is a freelance "sales manager" whose role is to reply to inquiries.  It seems to be an entrepreneurial approach and also excellent customer service. I hope that companies in Singapore adopt the same approach and employ such "sales managers". It will create job for unemployed people.

Taxi surcharges

A taxi driver told me that Marina Bay Sands is outside the CBD and does not attract the surcharge. Taxi drivers are not interested to pick up the passengers there. There is a long queue of people waiting for taxis. To solve this problem, the taxi companies have applied to Land Transport Authority to designate this location as subject to surcharge. The public is not happy, as the surcharge is now being extended to more areas.

We have a confusing system of taxi fares in Singapore. It may be better to follow the practice in other countries where there is a flat fare (which may be higher than the existing fares) and no surcharge for peak hours or certain locations.

A friend from Malaysia told me that he had difficulty in getting a taxi in Singapore. He had visited Singapore before, and it was easier to get a taxi many years ago. I told him that he probably tried to get a taxi during the time before the peak hour surcharge applies. It seems that many taxi drivers will disappear during this period and will reappear at the peak hour.

Get Rich Quick Schemes

Hi Mr Tan,

Central Bank of Malaysia (i.e. Bank Negara Malaysia) recently probes an illegal deposit company - "The Gold Label Sdn Bhd" - as stated in this report, 8-May-2010.

There are just too many fraudalent & illegal get-rich-schemes (with empty promises and empty 'guarantees') designed to cheat consumers nowaday. As long as those being cheated stands out and notify the Central Bank or other authorised regulatory agencies, these regulators could conduct checks and investigations protecting the general public.

I believe there is similar authorities in Singapore too.

Philip

My comment
There is a law against illegal deposit taking in Malaysia. I believe that a similar law applies in Singapore. The financial products sold in Singapore that offer a buyback option option with interest at a high rate is a form of deposit taking. It should be regulated by the authority in Singapore.

Fragile global financial system

Read this excellent article by Lucky Tan.

My comment
I agree with the reference to high property prices in Singapore that is propped up by debt. Investors who believe that property prices in Singapore will continue to move up due to limited land should reconsider their views.

Need for Unity in Oppostion Parties

Read this article by Yoong Siew Wah.

Fair remuneration of agent

At the FISCA talk, I asked the participants what is a fair amount for an agent to earn on selling a life insurance policy with a monthly premium of $500. Should it be $2,000? Most participants felt that this was too high.

The actual amount that is earned by the agent (and the managers) is shown as "distribution cost" in the benefit illustration. It varies from $6,000 to $10,000. The participants were shocked. They did not realise it.

If you wish to buy a life insurance policy, look for the distribution cost and the effect of deduction. These two important points are explained in my book, Practical Guide on Financial Planning. The effect of deduction can amount to $200,000 for a policy of the above size. It is a lot of money that is deducted from your accumulated savings.

Spend $12 and 12 hours to learn about the basics of financial planning by reading the book. Attend the FISCA talk to get a better understading.

FISCA talk on Financial Planning - 8 May 2010

The FISCA talk on financial planning was attended by 60 participants on 8 May. The interaction was excellent.

FISCA will be holding a monthly talk on Financial Planning at the School of Business in SMU. Go to FISCA website to register.

Legal agreement

Read this letter about the role of lawyers in drafting unfair legal agreements.

My comment
We need a process to ensure that legal agreements that are imposed on the public for regulat transactions are checked to be fair. I hope that CASE or FISCA can play this role.