I am looking for a person who is experienced in investing in the stocks, REITS and ETF of SGX. I like to arrange a 3 hour course for members of FISCA. If you are interested to give this talk, please send an e-mail to kinlian@gmail.com.
The topics should include:
1. How to open an account.
2. How are the shares kept in CDP
3. What are REITS
4. What are ETFs
5. How to identify and select the blue chip stocks
6. Difference between long term investing and short term trading.
7. What are the charges for transacting and keeping shares
8. What to do with rights and bonus issues
Sunday, June 27, 2010
Yield on life policies
Here are some examples of the poor yield on life assurance policies:
http://tankinlian.blogspot.com/search?q=poor+return
http://tankinlian.blogspot.com/search?q=poor+return
Economic stimulus or austerity
The US implemented economic stimulus to deal with the economic crisis. UK and Germany decided to implement austerity measures to cut down their deficits. These countries have top economic advisers. Why does one country decided to adopt stimulus while two others decided to take the opposite measures?
Economics is an imperfect science. Expert economists have two views. They said, "one the one hand, we have to do this. On the other hand, we have to do that". Some government leaders are so tired of this type of talk that they are now looking for economic experts with one hand (just a joke!).
What is the correct action? Nobody knows. Each person, economic expert or non-expert, can have his view. I prefer the US approach. I do not see how the economy can get better if more people are unemployed due to austerity measures.
Economics is an imperfect science. Expert economists have two views. They said, "one the one hand, we have to do this. On the other hand, we have to do that". Some government leaders are so tired of this type of talk that they are now looking for economic experts with one hand (just a joke!).
What is the correct action? Nobody knows. Each person, economic expert or non-expert, can have his view. I prefer the US approach. I do not see how the economy can get better if more people are unemployed due to austerity measures.
SAF group insurance (term and critical illness)
Many consumers have difficulty in getting an attractive rate for term insurance and critical illness cover. Some insurance agents quote a high premium rate for term insurance (more than 5 times of the actual cost) and then try to convince the customer to buy a high cost policy which pays an attractive commission to the agent. The high cost policy includes the investment-linked plan (ILP) and the limited payment policy (i.e. covers whole of life with premium payable for 20 years).
Consumers can refer to the SAF group insurance policy (term insruance and critical illness cover) to get a benchmark for the premium rate for these covers. You can refer to the documents uploaded here: http://www.easysearch.sg/Links.aspx?CatID=11
If you are eligible, you can join the SAF group insurance scheme. For example, you pay a monthly premium of $38.40 to get term insurance up to age 65 of $300,000. You pay $10 a month to get critical illness cover for $100,000 up to age 45. (You do not need to insure more than $100,000 or beyond age 45).
If you are not eligible, you can use the premium rate as the benchmark for what you need to pay for your individual cover. You may have to pay a higher rate, but it should be within 30% of the SAF rate. If it is higher, the policy is too expensive and should be avoided.
Tan Kin Lian
Read Practical Guide on Financial Planning
Consumers can refer to the SAF group insurance policy (term insruance and critical illness cover) to get a benchmark for the premium rate for these covers. You can refer to the documents uploaded here: http://www.easysearch.sg/Links.aspx?CatID=11
If you are eligible, you can join the SAF group insurance scheme. For example, you pay a monthly premium of $38.40 to get term insurance up to age 65 of $300,000. You pay $10 a month to get critical illness cover for $100,000 up to age 45. (You do not need to insure more than $100,000 or beyond age 45).
If you are not eligible, you can use the premium rate as the benchmark for what you need to pay for your individual cover. You may have to pay a higher rate, but it should be within 30% of the SAF rate. If it is higher, the policy is too expensive and should be avoided.
Tan Kin Lian
Read Practical Guide on Financial Planning
Locked into a poor policy
A consumer showed me the benefit illustration of a 21 year anticipated endowment policy taken 18 years ago for a large life insurance company. She paid $2,000 a year, comprising of $1,500 for the basic policy and $500 for the critial illness rider.
The projected maturity value in 3 years time is $25,000. The premiums paid for 21 years is $42,000, comprising of $31,500 for the basic policy and $10,500 for the rider.
I found the premium for the critcal illness rider (which does not provide any return) to be too expensive for the small amount of cover. The return on the main policy is negative, and is lower than the total premiums that was paid.
The consumer asked if she should stop the policy now, as the return is negative. The cash value for 18 years of premium is so poor, that she had no choice but to continue the policy.
This large insurance company must have sold more than 100,000 policies of this plan (just my guess). The policyholders had no choice but to accept the negative return for 20 years of savings.
It is very sad that the consumers in Singapore have to suffer this type of treatment. They were financially unsavvy and trusted the insurance agents. However, these agents sold them a bad product, which was made worse by the cut in bonus rates and the reduction in the interest that is credited on the installment payments.
Consumers should avoid most types of life insurance products that give a poor yield on their savings. They should buy term insurance and save in a low cost investment fund, such as the STI ETF available on the Singapore Exchange.
Read my book, Practical Guide on Financial Planning.
The projected maturity value in 3 years time is $25,000. The premiums paid for 21 years is $42,000, comprising of $31,500 for the basic policy and $10,500 for the rider.
I found the premium for the critcal illness rider (which does not provide any return) to be too expensive for the small amount of cover. The return on the main policy is negative, and is lower than the total premiums that was paid.
The consumer asked if she should stop the policy now, as the return is negative. The cash value for 18 years of premium is so poor, that she had no choice but to continue the policy.
This large insurance company must have sold more than 100,000 policies of this plan (just my guess). The policyholders had no choice but to accept the negative return for 20 years of savings.
It is very sad that the consumers in Singapore have to suffer this type of treatment. They were financially unsavvy and trusted the insurance agents. However, these agents sold them a bad product, which was made worse by the cut in bonus rates and the reduction in the interest that is credited on the installment payments.
Consumers should avoid most types of life insurance products that give a poor yield on their savings. They should buy term insurance and save in a low cost investment fund, such as the STI ETF available on the Singapore Exchange.
Read my book, Practical Guide on Financial Planning.
Winner of Quiz 6-1
10 correct entries (i.e. Henry) were received. The winner, selected by a draw conducted by the computer software, was Kuan Say Yong (Sxxxx3771). Congratulations.
Please send an e-mail to kinlian@gmail.com giving your mobile number Ifor verification) and address. The prize (Intelligence Quiz Vol 3) will be sent to you.
This intelligence quiz requires some skill. You can get the tips from the book. Quiz 6-2 is now open for you to try your skill and luck.
Please send an e-mail to kinlian@gmail.com giving your mobile number Ifor verification) and address. The prize (Intelligence Quiz Vol 3) will be sent to you.
This intelligence quiz requires some skill. You can get the tips from the book. Quiz 6-2 is now open for you to try your skill and luck.
Wisdom on How to Live Life (Book 2)
Humans being the most intelligent species and having lived on Earth for thousands of years, we are yet nowhere near to a life of peace, love, joy and harmony. This book contains a story of a young man, Tom, who had a second and a third conversation with Guru Harry. These are continuations of their first conversation which is contained in the book "Wisdom on How to Live Life". Guru Harry epitomizes someone from a spiritual society who offers a way of living which can lead to peace, love, joy and harmony.
Through these conversations, Tom learnt that (1) how to find out our interest and mission in life, (2) why meditation is important, (3) what we have left after losing everything, (4) why it is better to believe that people die at a time of their own choosing, (5) what we should do after becoming enlightened, (6) what life is like without a body, (7) which concept of God is more empowering, (8) what is the real power of believing we are divine, (9) why it is important to believe that God and I are one, and (10) why we should transform Earth into heaven.
Tommy Wong
Tommy Wong's books (Vol 1 and 2) can be bought here.
Through these conversations, Tom learnt that (1) how to find out our interest and mission in life, (2) why meditation is important, (3) what we have left after losing everything, (4) why it is better to believe that people die at a time of their own choosing, (5) what we should do after becoming enlightened, (6) what life is like without a body, (7) which concept of God is more empowering, (8) what is the real power of believing we are divine, (9) why it is important to believe that God and I are one, and (10) why we should transform Earth into heaven.
Tommy Wong
Tommy Wong's books (Vol 1 and 2) can be bought here.
Wisdom on How to Live Life
Here are some comments on Amazon website on the book by Dr. Tommy Wong.
Discussion of "Wisdom on How to Live Life" on Amazon
I came across Tommy Wong's books whist carrying out a search on 'spirituality' and am pleased I did. His whole way of writing and explanations are simple and make so much sense. I have read and reviewed books by Eckhart Tolle which I thought were good, but these books by Tommy are much better in my opinion and deserve to be read widely. I hate to use cliche's by these books are definitely lifechangers. I cannot recommend them highly enough. So impressed am I that I will buy any future book if he decides to write more. Are there other people who have read his books and feel the same way?
A. J. Bray
Discussion of "Wisdom on How to Live Life" on Amazon
I came across Tommy Wong's books whist carrying out a search on 'spirituality' and am pleased I did. His whole way of writing and explanations are simple and make so much sense. I have read and reviewed books by Eckhart Tolle which I thought were good, but these books by Tommy are much better in my opinion and deserve to be read widely. I hate to use cliche's by these books are definitely lifechangers. I cannot recommend them highly enough. So impressed am I that I will buy any future book if he decides to write more. Are there other people who have read his books and feel the same way?
A. J. Bray
Financial awareness
Hi Mr Tan,
I am running a small business. I have heard from friends that I should buy unit trust but do not know how to do it and which company to look for. I also heard that foreign currency deposit is butter than insurance as I do not need to commit so long.
A couple of years ago, I had placed some hard earned savings with Sunshine Empire and was very disappointed that I could not get back anything. I was actually angry why the firm could run in Singapore and had so many investors, but I have lost hope in getting back my money.
Can you advise me as to which company can advise me on unit trust and has lower distribution cost? Is placing my savings with Income a wise move? Which investment firm would accept investment under my corporate sole proprietorship account? Is it secure or should I only be satisfied with returns from fixed deposit under corporate account?
REPLY
Please attend the talk on financial planning organised by FISCA (http://www.fisca.sg/). You will be given a copy of the book, Practucal Guide on Financial Planning. It will answer most of your questions. You can also buy the book here, http://www.easysearch.sg/
I am running a small business. I have heard from friends that I should buy unit trust but do not know how to do it and which company to look for. I also heard that foreign currency deposit is butter than insurance as I do not need to commit so long.
A couple of years ago, I had placed some hard earned savings with Sunshine Empire and was very disappointed that I could not get back anything. I was actually angry why the firm could run in Singapore and had so many investors, but I have lost hope in getting back my money.
Can you advise me as to which company can advise me on unit trust and has lower distribution cost? Is placing my savings with Income a wise move? Which investment firm would accept investment under my corporate sole proprietorship account? Is it secure or should I only be satisfied with returns from fixed deposit under corporate account?
REPLY
Please attend the talk on financial planning organised by FISCA (http://www.fisca.sg/). You will be given a copy of the book, Practucal Guide on Financial Planning. It will answer most of your questions. You can also buy the book here, http://www.easysearch.sg/
Corporate E-mails
Here are some tips on the use of corporate e-mails for small and large companies. They allow a company to operate smoothly in spite of changes in staff and to have several staff work together in handling replies to third parties. It can improve the company's productivity significantly and reduce the scope for confusion.
Tan Kin Lian
Tan Kin Lian
Saturday, June 26, 2010
Separation from Malaysia
Here are some views about the historic occasion 45 years ago, and some speculation about the future.
Cost of insurance
Singapore has low mortality rate (death rate) among young people. The rate for most working people below 50 years is less than 0.5 per 1,000. At this death rate, the cost of insurance to provide $300,000 should be less than $300 (after allowing for expenses and profit of the insurance company). You can get this type of coverage at this low rate from group insurance scheme offered to memebrs of SAF, SAFRA, trade unions and public officers.
Many people, however, are now paying 10 to 20 times of this premium to get a similar coverage. The only reason for paying so much is that the part of the premium is being invested to get a return. If this is the argument, then it is important that the yield on the premium that is invested should be attractive, compared to other types of investments. But this is not the case, as most life insurance policies give a return of less than 2% per annum over a long period. A fair return should be 4%, but this is being taken away from the high expenses of the insurance company.
The advice given by many insurance agents are not helpful. On the one hand, they argue that the life insurance policy gives a return on the premium, and argue against term insurance (which does not provide any return). But, when they are confronted with the fact that the return is too low, they changed their tune to argue about the importance of having insurance cover to protect the family. Sadly, the cost of the insurance products that they offer for protection is too high.
Insurance agents face a dilemma. If they offer the products that are good for consumers, they are not able to earn a high income. They can only earn more by selling products that "rip off" the unsavvy consumers.
Some insurance agents are honest and ethical and genuinuely wish to give the right advice to their customers. However, customers are not willing to pay an adequate fee for the time that is spent. And these insurance agents are not able to get sufficient business to make give an adequate income.
What is the solution? The growth on online portals that offer insurance directly is one useful step. Another important step is for consumers to be educated about financial matter. They can join FISCA (http://www.fisca.sg/) and attend the talk on financial planning offered by FISCA.
Consumers can also get useful tips from my book, Practical Guide on Financial Planning.
Tan Kin Lian
Many people, however, are now paying 10 to 20 times of this premium to get a similar coverage. The only reason for paying so much is that the part of the premium is being invested to get a return. If this is the argument, then it is important that the yield on the premium that is invested should be attractive, compared to other types of investments. But this is not the case, as most life insurance policies give a return of less than 2% per annum over a long period. A fair return should be 4%, but this is being taken away from the high expenses of the insurance company.
The advice given by many insurance agents are not helpful. On the one hand, they argue that the life insurance policy gives a return on the premium, and argue against term insurance (which does not provide any return). But, when they are confronted with the fact that the return is too low, they changed their tune to argue about the importance of having insurance cover to protect the family. Sadly, the cost of the insurance products that they offer for protection is too high.
Insurance agents face a dilemma. If they offer the products that are good for consumers, they are not able to earn a high income. They can only earn more by selling products that "rip off" the unsavvy consumers.
Some insurance agents are honest and ethical and genuinuely wish to give the right advice to their customers. However, customers are not willing to pay an adequate fee for the time that is spent. And these insurance agents are not able to get sufficient business to make give an adequate income.
What is the solution? The growth on online portals that offer insurance directly is one useful step. Another important step is for consumers to be educated about financial matter. They can join FISCA (http://www.fisca.sg/) and attend the talk on financial planning offered by FISCA.
Consumers can also get useful tips from my book, Practical Guide on Financial Planning.
Tan Kin Lian
Rechargeable torchlight with locator lamp
Local Transport
A good form of local transport is car sharing and bicycle sharing. It should be operated on a licence given by the town council and should operate for short distance within a town. The purpose is to bring people from their home to the town center, MRT station or bus interchange and to bring them back. By using shared bicycles and electric cars, the vehicle are used for several trips each day and reduce the space required for parking.
There is a maintenance cost, due to the high usage of the vehicles, but the cost to the consumer should be much lower than the cost of a privately owned bicycle or electric car. There is less hassle in looking for a parking space.
This type of sharing arrangements need to be initiated by the authority, as they have the power to set aside space for parking, right of way on the roads and overcome other obstacles. Several cities in Europe have taken the step to make these operations available.
In many residential areas in Singapore, the car parking lots and side roads are congested with parked cars. It is quite a hassle to drive through these roads or to find a parking space. The situation has become quite bad. The situation can be remedied by introducing the sharing schemes.
To make it work, we need the authoruty to the town councils to initiate this scheme and to overcome the regulatory overlap between the various ministries and agencies.
Tan Kin Lian
There is a maintenance cost, due to the high usage of the vehicles, but the cost to the consumer should be much lower than the cost of a privately owned bicycle or electric car. There is less hassle in looking for a parking space.
This type of sharing arrangements need to be initiated by the authority, as they have the power to set aside space for parking, right of way on the roads and overcome other obstacles. Several cities in Europe have taken the step to make these operations available.
In many residential areas in Singapore, the car parking lots and side roads are congested with parked cars. It is quite a hassle to drive through these roads or to find a parking space. The situation has become quite bad. The situation can be remedied by introducing the sharing schemes.
To make it work, we need the authoruty to the town councils to initiate this scheme and to overcome the regulatory overlap between the various ministries and agencies.
Tan Kin Lian
Friday, June 25, 2010
Wisdom on How to Live Life Vol 2
Volume 2 of this book by Dr. Tommy Wong is now available at www.easysearch.sg/ishop ($25).
Car sharing scheme in Paris
My friend from Paris gave me an update of the city's proposed car sharing scheme. It will involve 3,000 electric-operated vehicles. The city is inviting proposals from private sector operators to run the car sharing scheme, which is expected to operate from 2012.
This is an interesting approach. The city government is able to find the parking spaces and clears the regulatory hurdles. The private sector will operate the schemes under some regulated pricing.
The advantage of the proposed car sharing scheme are:
- use of electric vehicles, which is friendly for the environment
- each vehicle can be shared by many users in a day (save parking space) and reduced number of vehicles
I hope that a similar scheme can be set up in each of the towns in Singapore to provide local transport from residential areas to MRT stations and bus terminus.
Tan Kin Lian
This is an interesting approach. The city government is able to find the parking spaces and clears the regulatory hurdles. The private sector will operate the schemes under some regulated pricing.
The advantage of the proposed car sharing scheme are:
- use of electric vehicles, which is friendly for the environment
- each vehicle can be shared by many users in a day (save parking space) and reduced number of vehicles
I hope that a similar scheme can be set up in each of the towns in Singapore to provide local transport from residential areas to MRT stations and bus terminus.
Tan Kin Lian
Late submission of critical illness claim
Dear Mr. Tan,
My wife was diagnosed with breast cancer stage three in 2007. At that time, we did not realised she had a ILP with X and critical illness cover was attached to the plan. We shifted house in the process and only realised the policy existence when we went back to collect our mails. The fact is the policy is still in force because the cash value is being taken to finance the policy, including of its critical illness cover.
Now X is asking us to furnish a memo explaining why we made the claims so late. I'm concerned whether X will make good the claim because its a genuine oversight on our part.
Can you advise me on how we should revert to X and honestly in your opinion, do you think the chances of us getting the claim is good?
REPLY
You can state your facts honestly, that you were not aware about the insurance policy previously. You made the claim as soon as you realised that there was a cover. I think that X should accept your claim. If they reject it, you can consult a lawyer.
My wife was diagnosed with breast cancer stage three in 2007. At that time, we did not realised she had a ILP with X and critical illness cover was attached to the plan. We shifted house in the process and only realised the policy existence when we went back to collect our mails. The fact is the policy is still in force because the cash value is being taken to finance the policy, including of its critical illness cover.
Now X is asking us to furnish a memo explaining why we made the claims so late. I'm concerned whether X will make good the claim because its a genuine oversight on our part.
Can you advise me on how we should revert to X and honestly in your opinion, do you think the chances of us getting the claim is good?
REPLY
You can state your facts honestly, that you were not aware about the insurance policy previously. You made the claim as soon as you realised that there was a cover. I think that X should accept your claim. If they reject it, you can consult a lawyer.
Cash back policy
Comment posted in my blog (edited)
The whole idea of cash back is to confuse the consumers. Imagine the executive financial consultants cannot calculate and know little about this product, how do you expect the consumers to understand.
One social enterprise launched another product recently. These consumers will be in for a good ride when they find out that the projected return will not be delivered after 10 years. These consumers deserve it for trusting their agents. Don't know whether to pity the consumers or not.Consumers may think the cashbacks are interest earned. They are actually your own money returned to you as cash back. The agents are silent on this. The agents were trained not to mention anything until you ask. They tell the customers the points that 'sound' good and suppress the risk to the consumer.
My comment
The insurance agent compares the yield of these cash back product (around 1% per annum) with the low rate of interest on bank deposits. This comparison is wrong. Consumers should not lock their savings for 10 years or longer at the low yield. A fairer comparision is the yield on government bonds of the same duration, which should be more than 2% per annum. Furthermore, the government bonds are liquid and can be sold at a fair market price, without the heavy penalty that is found in a life insurance policy.
Learn about the "effect of deduction" from Practical Guide on Financial Planning.
The whole idea of cash back is to confuse the consumers. Imagine the executive financial consultants cannot calculate and know little about this product, how do you expect the consumers to understand.
One social enterprise launched another product recently. These consumers will be in for a good ride when they find out that the projected return will not be delivered after 10 years. These consumers deserve it for trusting their agents. Don't know whether to pity the consumers or not.Consumers may think the cashbacks are interest earned. They are actually your own money returned to you as cash back. The agents are silent on this. The agents were trained not to mention anything until you ask. They tell the customers the points that 'sound' good and suppress the risk to the consumer.
My comment
The insurance agent compares the yield of these cash back product (around 1% per annum) with the low rate of interest on bank deposits. This comparison is wrong. Consumers should not lock their savings for 10 years or longer at the low yield. A fairer comparision is the yield on government bonds of the same duration, which should be more than 2% per annum. Furthermore, the government bonds are liquid and can be sold at a fair market price, without the heavy penalty that is found in a life insurance policy.
Learn about the "effect of deduction" from Practical Guide on Financial Planning.
The Awakening
Read this inspiring article.
Some key points:
- stop judging and pointing fingers
- honesty and integrity are the foundations to build a life
- stop trying to control situations, people an doutcome
Some key points:
- stop judging and pointing fingers
- honesty and integrity are the foundations to build a life
- stop trying to control situations, people an doutcome
Shield claim
Dear Mr Tan,
A few months back my father went to hospital to do a post-hostpitalisation treatment of immunotherapy for bladder cancer. He is insured under Enhanced IncomeShield Policy and NTUC said that as the date of treatment exceeds 90 days from the date of hospitalisation (it was 93 days) they are not liable to pay.In fact, we got the doctor to write a letter of appeal but it was rejected. Would you know how we can appeal for this?
REPLY
Please ask the insurance company to give you a written reply for their rejection, i.e. to quote the clause from the policy about the coverage and their reason for rejection.
I believe that the policy does cover outpatient treatment for cancer. Can you see if your father's condition fits into this outpatient treatment? It is not related to the 90 day period from post-hospitalisation. I am not familiar with the exact coverage, so my remarks needs to be checked against clarification from the insurance company.
A few months back my father went to hospital to do a post-hostpitalisation treatment of immunotherapy for bladder cancer. He is insured under Enhanced IncomeShield Policy and NTUC said that as the date of treatment exceeds 90 days from the date of hospitalisation (it was 93 days) they are not liable to pay.In fact, we got the doctor to write a letter of appeal but it was rejected. Would you know how we can appeal for this?
REPLY
Please ask the insurance company to give you a written reply for their rejection, i.e. to quote the clause from the policy about the coverage and their reason for rejection.
I believe that the policy does cover outpatient treatment for cancer. Can you see if your father's condition fits into this outpatient treatment? It is not related to the 90 day period from post-hospitalisation. I am not familiar with the exact coverage, so my remarks needs to be checked against clarification from the insurance company.
2 million visitors
Congratulations to the following winners for being the 2,000,000th visitor to http://www.tankinlian.blogspot.com/
Clarence Goh
Vincent Choy
Chua Wei Lin
Eddy Lim
Aik Theng Chong
Kelvin Chin
Teo Aik Kiat
Please get your friends to visit my blog, http://www.tankinlian.blogspot.com/
Clarence Goh
Vincent Choy
Chua Wei Lin
Eddy Lim
Aik Theng Chong
Kelvin Chin
Teo Aik Kiat
Please get your friends to visit my blog, http://www.tankinlian.blogspot.com/
Open market create jobs
I saw an ad on CNN from the International Chamber of Commerce. It said, "Open Markets Create Jobs". I reflected on this message. It is a strong, appealling message, but is it true?
It is certainly true in some respects. The jobs are created in developing countries. But it came at a big price for these countries.
Look at what is happening in China. Many workers found that the wages could not keep up with the cost of living. They are taking industrial action and go on strike. This would be unthinkable in a communist country where the trade unions are under the control of the Government. But, it is happening, and the Government seemed to find it difficult to maintain the industrial harmony.
The jobs that went to the developing countries were at the expense of the same jobs that were lost in their home countries. Looking at the global picture, the number of jobs may not have increased. Instead the wage cost has come down, and that allows more profit for the capital owners.
These jobs were also made at the expense of public sector jobs that could improve the quality of life for the people, i.e. teachers, health care, community services, etc. With globalisation, more people are now working in jobs that product material goods, at the expense of public service jobs that help to make a balanced, better life for the people.
We need a new way of looking at jobs in its totality. If the trend continues as it had for the past two decades, we will have a less stable a less happy environment.
Tan Kin Lian
It is certainly true in some respects. The jobs are created in developing countries. But it came at a big price for these countries.
Look at what is happening in China. Many workers found that the wages could not keep up with the cost of living. They are taking industrial action and go on strike. This would be unthinkable in a communist country where the trade unions are under the control of the Government. But, it is happening, and the Government seemed to find it difficult to maintain the industrial harmony.
The jobs that went to the developing countries were at the expense of the same jobs that were lost in their home countries. Looking at the global picture, the number of jobs may not have increased. Instead the wage cost has come down, and that allows more profit for the capital owners.
These jobs were also made at the expense of public sector jobs that could improve the quality of life for the people, i.e. teachers, health care, community services, etc. With globalisation, more people are now working in jobs that product material goods, at the expense of public service jobs that help to make a balanced, better life for the people.
We need a new way of looking at jobs in its totality. If the trend continues as it had for the past two decades, we will have a less stable a less happy environment.
Tan Kin Lian
Thursday, June 24, 2010
FISCA talk on Financial Planning - 26 June, 3 to 6 pm
FISCA is organising a talk on financial planning as follows:
Title: Financial Planning - A Practical Guide
Time: 3 to 6 pm
Venue: SMU School of Business
Date: 26 June 2010
Speaker: Tan Kin Lian
This is a repeat of the same talk that wsa held in May and was attended by a full house.
Register for the talk: register.
FISCA
Title: Financial Planning - A Practical Guide
Time: 3 to 6 pm
Venue: SMU School of Business
Date: 26 June 2010
Speaker: Tan Kin Lian
This is a repeat of the same talk that wsa held in May and was attended by a full house.
Register for the talk: register.
FISCA
New life insurance products
Many new life insurance products introduced in the Singapore market recently provide a poor deal for customers. It is difficult for the customer to calculate the yield on their savings, as the new products offer cash payback at certain intervals.
The products offer a poorer yield compared to the traditional products (which already provided a low yield). To get the cash payback, the policyholder has to pay an additional premium that is at least 10% more than the payback. For example, if the cash payback is $2,000 a year, the policyholder has to pay an additional premium of at least $2,200 and get the cash payback only the second year only (i.e. no payback in the first year).
Does it make sense for you to save an additional $2,200 a year to get back $2,000? It does not, but the insurance agent is trained to tell you that this is a policy that gives you cash back!
There are other products that require you to pay premium for a certain number of years and pay back the benefit over a few years later. It is quite complicated to calculate the yield, but the yield is quite low (from the few examples that I have seen).
The only way to know if you are getting a fair deal is to look at the "effect of deduction" and the "distribution cost" shown in the benefit illustration. Although it come is many pages and is hidden among a lot of other distracting information, you can ask for these figures to be shown to you, as they are mandatory. You should also read my book, Practical Guide on Financial Planning to learn how to interpret these figures and to get the benchmark on what are the fair figures.
Tan Kin Lian
The products offer a poorer yield compared to the traditional products (which already provided a low yield). To get the cash payback, the policyholder has to pay an additional premium that is at least 10% more than the payback. For example, if the cash payback is $2,000 a year, the policyholder has to pay an additional premium of at least $2,200 and get the cash payback only the second year only (i.e. no payback in the first year).
Does it make sense for you to save an additional $2,200 a year to get back $2,000? It does not, but the insurance agent is trained to tell you that this is a policy that gives you cash back!
There are other products that require you to pay premium for a certain number of years and pay back the benefit over a few years later. It is quite complicated to calculate the yield, but the yield is quite low (from the few examples that I have seen).
The only way to know if you are getting a fair deal is to look at the "effect of deduction" and the "distribution cost" shown in the benefit illustration. Although it come is many pages and is hidden among a lot of other distracting information, you can ask for these figures to be shown to you, as they are mandatory. You should also read my book, Practical Guide on Financial Planning to learn how to interpret these figures and to get the benchmark on what are the fair figures.
Tan Kin Lian
Buying stocks
Buying stocks is like buying a used car. You have to spend time and attention to make sure that you buy the right stock and pay the right price. Read this article. Do not listen to tips from friends or ask for their advice.
My observation
If you are not sure which stock to buy, buy the STI ETF. It is invested in the shares of the 30 largest companies listed in the SGX. It has low transaction and annual management fee. You can mitigate the risks of investing in this ETF by following the principles explained in Practical Guide on Financial Planning.
Another alternative is to invest in a life insurance policy, provided that you are able to find a product that offers a low "effect of deduction" as explained in that book.
My observation
If you are not sure which stock to buy, buy the STI ETF. It is invested in the shares of the 30 largest companies listed in the SGX. It has low transaction and annual management fee. You can mitigate the risks of investing in this ETF by following the principles explained in Practical Guide on Financial Planning.
Another alternative is to invest in a life insurance policy, provided that you are able to find a product that offers a low "effect of deduction" as explained in that book.
Filial piety
Here are some letters from readers about the TV ad created by the Government agency to promote filial piety in Singapore.
Lesson on tolerance
http://www.straitstimes.com/STForum/Story/STIStory_544831.html
Ad does not convey correct values
http://www.straitstimes.com/STForum/OnlineStory/STIStory_544665.html
TV ad on filial piety was effective
http://www.straitstimes.com/STForum/OnlineStory/STIStory_544664.html
Favour elderly parents whom we owe so much
http://www.straitstimes.com/STForum/Story/STIStory_544833.html
Filial piety not a simple matter
http://www.straitstimes.com/STForum/Story/STIStory_544832.html
Lesson on tolerance
http://www.straitstimes.com/STForum/Story/STIStory_544831.html
Ad does not convey correct values
http://www.straitstimes.com/STForum/OnlineStory/STIStory_544665.html
TV ad on filial piety was effective
http://www.straitstimes.com/STForum/OnlineStory/STIStory_544664.html
Favour elderly parents whom we owe so much
http://www.straitstimes.com/STForum/Story/STIStory_544833.html
Filial piety not a simple matter
http://www.straitstimes.com/STForum/Story/STIStory_544832.html
Lifestyle in Dubai
Dubai has an attractive residential development called the Dubai Marina. It must have more than 100 high class apartment blocks, with excellent restaurants, shopping, recreational, sports and other facilities. It now has a Metro station which can bring the residents to the places of work in the financial and business districts along Sheik Zayed Road. There are many large shopping malls along the Metro line. This locality is quite attractive for expatriates.
There are also many new, top end residential apartment blocks located near the offices, for people who prefer to live close to the office.
The modern lifestyle in Dubai can be quite attractive. Most people are put off by the hot climate, but I found that the hot summer was quite bearable for short stays outside. Most of the time, the people are in air conditioned office, homes and cars. The other seasons are pleasant. The Metro trains and shopping malls in Dubai are not as crowded as Singapore.
Tan Kin Lian
There are also many new, top end residential apartment blocks located near the offices, for people who prefer to live close to the office.
The modern lifestyle in Dubai can be quite attractive. Most people are put off by the hot climate, but I found that the hot summer was quite bearable for short stays outside. Most of the time, the people are in air conditioned office, homes and cars. The other seasons are pleasant. The Metro trains and shopping malls in Dubai are not as crowded as Singapore.
Tan Kin Lian
Transport in Dubai
I spoke to several taxi drivers during my trip around Dubai yesterday to try out the Dubai Metro and visit Dubai Mall. They came from overseas, but have been living in Dubai for many years.
It is quite easy to get a taxi in Dubai as there is adequate supply. The fare is slightly more expensive than Singapore but is fixed for all taxis and is based on distance. There is no surcharge for time and location. It fare system is easy for commuters and taxi drivers.
The taxis provide a useful link for the first and last legs of the journey, with the main part of the journey being the Metro trains.
There are bus services that provide this connection for the local people who are familiar with the bus systems. However, the bus systems is still not well developed in Dubai.
Tan Kin Lian
It is quite easy to get a taxi in Dubai as there is adequate supply. The fare is slightly more expensive than Singapore but is fixed for all taxis and is based on distance. There is no surcharge for time and location. It fare system is easy for commuters and taxi drivers.
The taxis provide a useful link for the first and last legs of the journey, with the main part of the journey being the Metro trains.
There are bus services that provide this connection for the local people who are familiar with the bus systems. However, the bus systems is still not well developed in Dubai.
Tan Kin Lian
Replace a NRIC
Someone complained that $100 is too much to pay for a replacement of NRIC. Apart from this fee, they have to go through a lot of trouble, including visiting the crowded SIR office near Lavendar station.
The NRIC office said that $100 is the cost of replacing a NRIC. Is this so? There are many organisations that issue membership card with photograph. They do not charge $100 for a replacement card.
Most people take care of their NRIC and do not lose it due to carelessness. Many organisations ask for NRIC to record visitors. For it to be used often, it is quite easy for it to be misplaced.
I hope that the NRIC office should consider that $100 is a lot of money for students and low income earners. They should avoid levying excessively high charges.
Tan Kin Lian
The NRIC office said that $100 is the cost of replacing a NRIC. Is this so? There are many organisations that issue membership card with photograph. They do not charge $100 for a replacement card.
Most people take care of their NRIC and do not lose it due to carelessness. Many organisations ask for NRIC to record visitors. For it to be used often, it is quite easy for it to be misplaced.
I hope that the NRIC office should consider that $100 is a lot of money for students and low income earners. They should avoid levying excessively high charges.
Tan Kin Lian
Easy Tangram
Vera, 3 year old, tries the Easy Tangram on iPhone. She is making the shape of a camel.
Wednesday, June 23, 2010
Dubai in summer
I am now in Dubai. The outside temperature at noon is 40 degree C. I left the Dubai Metro to take a taxi back to my hotel in this temperature. Although it was hot, it was bearable. As the air is dry, it was not uncomfortable, unlike the humid climate in Singapore. Dubai is in a temperate region. It is hot in summer, but quite pleasant in the other seasons.
Weekend Car
Dear Mr Tan,
In March, my husband drove his weekend car on a weekday to run our errants. In the evening, my pet dog passed away. We forgot to apply for a e-day licence due to arrangement for cremention of my pet. The next day, my husband remembered and went down personally to LTA to seek their assistance for the oversight. To our surprise, we received a fine of $500 for this omission 3 months later !
I tried to appeal to LTA, as this was not an "intentional cheating" and had reported it the following day. However, they refused to waive the fine of $500!
This "e-system" was implemented in January to convenient people with weekend cars. However, it is also a "TRAP" if we forgot to apply for the e-day licence. Just imagine a fine of $500 for a first time offence, imposed on an honest owner who reported the oversight!
EL
In March, my husband drove his weekend car on a weekday to run our errants. In the evening, my pet dog passed away. We forgot to apply for a e-day licence due to arrangement for cremention of my pet. The next day, my husband remembered and went down personally to LTA to seek their assistance for the oversight. To our surprise, we received a fine of $500 for this omission 3 months later !
I tried to appeal to LTA, as this was not an "intentional cheating" and had reported it the following day. However, they refused to waive the fine of $500!
This "e-system" was implemented in January to convenient people with weekend cars. However, it is also a "TRAP" if we forgot to apply for the e-day licence. Just imagine a fine of $500 for a first time offence, imposed on an honest owner who reported the oversight!
EL
SCMP: UK will scrap its Financial Services Authority
22 Jun 2010
With Britain deciding to scrap its super-regulator - the Financial Services Authority (FSA) - after 12 years, it is a perfect opportunity for our officials to use the British reform plan as a reference for Hong Kong's way forward.
The FSA, which covers everything from banks, brokers, listed companies and asset management firms, was said to be too big to handle the financial crisis effectively. It is to be replaced by a Prudential Regulatory Authority under the central bank to govern the financial strength of all institutions, while also setting up a consumer protection and markets agency.
Hong Kong's problem is the exact opposite of Britain's. While Britain has one regulator that has become too big to move, we have too many regulators for different sectors.
Our banks are regulated by the Hong Kong Monetary Authority, brokers by the Securities and Futures Commission, insurance companies by the Office of the Commissioner of Insurance and pension funds by the Mandatory Provident Fund Schemes Authority. Oh yes, and don't forget the SFC and the Hong Kong stock exchange share responsibility for the regulation of listed companies.
The British reform plan, to be implemented in two years, is similar to Australia's model, which has one watchdog for the financial strength of institutions and another to regulate the conduct of individual salespersons. This "twin-peak" model is favoured by the SFC but not by the HKMA.
White Collar has always said the main problem with a fragmented regulatory structure is inconsistency. In the Lehman Brothers minibonds fiasco, customers who bought the products from banks got 60 per cent to 70 per cent of their money back, while those who bought them from brokers got 100 per cent.
When customers buy investment products from banks, the transactions are recorded on audio tapes. This does not happen when buying from insurance agents.
From January next year, customers over 65 years of age will have to wait two days before banks execute orders to buy structured products for them. Meanwhile, this HKMA regulation does not apply to people buying the same products from brokers.
Some of the smallest independent financial advisers who have been told by the SFC to stop selling fund products are likely to switch to offering insurance- or fund-based investment-linked products, taking them off the securities watchdog's radar screens.
The current Hong Kong regulatory model is very outdated because the boundaries between the various arms of the finance sector have become blurred.
The banks are selling everything from securities and funds to insurance policies while insurance agents are also selling investment-linked products. On top of that, neither the bank nor the insurance sales people are subject to SFC regulations. Investors can easily become victims of such a fragmented model.
In the United States and Britain, customer protection has been a priority of their reform plans. In Hong Kong, however, we may have many regulators but we do not have a customer protection agency.
When the FSA was set up in 1998, the Hong Kong government was asked if it would be following suit, only to be told to "wait and see".
We have waited for 12 years and now the FSA is going to be scrapped. In the meantime our government has done nothing. How much longer should we wait for reform?
With Britain deciding to scrap its super-regulator - the Financial Services Authority (FSA) - after 12 years, it is a perfect opportunity for our officials to use the British reform plan as a reference for Hong Kong's way forward.
The FSA, which covers everything from banks, brokers, listed companies and asset management firms, was said to be too big to handle the financial crisis effectively. It is to be replaced by a Prudential Regulatory Authority under the central bank to govern the financial strength of all institutions, while also setting up a consumer protection and markets agency.
Hong Kong's problem is the exact opposite of Britain's. While Britain has one regulator that has become too big to move, we have too many regulators for different sectors.
Our banks are regulated by the Hong Kong Monetary Authority, brokers by the Securities and Futures Commission, insurance companies by the Office of the Commissioner of Insurance and pension funds by the Mandatory Provident Fund Schemes Authority. Oh yes, and don't forget the SFC and the Hong Kong stock exchange share responsibility for the regulation of listed companies.
The British reform plan, to be implemented in two years, is similar to Australia's model, which has one watchdog for the financial strength of institutions and another to regulate the conduct of individual salespersons. This "twin-peak" model is favoured by the SFC but not by the HKMA.
White Collar has always said the main problem with a fragmented regulatory structure is inconsistency. In the Lehman Brothers minibonds fiasco, customers who bought the products from banks got 60 per cent to 70 per cent of their money back, while those who bought them from brokers got 100 per cent.
When customers buy investment products from banks, the transactions are recorded on audio tapes. This does not happen when buying from insurance agents.
From January next year, customers over 65 years of age will have to wait two days before banks execute orders to buy structured products for them. Meanwhile, this HKMA regulation does not apply to people buying the same products from brokers.
Some of the smallest independent financial advisers who have been told by the SFC to stop selling fund products are likely to switch to offering insurance- or fund-based investment-linked products, taking them off the securities watchdog's radar screens.
The current Hong Kong regulatory model is very outdated because the boundaries between the various arms of the finance sector have become blurred.
The banks are selling everything from securities and funds to insurance policies while insurance agents are also selling investment-linked products. On top of that, neither the bank nor the insurance sales people are subject to SFC regulations. Investors can easily become victims of such a fragmented model.
In the United States and Britain, customer protection has been a priority of their reform plans. In Hong Kong, however, we may have many regulators but we do not have a customer protection agency.
When the FSA was set up in 1998, the Hong Kong government was asked if it would be following suit, only to be told to "wait and see".
We have waited for 12 years and now the FSA is going to be scrapped. In the meantime our government has done nothing. How much longer should we wait for reform?
ILP fund
Dear Mr Tan,
I am currently reading up on Unit Trusts and ILPs. Are all ILPs invested in Unit Trusts?
REPLY
An ILP operates like a unit trust. The insurance company put the ILP premium into a fund and invest the fund in shares, bonds, unit trusts and other assts. The ILP fund is divided into units. The price of each unit of the ILP fund is calculated daily based on the underlying value of the assets, divided by the number of units. Hence, the ILP fund is managed like a unit trust. Usually, the insurance company managed the investments of the ILP fund using their inhouse fund managers, but they may also outsource the investing to external fund managers.
I am currently reading up on Unit Trusts and ILPs. Are all ILPs invested in Unit Trusts?
REPLY
An ILP operates like a unit trust. The insurance company put the ILP premium into a fund and invest the fund in shares, bonds, unit trusts and other assts. The ILP fund is divided into units. The price of each unit of the ILP fund is calculated daily based on the underlying value of the assets, divided by the number of units. Hence, the ILP fund is managed like a unit trust. Usually, the insurance company managed the investments of the ILP fund using their inhouse fund managers, but they may also outsource the investing to external fund managers.
2 millionth visitor - 7 winners
7 readers sent to me their screen shots showing that they are the 2 milionth visitors. They sent their replies within 5 minutes. I am acknowledging all 7 as the winners. They are asked to send to me their mailing address and their choice of books. Congratulations to all 7 winners.
Tan Kin Lian
Tan Kin Lian
2 million visitors
Will the person who is recorded as the 2 millionth visitor to my blog take a screen shot (or print out the webpage) of this achievement and send it to kinlian@gmail.com. I will give you a prize (i.e tangram book or financial planning book..
Tan Kin Lian
Tan Kin Lian
Occupants of a property
Read this letter.
It seems that a person who did not update his address can still borrow money using a NRIC showing the old address. The new occupant at that address faces the harrassment by the loan shark. It seems that nothing can be done about this matter by the authority (i.e. NRIC office).
I suggest that the name of the occupant of an address should be available for checking by the public (and it is already public as shown in the telephone directory), unless the occupant wish it to be kept private. This will allow, for example, a party to a transaction (e.g. loan) to search that a correct address has been given. It will also allow the legal occupant to identify people who are using the address without authority, and for the name to be removed from that address.
I wonder if the NRIC office is still keeping to the old mindset that the address is "confidential". This mindset is causing difficulty to the new occupant at the address.
Tan Kin Lian
It seems that a person who did not update his address can still borrow money using a NRIC showing the old address. The new occupant at that address faces the harrassment by the loan shark. It seems that nothing can be done about this matter by the authority (i.e. NRIC office).
I suggest that the name of the occupant of an address should be available for checking by the public (and it is already public as shown in the telephone directory), unless the occupant wish it to be kept private. This will allow, for example, a party to a transaction (e.g. loan) to search that a correct address has been given. It will also allow the legal occupant to identify people who are using the address without authority, and for the name to be removed from that address.
I wonder if the NRIC office is still keeping to the old mindset that the address is "confidential". This mindset is causing difficulty to the new occupant at the address.
Tan Kin Lian
Impartial financial advice
Dear Mr. Tan,
Is there any independent financial firm that provides:
a. product neutrality
b. financial planner measured NOT by financial product sales revenue
I would like to be a true financial planner where I can advice my clients base on what I think is right for them rather than being influenced by:
a. product commissions
b. management pushing for sales numbers for a certain product
c. management pushing for overall sales numbers
Thank you for much! I am a newbie in financial sector and trying to break into it.
Richard
REPLY
There are a few independent financial firms. You have to meet and talk to them. I do not know whether they are target driven or focused on giving impartial advice. You can try to talk to (names removed).
Is there any independent financial firm that provides:
a. product neutrality
b. financial planner measured NOT by financial product sales revenue
I would like to be a true financial planner where I can advice my clients base on what I think is right for them rather than being influenced by:
a. product commissions
b. management pushing for sales numbers for a certain product
c. management pushing for overall sales numbers
Thank you for much! I am a newbie in financial sector and trying to break into it.
Richard
REPLY
There are a few independent financial firms. You have to meet and talk to them. I do not know whether they are target driven or focused on giving impartial advice. You can try to talk to (names removed).
China - success story
Dear Mr. Tan
Here is an interesting article.
LN
INTERESTING SUCCESS STORY OF CHINA
US President Obama visited China recently, primarily to find out what exactly & how exactly China is doing things that makes it such a success story, surpassing all the so-called "expert economic planners" of the US & Europe. His team found these 5 basic lessons behind China 's success.
LESSON No 1 - BE AMBITIOUS
The Chinese believe in Setting Goals, Making Plans, & Focusing on Moving Ahead - there is always the sense of foward motion. As an example, a huge 6-lane highway in Shanghai took only 2 years from planning to ready for traffic. In the US, 2 years will only get you the environment and local authority permit if you are lucky.
LESSON No 2 - EDUCATION MATTERS
The Chinese are obsessed with ensuring kids get the right education - English, Maths & Science. They made sure that their education system reached even the most remote rural areas - today the literacy rate in China is OVER 90%, surpassing even the USA 's 86%. According to American Educationists, the Chinese kids are way ahead of the kids in the USA .
LESSON No 3 - LOOK AFTER THE ELDERLY
The Chinese DO NOT send their elderly to nursing care centres - they personally look after & care for their parents. In the US , nursing care of the elderly is now costing each resident USD 85,000 annually, & this is rising. The Chinese also believe that the grandparents at home make the best tutors for their children. It also provides a sense of cultural continuity - this helps bind society.
Here its a growing trend to have children brought up by maids, of the lowest educational & moral quality - so our children (the future leaders) grow up with similar language & outlook capability.
LESSON No 4 - SAVE MORE
In the USA , savings dropped to zero in 2005, and is only now slowly rising to 4%. In China , the savings rate for every household has exceeded 20%. The Chinese believe that fugality & a healthy savings rate are a sure indicator of a country's financial health. High savings lead to increased investments - results in increased productivity, innovation & job growth.
LESSON No 5 - LOOK OVER THE HORIZON
In China , eveyone is foward looking - never backwards. New graduates make a vow - never ever will their children & grandchildren ever work in the fields again. With this kind of foward mentality, people are always thinking & planning how, not just to succeed, BUT how to be the best in the world in everything they do.
Here is an interesting article.
LN
INTERESTING SUCCESS STORY OF CHINA
US President Obama visited China recently, primarily to find out what exactly & how exactly China is doing things that makes it such a success story, surpassing all the so-called "expert economic planners" of the US & Europe. His team found these 5 basic lessons behind China 's success.
LESSON No 1 - BE AMBITIOUS
The Chinese believe in Setting Goals, Making Plans, & Focusing on Moving Ahead - there is always the sense of foward motion. As an example, a huge 6-lane highway in Shanghai took only 2 years from planning to ready for traffic. In the US, 2 years will only get you the environment and local authority permit if you are lucky.
LESSON No 2 - EDUCATION MATTERS
The Chinese are obsessed with ensuring kids get the right education - English, Maths & Science. They made sure that their education system reached even the most remote rural areas - today the literacy rate in China is OVER 90%, surpassing even the USA 's 86%. According to American Educationists, the Chinese kids are way ahead of the kids in the USA .
LESSON No 3 - LOOK AFTER THE ELDERLY
The Chinese DO NOT send their elderly to nursing care centres - they personally look after & care for their parents. In the US , nursing care of the elderly is now costing each resident USD 85,000 annually, & this is rising. The Chinese also believe that the grandparents at home make the best tutors for their children. It also provides a sense of cultural continuity - this helps bind society.
Here its a growing trend to have children brought up by maids, of the lowest educational & moral quality - so our children (the future leaders) grow up with similar language & outlook capability.
LESSON No 4 - SAVE MORE
In the USA , savings dropped to zero in 2005, and is only now slowly rising to 4%. In China , the savings rate for every household has exceeded 20%. The Chinese believe that fugality & a healthy savings rate are a sure indicator of a country's financial health. High savings lead to increased investments - results in increased productivity, innovation & job growth.
LESSON No 5 - LOOK OVER THE HORIZON
In China , eveyone is foward looking - never backwards. New graduates make a vow - never ever will their children & grandchildren ever work in the fields again. With this kind of foward mentality, people are always thinking & planning how, not just to succeed, BUT how to be the best in the world in everything they do.
Tuesday, June 22, 2010
Customer Service
Customer Service is neglected by most businesses. Some think that their customers are just B2B.
Everyone is a customer to anyone, including our children and our parents and friends. We are trying to sell ourselves everytime there is an interaction.
Some key points about customer service:
A) There must be passion about the work
B) There must be empowerment
C) There must be rewards and recognition
D) There must be involvement from management ( from CEO to toilet cleaner)
E) There must be feedback.
Employment of mature workers can be effective only with redesign of the job or that the product warrants a mature employee. Grooming, tone of voice and service language is sadly lacking. These qualities can be infused quickly only if managers devote more time in ensuring all employees go through a short course in appreciation of customer behaviour and trends.
Much money is spent on market research, buying franchises and renting of retail space.However, the best investment is in employee training in customer care. It does not matter if the business product is fibre optics to oil rigs and trendy handbags. There is a customer within and without, internally & externally.
The moment of truth turns magical when an employee establishes rapport and is fully aware of the customer's needs, aspiration or fears. We can achieve this magic. Managers are responsible to induct these skills from the top right down to every segment of their business. Its called passion and belief.
The obstacles are usually: what is the ROI? Well, imagine the ROI when you lose 15% of sales to your competitor who gains 15% recurring sales.. all from your base just because it is not important that your employee smiles and says hello with energy and passion.
All products do almost the same function: notebooks,air travel,telephony, spaghetti , pizza. What makes them different? and what tempts and beckons the customer to return?
Front end sales and image... pure allure of brand may not bring in the sales anymore.. but imagine if you combine great branding with great customer care!... pure magic!
AIA? Prudential? great brands.. but what about their customer service from the agents?.. yeah.. right!
Ronnie Eng
Everyone is a customer to anyone, including our children and our parents and friends. We are trying to sell ourselves everytime there is an interaction.
Some key points about customer service:
A) There must be passion about the work
B) There must be empowerment
C) There must be rewards and recognition
D) There must be involvement from management ( from CEO to toilet cleaner)
E) There must be feedback.
Employment of mature workers can be effective only with redesign of the job or that the product warrants a mature employee. Grooming, tone of voice and service language is sadly lacking. These qualities can be infused quickly only if managers devote more time in ensuring all employees go through a short course in appreciation of customer behaviour and trends.
Much money is spent on market research, buying franchises and renting of retail space.However, the best investment is in employee training in customer care. It does not matter if the business product is fibre optics to oil rigs and trendy handbags. There is a customer within and without, internally & externally.
The moment of truth turns magical when an employee establishes rapport and is fully aware of the customer's needs, aspiration or fears. We can achieve this magic. Managers are responsible to induct these skills from the top right down to every segment of their business. Its called passion and belief.
The obstacles are usually: what is the ROI? Well, imagine the ROI when you lose 15% of sales to your competitor who gains 15% recurring sales.. all from your base just because it is not important that your employee smiles and says hello with energy and passion.
All products do almost the same function: notebooks,air travel,telephony, spaghetti , pizza. What makes them different? and what tempts and beckons the customer to return?
Front end sales and image... pure allure of brand may not bring in the sales anymore.. but imagine if you combine great branding with great customer care!... pure magic!
AIA? Prudential? great brands.. but what about their customer service from the agents?.. yeah.. right!
Ronnie Eng
Get a better return on your savings
Many people still rely on life insurance policies as an important form of personal savings for the future, either for their own retirement or for their children. They may save 10 to 15% of their monthly incomes. The accumulated savings over a working life could amount to $500,000 or more.
It is important that they avoid insurance policies that take away a large part of their accumulated savings. This is stated in the column "effect of deduction" in the benefit illustration. I have seen many benefit illustrations where the deduction is 40% or higher. This is excessive. If the accumulated savings is $500,000 and 40% is taken away, you are left with only $300,000. Surely $200,000 is too much money to give away?
This will make the insurance agent and insurance company rich, but the policyholders poor. In many cases, the maturity benefit may not even keep up with inflation!
The "effect of deduction" is explained in my book, Practical Guide on Financial Planning. It also contains tips on the types of investment to avoid, such as structured products and unrelated investment products. It also advice you to invest in low cost investment funds.
If you wish to invest in a life insurance policy, as you are not familiar with other types of investments, you must make sure that the effect of deduction does not exceed the benchmark shown in my book. The benchmark depends on the period of investment.
Spend $12 and 12 hours to be educated. Buy and read the book.
It is important that they avoid insurance policies that take away a large part of their accumulated savings. This is stated in the column "effect of deduction" in the benefit illustration. I have seen many benefit illustrations where the deduction is 40% or higher. This is excessive. If the accumulated savings is $500,000 and 40% is taken away, you are left with only $300,000. Surely $200,000 is too much money to give away?
This will make the insurance agent and insurance company rich, but the policyholders poor. In many cases, the maturity benefit may not even keep up with inflation!
The "effect of deduction" is explained in my book, Practical Guide on Financial Planning. It also contains tips on the types of investment to avoid, such as structured products and unrelated investment products. It also advice you to invest in low cost investment funds.
If you wish to invest in a life insurance policy, as you are not familiar with other types of investments, you must make sure that the effect of deduction does not exceed the benchmark shown in my book. The benchmark depends on the period of investment.
Spend $12 and 12 hours to be educated. Buy and read the book.
Pay insurance premium directly
A few decades ago, it was quite common and convenient for policyholders to pay insurance premiums to the agents. At that time, there was the risk that the insurance agent might pocket the money, so the policyholder have to rely on an agent that they can trust.
Nowadays, with GIRO and internet banking, there is no need to pay insurance premium to an agent. It is better to pay the premium directly to the insurance company, especially through GIRO.
Nowadays, with GIRO and internet banking, there is no need to pay insurance premium to an agent. It is better to pay the premium directly to the insurance company, especially through GIRO.
Survey of Political Parties
What are your views of the political parties in Singapore? The survey is now closed.
Update
Here is the final report based on 97 replies
Update
Here is the final report based on 97 replies
Websites of Government Agencies
Many people told me that they had a difficult time in applying for passes at the website of the Ministry of Manpower. I recently encountered a lot of difficulty in making a submission. The website was designed from the perspective of MOM but was not friendly to the general public.
The difficulties include the following:
- hassle of getting the PIN
- a lot of detail to be entered into one form (from the employee and from the employer).
Some common sense solution include the following:
- allow the applicant (i.e. person to be employed) and employer to enter their details separately
- simplify the process of getting a PIN
- allow one PIN to be used for all services in MOM, instead of separate PINs for different types of applications.
I encountered similar difficulties in using the website of IRAS. They seem to be advised by the same consultants who approach the design from the perspective of the agency and not the general public.
I like other readers to share their experience in using the websites of government agencies.
Tan Kin Lian
The difficulties include the following:
- hassle of getting the PIN
- a lot of detail to be entered into one form (from the employee and from the employer).
Some common sense solution include the following:
- allow the applicant (i.e. person to be employed) and employer to enter their details separately
- simplify the process of getting a PIN
- allow one PIN to be used for all services in MOM, instead of separate PINs for different types of applications.
I encountered similar difficulties in using the website of IRAS. They seem to be advised by the same consultants who approach the design from the perspective of the agency and not the general public.
I like other readers to share their experience in using the websites of government agencies.
Tan Kin Lian
Display panels in MRT trains
The display panels in MRT trains on the North South lines are not showing the right information. The lighted maps have been not working. The display panels are now showing the wrong information about the next arriving station and the doors that will be opened.
I observed that the trains have been showing the wrong signals for nearly a month. Nobody seemed to be bothered to fix them. At least, the displays should be switched off.
Is this any sign of apathy in Singapore?
I observed that the trains have been showing the wrong signals for nearly a month. Nobody seemed to be bothered to fix them. At least, the displays should be switched off.
Is this any sign of apathy in Singapore?
Trading in Futures
Hi Mr Tan
Recently I read about "STI Futures". As currently I have set aside 5K for investment( Spare cash ). I want to find an investment vehicle to earn quick money ( also aware that I might lost quick $ if not careful )
I noticed this "STI futures" recently, Initial we need to place an initial margin of about $1625 for one contract.
Per index point is $10 ( either earn or lost ), there is margin call also etc.
We can get in and out( trading ) within a few mins , hour, or a day to even months. As I understand that the RISK factor is there also. But I find that this STI Futures can let me earn $ fast as I don't like to wait long. I also prepare to lost this 5K if my decision is not right.
As this STI Futures might be one of my investment vehicle, it "attract me" is because if my decision is right, I might earn $ fast within a few hours or a day. I also understand that there might be risk also. Anyway this 5K is my spare cash (but doesn't mean I am prepare to loose the $ ).
I wondering any advises you can share with me or where I can find more detils to have a better understanding. As I am your regular reader to your blog, wondering you can post my enquiry to your blog so that your readers might share with me the risk factors etc or where to look for?
Anthony
MY REPLY
There are many futures contracts that you can trade in, i.e. stock index futures and currency futures. You need to be familiar with trading in futures before you plunge in. You have to understand the risk, liquidity and other factors. Please attend training courses on trading in this type of contracts.
Recently I read about "STI Futures". As currently I have set aside 5K for investment( Spare cash ). I want to find an investment vehicle to earn quick money ( also aware that I might lost quick $ if not careful )
I noticed this "STI futures" recently, Initial we need to place an initial margin of about $1625 for one contract.
Per index point is $10 ( either earn or lost ), there is margin call also etc.
We can get in and out( trading ) within a few mins , hour, or a day to even months. As I understand that the RISK factor is there also. But I find that this STI Futures can let me earn $ fast as I don't like to wait long. I also prepare to lost this 5K if my decision is not right.
As this STI Futures might be one of my investment vehicle, it "attract me" is because if my decision is right, I might earn $ fast within a few hours or a day. I also understand that there might be risk also. Anyway this 5K is my spare cash (but doesn't mean I am prepare to loose the $ ).
I wondering any advises you can share with me or where I can find more detils to have a better understanding. As I am your regular reader to your blog, wondering you can post my enquiry to your blog so that your readers might share with me the risk factors etc or where to look for?
Anthony
MY REPLY
There are many futures contracts that you can trade in, i.e. stock index futures and currency futures. You need to be familiar with trading in futures before you plunge in. You have to understand the risk, liquidity and other factors. Please attend training courses on trading in this type of contracts.
Monday, June 21, 2010
Admission to local universities
Dear Mr Tan,
My son passed GCE "A" level with many As, 1 B, and 2 Es. He was not accepted into a local university. He applied to NUS, NTU, SMU and SUDT and appealed twice, but was rejected.
Local universities are funded by taxpayers and our fourth generation citizen cannot have the opportunity to enter a local university. How do we compete with other nation when, as a global city, our own citizen are deprived the opportunity to go for tertiary education?
When I visited the local universities, we saw many foreign students which took away the opportunity for our own citizens to be admitted. These foreign students are given a scholarship by our Government to take the university place from our own citizens. Many of them did not opt to become Singapore citizens.
If my son were to study in an overseas university, there is the tendency that he would not come back to Singapore. I hold this fear based on the experience of my relatives. If we were to lose a fourth generation citizen, how can Singapore be able to sustain as a nation without a deep root of its own citizens. If a significant crisis or disaster were to hit singapore, who will defend this country? Why can't the local universities accept our own local students?
Alan
My observationAlan has asked me to post this letter to invite the views of other readers. He also asked me to carry out a survey. I will think about how to organise this survey.
My son passed GCE "A" level with many As, 1 B, and 2 Es. He was not accepted into a local university. He applied to NUS, NTU, SMU and SUDT and appealed twice, but was rejected.
Local universities are funded by taxpayers and our fourth generation citizen cannot have the opportunity to enter a local university. How do we compete with other nation when, as a global city, our own citizen are deprived the opportunity to go for tertiary education?
When I visited the local universities, we saw many foreign students which took away the opportunity for our own citizens to be admitted. These foreign students are given a scholarship by our Government to take the university place from our own citizens. Many of them did not opt to become Singapore citizens.
If my son were to study in an overseas university, there is the tendency that he would not come back to Singapore. I hold this fear based on the experience of my relatives. If we were to lose a fourth generation citizen, how can Singapore be able to sustain as a nation without a deep root of its own citizens. If a significant crisis or disaster were to hit singapore, who will defend this country? Why can't the local universities accept our own local students?
Alan
My observationAlan has asked me to post this letter to invite the views of other readers. He also asked me to carry out a survey. I will think about how to organise this survey.
Pinnacle Notes 6 & 7
Hi Mr Tan,
Morgan Stanley has just informed investors that another two of Pinnacle Notes, Series 6 & 7 have failed due to mandatory redemption (see attached).
For those who still hold hope they can hang on till maturity dates and they may still get back their principle if nothing else fails, this is a wake-up call and they should just join the legal action organized by the US lawyer. Please help to post this in you Blog.
The Town Council who invested in this “created-to-fail” product is also looking at $3 million dollar loss as reported in this 2008 News report. Who is accountable?
http://www.channelnewsasia.com/stories/singaporelocalnews/view/390407/1/.html
Benedict
My comment
Investors who wish to join the legal action to be held in US courts by a reputable US legal firm working on a contigency fee basis can send an e-mail to tkla.km@gmail.com. The lawyer will take the fee and expenses only on successful outcome. If the lawyer is unsuccessful, they will bear the expenses and the investors will not need to pay any fee or expenses.
Morgan Stanley has just informed investors that another two of Pinnacle Notes, Series 6 & 7 have failed due to mandatory redemption (see attached).
For those who still hold hope they can hang on till maturity dates and they may still get back their principle if nothing else fails, this is a wake-up call and they should just join the legal action organized by the US lawyer. Please help to post this in you Blog.
The Town Council who invested in this “created-to-fail” product is also looking at $3 million dollar loss as reported in this 2008 News report. Who is accountable?
http://www.channelnewsasia.com/stories/singaporelocalnews/view/390407/1/.html
Benedict
My comment
Investors who wish to join the legal action to be held in US courts by a reputable US legal firm working on a contigency fee basis can send an e-mail to tkla.km@gmail.com. The lawyer will take the fee and expenses only on successful outcome. If the lawyer is unsuccessful, they will bear the expenses and the investors will not need to pay any fee or expenses.
Security on MRT trains
Read this article by Yoong Siew Wah.
My observations
It is a Singaporean habit to point fingers at other people and to avoid responsibility. We learn from our leaders.
My observations
It is a Singaporean habit to point fingers at other people and to avoid responsibility. We learn from our leaders.
Sunday, June 20, 2010
Working from home
Here are some tips of working from home, and setting up a home office.
My observation
An alternative is to work in a low cost office near your home. I rented a low cost office at an industrial park near my home. I employ a few persons who live nearby to work for me in I.T. development and administrative work. Working near home has most of the covenience of working from home.
My observation
An alternative is to work in a low cost office near your home. I rented a low cost office at an industrial park near my home. I employ a few persons who live nearby to work for me in I.T. development and administrative work. Working near home has most of the covenience of working from home.
Employment of older workers
Can we identify organisations that are willing to spend money to employ older workers to provide customer service?
I saw some customer guides at MRT stations. They are employed by SMRT to guide commuters. I appreciate the work by SMRT in creating employment and to provide good customer service.
Let us identify other organisations that make this positive effort.
Tan Kin Lian
I saw some customer guides at MRT stations. They are employed by SMRT to guide commuters. I appreciate the work by SMRT in creating employment and to provide good customer service.
Let us identify other organisations that make this positive effort.
Tan Kin Lian
Customer Service
I have written several postings about the standard of customer service in Singapore. I have examples of good and bad customer service. Sadly, the examples of bad service are overwhelming.
It is quite easy to improve the customer service by simple changes to their operating procedures. But this require attention by decision makers.
Sadly, the culture in Singapore is for too many people, including service quality managers and customer service managers of large organisations, to follow instructions and preserve the status quo, rather than to innovate and change for the better. It seems that only the few people at the time can decide.
I like to ask my readers to help share the experience. Can you identify examples of good and bad service provided by the large organisations in Singapore, i.e. where it has a large impact on customers? Examples are bad call centers and websites that make life difficult for thousands of customers daily.
Tan Kin Lian
It is quite easy to improve the customer service by simple changes to their operating procedures. But this require attention by decision makers.
Sadly, the culture in Singapore is for too many people, including service quality managers and customer service managers of large organisations, to follow instructions and preserve the status quo, rather than to innovate and change for the better. It seems that only the few people at the time can decide.
I like to ask my readers to help share the experience. Can you identify examples of good and bad service provided by the large organisations in Singapore, i.e. where it has a large impact on customers? Examples are bad call centers and websites that make life difficult for thousands of customers daily.
Tan Kin Lian
Comment moderation
When I moderate the comment, I can read the first line of all the comments that have been posted. From the first line, I am usually able to detect the znonymous comments of the two vile persons who keeps making personal attacks against me. I know these two persons as being a top manager of an insurance company (or an insurance agent working for him) and a cranky unemployed person.
I delete their comments without reading the rest of the comments.
I write this blog to educate the public about investment and insurance, to select the fair products and to avoid the over-priced products. Insurance and land banking agents who dislike my views are not welcomed in this blog. They can promote their views in their own blogs or facebooks.
Tan Kin Lian
I delete their comments without reading the rest of the comments.
I write this blog to educate the public about investment and insurance, to select the fair products and to avoid the over-priced products. Insurance and land banking agents who dislike my views are not welcomed in this blog. They can promote their views in their own blogs or facebooks.
Tan Kin Lian
Saturday, June 19, 2010
Easysearch Portals
There are many useful information in the Easysearch Portal. Go to http://www.easysearch.sg/ and click on the Link tab. Select a category and view the resources.
Poor service in restaurant reservations
I wanted to reserve a table at a Tung Lok restaurant at the Esplanade. I went to their website and filled up a web form for Reservation. I provided the essential information. Nobody called me back for two days. I consider that my reservation is not accepted. I arranged to go somewhere else.
I have the same difficulty in making reservations at other restaurants. Last month, I telephoned a restaurant in a hotel in Queen Street. After much difficulty, my reservation confirmed over the telephone. When I turned up at the restaurant, there was no record of my reservation and no table was available. There was a large wedding dinner.
I hope that the larger restaurants takeing reservations should outsourse this activity to a service provider. This will ensure a better standard of service.
Tan Kin Lian
I have the same difficulty in making reservations at other restaurants. Last month, I telephoned a restaurant in a hotel in Queen Street. After much difficulty, my reservation confirmed over the telephone. When I turned up at the restaurant, there was no record of my reservation and no table was available. There was a large wedding dinner.
I hope that the larger restaurants takeing reservations should outsourse this activity to a service provider. This will ensure a better standard of service.
Tan Kin Lian
Voting swing at next general election
I wish to make a bold forecast of the swing against the PAP at the next general election.
In several recent surveys in my blog, the swing is around 50%. Nearly 90% of respondents said that they would vote for another party, compared to 35% at the last general election.
However, my blog tends to attract the people who are unhappy with the Government, i.e. those who lost money on the structuerd notes or are unemployed. So, there is a bias and their results do not represent the general population.
My bold forecast is that the swing will be 15%, after discounting the bias. This will bring down the votes for the PAP from 65% to around 50%. We can expect the next Parliament to have a larger representation from the other political parties.
This will lead to a "more accountable Parliament" with members elected to reflect the views and wishes of the people. It will be a better outcome for the future of Singapore.
Tan Kin Lian
In several recent surveys in my blog, the swing is around 50%. Nearly 90% of respondents said that they would vote for another party, compared to 35% at the last general election.
However, my blog tends to attract the people who are unhappy with the Government, i.e. those who lost money on the structuerd notes or are unemployed. So, there is a bias and their results do not represent the general population.
My bold forecast is that the swing will be 15%, after discounting the bias. This will bring down the votes for the PAP from 65% to around 50%. We can expect the next Parliament to have a larger representation from the other political parties.
This will lead to a "more accountable Parliament" with members elected to reflect the views and wishes of the people. It will be a better outcome for the future of Singapore.
Tan Kin Lian
Land banking - Look before you leap
Read this article in MAS website.
Quote
After all, where there is an opportunity for you to make some money, there is always a chance that you can lose some or all of your money. There is no free lunch. In the case of land banking, you may have seen media reports about investors losing money in land banking schemes in various countries. Some schemes have also turned out to be scams!
Unqutoe
Quote
After all, where there is an opportunity for you to make some money, there is always a chance that you can lose some or all of your money. There is no free lunch. In the case of land banking, you may have seen media reports about investors losing money in land banking schemes in various countries. Some schemes have also turned out to be scams!
Unqutoe
Plan ahead for future MRT interchange stations
Published in Straits Times Forum Page, 19 June 2010
When the MRT system was developed three decades ago, the planners did a great job in designing the interchange station at City Hall and Raffles Place. It is easy for the commuter to change train by walking to the platform within a short distance.
However, the planners did not plan ahead for the expansion of the MRT system.
When the North East and Circle Lines were developed later, the platforms for these lines at the interchange stations had to be located quite far away, due to engineering and safety issues. Commuters have to walk quite a long distance to transfer from one line to another at the Dhoby Ghaut and other interchange stations.
As we are building new lines for the MRT system, it is better to plan ahead for future interchange stations, including those that are not on the drawing board now.
I suggest that every third station on a new line should be planned ahead as an interchange station, using the design of City Hall. This will make it easy to connect a new line in the future. Although this may increase the cost marginally, it can be recouped from the cost savings in the future. The convenience to the commuters will be immense.
Tan Kin Lian
When the MRT system was developed three decades ago, the planners did a great job in designing the interchange station at City Hall and Raffles Place. It is easy for the commuter to change train by walking to the platform within a short distance.
However, the planners did not plan ahead for the expansion of the MRT system.
When the North East and Circle Lines were developed later, the platforms for these lines at the interchange stations had to be located quite far away, due to engineering and safety issues. Commuters have to walk quite a long distance to transfer from one line to another at the Dhoby Ghaut and other interchange stations.
As we are building new lines for the MRT system, it is better to plan ahead for future interchange stations, including those that are not on the drawing board now.
I suggest that every third station on a new line should be planned ahead as an interchange station, using the design of City Hall. This will make it easy to connect a new line in the future. Although this may increase the cost marginally, it can be recouped from the cost savings in the future. The convenience to the commuters will be immense.
Tan Kin Lian
Customer Service and Web Forms
Many organisations have feedback forms on their website. These forms are often ignored, giving a bad impression of the customer service standard of the organisation.
This situation can be easily addressed. The contact center should be made responsible to attend to these forms. The forms are an alternative to getting a call on the telephone. By processing the web forms, the organisation can improve the productivity of its call center as most of the essential information are entered by the customer. If any information is missing, it can be obtained by a call back to the customer.
The web from should be simple in design. It only need to ask for the name, contact number, e-mail address (optional) and a free format text box for details to be entered. All enquiries are placed in the server and marked as attended or not. This ensures that all requests are handled.
I hope that organisations will organise this additional mode to contact the call center. It will improve the standard of customer service in Singapore.
Tan Kin Lian
This situation can be easily addressed. The contact center should be made responsible to attend to these forms. The forms are an alternative to getting a call on the telephone. By processing the web forms, the organisation can improve the productivity of its call center as most of the essential information are entered by the customer. If any information is missing, it can be obtained by a call back to the customer.
The web from should be simple in design. It only need to ask for the name, contact number, e-mail address (optional) and a free format text box for details to be entered. All enquiries are placed in the server and marked as attended or not. This ensures that all requests are handled.
I hope that organisations will organise this additional mode to contact the call center. It will improve the standard of customer service in Singapore.
Tan Kin Lian
Friday, June 18, 2010
Good customer service (SMRT Taxi)
I experienced good customer service at SMRT Taxi. I called their hotline. They asked me to enter my postal code (if I wanted to get a taxi) or press a number to speak to a person. The call was answered immediately. The staff took down my name, e-mail address, telephone number and nature of my enquiry. I get an e-mail reply from the relevant staff within one hour.
I commend SMRT Taxi for this excellent service. It is easy and prompt. Many big organisations can follow this simple approach to improve customer service significantly, and at no extra cost.
Tan Kin Lian
I commend SMRT Taxi for this excellent service. It is easy and prompt. Many big organisations can follow this simple approach to improve customer service significantly, and at no extra cost.
Tan Kin Lian
Bad customer service (Maybank)
I experienced bad customer service with Maybank. I sent a fax to their Johor Bahru Main branch to send me a new cheque book. They did not respond after a week. I called their number. Nobody picked up the phone. I tried with 4 other numbers. It was not answered.
I called their KL contact center. I went through the automated mesages and finally managed to speak to an officer taking complaints. She said that I have to call the Johor Bahru Main branch and give me two new numbers to call. I tried several times, but nobody pick up the phone.
I called the KL contact center again, and lodged a complaint about the bad customer service. I insisted that they take down my complaint and tell the Johor Bahru branch to call me back. She ageed. She was patient and helpful. I commend her.
Many big organisations had bad customer service due to bad operating procedures, which are unfriendly to customers. The customers who have to wait for a long time on a telephone that is never answered. A better solution is to allow the customer to give their name, e-mail, contact number and request in a web based form. The call center can also used this form to enter down the key details. This will allow the relevant staff to call back the customer when they are free.
Tan Kin Lian
I called their KL contact center. I went through the automated mesages and finally managed to speak to an officer taking complaints. She said that I have to call the Johor Bahru Main branch and give me two new numbers to call. I tried several times, but nobody pick up the phone.
I called the KL contact center again, and lodged a complaint about the bad customer service. I insisted that they take down my complaint and tell the Johor Bahru branch to call me back. She ageed. She was patient and helpful. I commend her.
Many big organisations had bad customer service due to bad operating procedures, which are unfriendly to customers. The customers who have to wait for a long time on a telephone that is never answered. A better solution is to allow the customer to give their name, e-mail, contact number and request in a web based form. The call center can also used this form to enter down the key details. This will allow the relevant staff to call back the customer when they are free.
Tan Kin Lian
Buying Cash Value Insurance
Read this article. A consumer ask about a cash value insurance that he is considering. There are many interesting and educational comments from other readers about this product. These comments generally apply to Singapore as well.
Thursday, June 17, 2010
Signage at the Circle Line
I can only guess that the lights were dimmed during the first stage when the line served Bishan to Serangoon. The line had been extended to Marymount for nearly one year and still the lights have not been fixed. What is the reason?
I take the Circle Line only a few times and observed this situation. But there are many commuters who take taking this line daily. Why did they not raise this matter? What about the employees working at the stations?
Is this the state of apathy in Singapore? If so, it would be quite worrisome!
Tan Kin Lian
Accident Photos
If you meet with an accident, please take photos of the damages to both vehicles and send them to your insurance company. You should also keep the photos in your e-mail server for future retrival. If you like an additional place to store the photos, you can use the e-mail account indicated in this document. Read the instructions.
Donation to FISCA
An anonymous reader criticised me for asking for the donation of $1,000 (in return for accepting an invitation to listen to a presentation by a land banking company) to be given to the Financial Services Consumer Association (FISCA). He said that I headed FISCA and that it is more proper for the money to be donated to a charity.
FISCA is a volunatary, non-profit association of members, with the goal to educate the pubmic on financial matters, so that they can void being cheated on their investments in bad financial products. It needs funds to operate and pay its expenses.
I hope that the public will donate to FISCA and also be its members.
Go to http://www.fisca.sg/.
.
FISCA is a volunatary, non-profit association of members, with the goal to educate the pubmic on financial matters, so that they can void being cheated on their investments in bad financial products. It needs funds to operate and pay its expenses.
I hope that the public will donate to FISCA and also be its members.
Go to http://www.fisca.sg/.
.
Selective repayment
A land banking compay paid off an investor who gave them a lot of trouble earlier but had agreed to cool off for a month. This amount invested was less than $30,000. Other investors in the same product had been waiting for more than one year, without being repaid. Presumably, they were not so troublesome or had invested a large sum of money.
This company is practicing "divide and conquer". By paying off some investors, who would then tell the other investors, it might motivate the other mitigant investors to be more compliant, in the hope that they would be repaid.
This seemed to me like highway robbery.
A month ago, another investor wrote to me to tell me that she had invested in land banking plots and was quite convinced about the merits of land banking. I knew this investor to be quite sound in financial matters and was quite surprised at her views. I wonder if she was also being paid off in this manner, in return for being an ambassador?
What has become of Singapore, for a company to take large sums of money from the public, to act in this manner, to be protected by a reputable lawyer firm and to practice selective repayment of their obligations?
Tan Kin Lian
This company is practicing "divide and conquer". By paying off some investors, who would then tell the other investors, it might motivate the other mitigant investors to be more compliant, in the hope that they would be repaid.
This seemed to me like highway robbery.
A month ago, another investor wrote to me to tell me that she had invested in land banking plots and was quite convinced about the merits of land banking. I knew this investor to be quite sound in financial matters and was quite surprised at her views. I wonder if she was also being paid off in this manner, in return for being an ambassador?
What has become of Singapore, for a company to take large sums of money from the public, to act in this manner, to be protected by a reputable lawyer firm and to practice selective repayment of their obligations?
Tan Kin Lian
Flood at Orchard Road
Someone wrote to me to link the flood at Orchard Road to the Marina Barrage. I do not understand how this could be the cause of the flood. However, it does appear that there were two serious floods in Singapore in recent years, i.e. the flood at Bukit Timah and now at Orchard Road. We used to have good drainage sysem in Singapore, but this seemed to have deteriorated. Can the experts share your views?
Tan Kin Lian
Tan Kin Lian
Wednesday, June 16, 2010
Blogs and ballot box
Question: Voters may complain on many issues but when they are at the ballot box, they will vote for stability and economic progress. Do you agree? (The survey is now closed).
Here is the final report based on 100 replies. The results are almost the same as the earlier report based on 50 replies.
The survey suggests a 37% swing against the PAP but this is from a group that is largely unhappy with the PAP. If this is extrapolated to the general population, the swing could be (just my guess) between 10% to 15%.
Here is the final report based on 100 replies. The results are almost the same as the earlier report based on 50 replies.
The survey suggests a 37% swing against the PAP but this is from a group that is largely unhappy with the PAP. If this is extrapolated to the general population, the swing could be (just my guess) between 10% to 15%.
Invitation by Land Banking Company
INVITATION TO X GROUP, SINGAPORE
Dear Mr. Tan,
I would like to personally extend a warm invitation to you to visit our office so that I can introduce you an objective insight to X's business model.
With your keen interest to help educate Singaporeans on land investments, I believe this session will provide you with a more in depth understanding of X's expertise in pre-development land investing and what distinguishes and sets us apart as a company from the rest.
REPLY
Thank you for your warm invitation.
I will attend your invitation on the following understanding
1. X will donate $1,000 to the Financial Services Consumer Associatoin
2. The presentation will be for up to two hours.
3. I can bring along three other persons to attend the presentation - they are from the Association and from land banking investors
4. I will keep an open mind to listen to your business model but will be free to form my own independent opinion
5. You will answer our questions transparently.
Let me have your views.
Dear Mr. Tan,
I would like to personally extend a warm invitation to you to visit our office so that I can introduce you an objective insight to X's business model.
With your keen interest to help educate Singaporeans on land investments, I believe this session will provide you with a more in depth understanding of X's expertise in pre-development land investing and what distinguishes and sets us apart as a company from the rest.
REPLY
Thank you for your warm invitation.
I will attend your invitation on the following understanding
1. X will donate $1,000 to the Financial Services Consumer Associatoin
2. The presentation will be for up to two hours.
3. I can bring along three other persons to attend the presentation - they are from the Association and from land banking investors
4. I will keep an open mind to listen to your business model but will be free to form my own independent opinion
5. You will answer our questions transparently.
Let me have your views.
Keep your existing life policy
Hi Mr Tan,
I bought a poilcy in 1998 to cover critcal illness for 100k. I pay $2200 yearly ( $1600 and $600 for the rider) under a Prime Life policy.
I have to pay till the end of time (i.e. death) for this coverage. Recently was shown another policy which I only pay 20 yrs ... for about the same coverage.
It is strange that the investment outlook was better 12 years ago compard to now and interest rate was much higher, and yet the insurance company can introduce a better produuct now..
If I terminate the plan, I will lose 10k.... but if I keep paying I will breakeven estimated at year 25. Should I change to the new policy?
MY REPLY
My advice is: never terminate an existing life policy to buy a new policy. You will be paying the high upfront cost all over again.You are right that it is not a good idea for the consumer's point of view. It is sad that the insurance agent want to earn commission at the expense of the customer, by asking the customer to switch to a new policy.
I have explained the reason in my book, Practical Guide on Financial Planning. I hope that you have bought it and will read it. Also, you can introduce my book to your family and friends and encourage them to read it. The book can be bought at www.easysearch.sg/ishop
I bought a poilcy in 1998 to cover critcal illness for 100k. I pay $2200 yearly ( $1600 and $600 for the rider) under a Prime Life policy.
I have to pay till the end of time (i.e. death) for this coverage. Recently was shown another policy which I only pay 20 yrs ... for about the same coverage.
It is strange that the investment outlook was better 12 years ago compard to now and interest rate was much higher, and yet the insurance company can introduce a better produuct now..
If I terminate the plan, I will lose 10k.... but if I keep paying I will breakeven estimated at year 25. Should I change to the new policy?
MY REPLY
My advice is: never terminate an existing life policy to buy a new policy. You will be paying the high upfront cost all over again.You are right that it is not a good idea for the consumer's point of view. It is sad that the insurance agent want to earn commission at the expense of the customer, by asking the customer to switch to a new policy.
I have explained the reason in my book, Practical Guide on Financial Planning. I hope that you have bought it and will read it. Also, you can introduce my book to your family and friends and encourage them to read it. The book can be bought at www.easysearch.sg/ishop
Long term investing
Here are some secrets and tips. Ignore the stock market. Don't watch TV. And more.
Criticism of politicians
Dr. Mahathir explains why he will not sue the author of a book that criticises him. Read this article.
Workers in China
1. Is the era of cheap Chinese labour almost over?
A string of suicides at the Foxconn plant in southern China that makes iPads and iPhones for Apple
has focused attention on wages and conditions there.
http://news.bbc.co.uk/2/hi/business/10294850.stm
2. In China, Unlikely Labor Leader Just Wanted a Middle-Class Life
Tan Guocheng is hardly a self-styled labor leader.
Age 23 and introverted, he grew up among rice paddies and orange groves far from China’s big factory towns.
But last month, an hour into his shift at a Honda factory in the southern city of Foshan,
Mr. Tan pressed an emergency button that shut down his production line.
“Let’s go out on strike!” he shouted.
Within minutes, hundreds of workers were abandoning their posts.
http://www.nytimes.com/2010/06/14/business/global/14honda.html
3. What Do China’s Workers Want?
What do these protests say about China’s new generation of workers?
How should multinationals respond, given their huge investment in China’s labor market?
Five experts share their views.
http://roomfordebate.blogs.nytimes.com/2010/06/13/what-do-chinas-workers-want/
My views
The low wages in China is not the only problem. This is made worse by the high cost of living and the high property prices. These issues have to be addressed, so that there is a proper balance between wages, cost of living and cost of a home. These challenges apply to Singapore as well.
A string of suicides at the Foxconn plant in southern China that makes iPads and iPhones for Apple
has focused attention on wages and conditions there.
http://news.bbc.co.uk/2/hi/business/10294850.stm
2. In China, Unlikely Labor Leader Just Wanted a Middle-Class Life
Tan Guocheng is hardly a self-styled labor leader.
Age 23 and introverted, he grew up among rice paddies and orange groves far from China’s big factory towns.
But last month, an hour into his shift at a Honda factory in the southern city of Foshan,
Mr. Tan pressed an emergency button that shut down his production line.
“Let’s go out on strike!” he shouted.
Within minutes, hundreds of workers were abandoning their posts.
http://www.nytimes.com/2010/06/14/business/global/14honda.html
3. What Do China’s Workers Want?
What do these protests say about China’s new generation of workers?
How should multinationals respond, given their huge investment in China’s labor market?
Five experts share their views.
http://roomfordebate.blogs.nytimes.com/2010/06/13/what-do-chinas-workers-want/
My views
The low wages in China is not the only problem. This is made worse by the high cost of living and the high property prices. These issues have to be addressed, so that there is a proper balance between wages, cost of living and cost of a home. These challenges apply to Singapore as well.
Lehman and Enron
Financial Planning Talk, 26 June 2010
I am giving a 3 hour talk entitled "Financial Planning - A Practical Apprach" at SMU on Saturday 26 June, 3 to 6 pm. The last talk had full house. Details can be found at http://www.fisca.sg/.
Fiduciary duty
The director of a company has a fiduciary duty (i.e. a duty of trust) to act in the interest of all shareholders. In the past, many people hold positions of trust and act with integrity. This position of trust also extend to profesionals, such as doctors and lawyers.
In recent years, due to greed and the wish to be super rich, some people (maybe many people) are behaving less honorably. They have less compunction about over-charging on their fees or take take advantage of other people's ignorance to make profit at their expense. In the past, these people would be considered as crooks. Today, these behaviors are considered as acceptable in the free market.
Tan Kin Lian
In recent years, due to greed and the wish to be super rich, some people (maybe many people) are behaving less honorably. They have less compunction about over-charging on their fees or take take advantage of other people's ignorance to make profit at their expense. In the past, these people would be considered as crooks. Today, these behaviors are considered as acceptable in the free market.
Tan Kin Lian
Structured products
A structured product is a financial product that has been created by a financial institution for sale to the public. The terms of the structured product are determined by the issuer (i.e. the financial institution).
When the consumer buys a structured product, the consumer faces the following risk:
a) The issuer may have high margin for their profit or marketing expenses
b) The terms of the contract may not be transparent to the consumer
c) Lack of liquidity - the product can only be sold back to the issuer at a big discount.
d) The terms amy be written in favour of the financial institution and to the disadvantage of the consumer
A life insurance policy has features similar to a structured product. In fact, it is the fore-runner of the structured products that were created by the banks, such as the various types of linked notes.
Many decades ago, most large life insurance companies were organised as mutual companies (i.e. owned by the policyholders) and can be trusted to look after the interest of their policyholders. However, in recent years, this trust has eroded as many companies have become demutualised or have focused on making profits for shareholders.
Many life insurance products introduced in recent years have become less transparent, to give a larger margin to the agents and shareholders, at the expense of the policyholders. In some cases, there were deliberately designed to confuse and mislead the policyholder.
Many structured products issued by the banks have similar characteristics, i.e. lack of transparency and poor return to the consumer.
Generally, I advice consumers to avoid all types of structured products and to invest in exchange traded products. Read my book, Practical Guide on Financial Planning.
Tan Kin Lian
When the consumer buys a structured product, the consumer faces the following risk:
a) The issuer may have high margin for their profit or marketing expenses
b) The terms of the contract may not be transparent to the consumer
c) Lack of liquidity - the product can only be sold back to the issuer at a big discount.
d) The terms amy be written in favour of the financial institution and to the disadvantage of the consumer
A life insurance policy has features similar to a structured product. In fact, it is the fore-runner of the structured products that were created by the banks, such as the various types of linked notes.
Many decades ago, most large life insurance companies were organised as mutual companies (i.e. owned by the policyholders) and can be trusted to look after the interest of their policyholders. However, in recent years, this trust has eroded as many companies have become demutualised or have focused on making profits for shareholders.
Many life insurance products introduced in recent years have become less transparent, to give a larger margin to the agents and shareholders, at the expense of the policyholders. In some cases, there were deliberately designed to confuse and mislead the policyholder.
Many structured products issued by the banks have similar characteristics, i.e. lack of transparency and poor return to the consumer.
Generally, I advice consumers to avoid all types of structured products and to invest in exchange traded products. Read my book, Practical Guide on Financial Planning.
Tan Kin Lian
Tender Loving Society
Singapore is a tender loving society. We believe in using the tender for most business transactions. The contract is usually awarded to the party that submitted the lowest cost or, in the case of sale of land, to the highest bidder.
This system has bad consequences. When a contractor tender a lower price to get a job, they are under pressure to reduce their cost. This will find ways to cut corners, resulting in lower quality of work. Alternatively, they will seek opportunity to increase their revenue on variation orders or extended scope of work.
If a developer pays a high cost for a piece of land, they will add the cost to the final product tht is sold. This has led to escalation in the price of property. The high property prices have led to high cost of living and other an unfair distribution of income, from tenants to owners of property. This has led to a frenzy of property buying, which has in turn caused the property prices to escalate further.
There is an alternative to the tender system. It is easy to estimate the cost of a contract, using the inputs in materials and labour, and to award the contract based on cost plus a fair margin. The work can be distributed to eligible parties based on fair assessment of quality. This is people are recruited to work in a big organisation.
If land is tendered based on the average price of similar properties and is sold at controlled prices (i.e. cost of land, construction and a fair margin of profit), there is no need for property prices to escalate sharply. The property prices will reflect the true market, without the excessive speculation.
There is an alternative to the "tender loving society".
Tan Kin Lian
This system has bad consequences. When a contractor tender a lower price to get a job, they are under pressure to reduce their cost. This will find ways to cut corners, resulting in lower quality of work. Alternatively, they will seek opportunity to increase their revenue on variation orders or extended scope of work.
If a developer pays a high cost for a piece of land, they will add the cost to the final product tht is sold. This has led to escalation in the price of property. The high property prices have led to high cost of living and other an unfair distribution of income, from tenants to owners of property. This has led to a frenzy of property buying, which has in turn caused the property prices to escalate further.
There is an alternative to the tender system. It is easy to estimate the cost of a contract, using the inputs in materials and labour, and to award the contract based on cost plus a fair margin. The work can be distributed to eligible parties based on fair assessment of quality. This is people are recruited to work in a big organisation.
If land is tendered based on the average price of similar properties and is sold at controlled prices (i.e. cost of land, construction and a fair margin of profit), there is no need for property prices to escalate sharply. The property prices will reflect the true market, without the excessive speculation.
There is an alternative to the "tender loving society".
Tan Kin Lian
Telco charges
The governments of Singapore and Malaysia have agreed to request the telcos to reduce their SMS and mobile charges between the two countries. The current charges are too high.
This is just one example about how businesses use the free market to over-charge consumers. Many examples exist in the banking industry and other businesses. It shows the fallacy of the concepts that the free market need not be regulated and that competition can bring down cost to consumer. In the free market environment, it is also difficult for businesses to agree on measures that are fair to consumers, when their own bottom line are involved.
I hope that the Government will realise that they have a role and a duty to take positive action to bring down prices for consumers and to ensure fair treatment of consumers. These matters cannot be left to good intention or the market.
Tan Kin Lian
This is just one example about how businesses use the free market to over-charge consumers. Many examples exist in the banking industry and other businesses. It shows the fallacy of the concepts that the free market need not be regulated and that competition can bring down cost to consumer. In the free market environment, it is also difficult for businesses to agree on measures that are fair to consumers, when their own bottom line are involved.
I hope that the Government will realise that they have a role and a duty to take positive action to bring down prices for consumers and to ensure fair treatment of consumers. These matters cannot be left to good intention or the market.
Tan Kin Lian
Tuesday, June 15, 2010
Land banking Action Group
If you have invested in land banking or similar products and wish to join the action group, please send an e-mail to Land Banking Action Group.
Intelligence Quiz
Dear Mr. Tan
Thank you for organising the Quiz 6-1 contest. I like this quiz. Where can I get more of such quiz?
REPLY
You can buy TKL Intelligence Quiz here. It comes in Vol 1, 2, and 3. Each volume has 24 quiz at 3 levels, total of 72 quiz. Some people are hooked to this type of quiz and like more volumes of puzzles to try.
Thank you for organising the Quiz 6-1 contest. I like this quiz. Where can I get more of such quiz?
REPLY
You can buy TKL Intelligence Quiz here. It comes in Vol 1, 2, and 3. Each volume has 24 quiz at 3 levels, total of 72 quiz. Some people are hooked to this type of quiz and like more volumes of puzzles to try.
Poor Return from New Plan
A customer sent the benefit illustration for a newly introduced plan called Reach. I analysed it as follows:
This is a 10 year Reach policy with an annual premium of $5,000 payable for 5 years. Subsequently, the policy pays a cash coupon for the next 5 years. The coupons can be accumulated with interest. Based on the non-guaranteed interest rate of 3% per annum payable on the cash coupons, the total amount at maturity represented a yield of about 1.2% p.a. For a 10 year investment, this is a poor yield and is not even guaranteed.
The same company had a single premium plan, called Growth, which gave a non-guaranteed yield of 2.7% or 3.5% over 7 years, which was more acceptable. It seemed that the old plan gave a better return, compared to the new plan.
It is better for the consumer to invest in the STI ETF, which is flexible and gives a better long term yield. Read my financial planning book for more information.
This is a 10 year Reach policy with an annual premium of $5,000 payable for 5 years. Subsequently, the policy pays a cash coupon for the next 5 years. The coupons can be accumulated with interest. Based on the non-guaranteed interest rate of 3% per annum payable on the cash coupons, the total amount at maturity represented a yield of about 1.2% p.a. For a 10 year investment, this is a poor yield and is not even guaranteed.
The same company had a single premium plan, called Growth, which gave a non-guaranteed yield of 2.7% or 3.5% over 7 years, which was more acceptable. It seemed that the old plan gave a better return, compared to the new plan.
It is better for the consumer to invest in the STI ETF, which is flexible and gives a better long term yield. Read my financial planning book for more information.
Willingness to change
Many people are afraid to change, because the change may go wrong. The fear the consequence of a mistake - that they may lose a well paying job.
Here are my views. We have to make many changes, in the hope that some will succeed and that the benefit of success will outweigh the cost of the failures. Usually, it is not possible for us to know if a change will succeed or fail, unless we are willing to try it. We only need to make sure that the cost of the failure is small and is affordable.
Sometimes, we need to fail the first time, in order to succeed the second time. The lessons of the first failure can be a great way to learn what the real world situation is like. If we never try, we will never know.
I wish to share this interesting personal experience. In the early 1980s, I headed an insurance company that launched, for the first time, the life annuity product. We did a great deal of planning, preparation and training of the agents and employees. We also advertised the product on a modest budget. It failed. The consumers do not accept a product where they can lose their capital on early death.
Three years later, we launched a modified life annuity product that provided a guaranteed payment for 15 years but gave a smaller payout. It was a roaring success and established a domiant market share for the insurance company. The lessons from the first failure was the trigger for the changes that led to the success of the second attempt.
I wish to encourage people, especially the younger ones, to be willing to try and to change. It will be fun to experience the succeess, failures and to learn from the results.
Tan Kin Lian
Here are my views. We have to make many changes, in the hope that some will succeed and that the benefit of success will outweigh the cost of the failures. Usually, it is not possible for us to know if a change will succeed or fail, unless we are willing to try it. We only need to make sure that the cost of the failure is small and is affordable.
Sometimes, we need to fail the first time, in order to succeed the second time. The lessons of the first failure can be a great way to learn what the real world situation is like. If we never try, we will never know.
I wish to share this interesting personal experience. In the early 1980s, I headed an insurance company that launched, for the first time, the life annuity product. We did a great deal of planning, preparation and training of the agents and employees. We also advertised the product on a modest budget. It failed. The consumers do not accept a product where they can lose their capital on early death.
Three years later, we launched a modified life annuity product that provided a guaranteed payment for 15 years but gave a smaller payout. It was a roaring success and established a domiant market share for the insurance company. The lessons from the first failure was the trigger for the changes that led to the success of the second attempt.
I wish to encourage people, especially the younger ones, to be willing to try and to change. It will be fun to experience the succeess, failures and to learn from the results.
Tan Kin Lian
Safe-to-fail
There is a controversy in the Straits Times about an article written by a journalist arguing that we should accept the "safe-to-fail" situation. Some readers said that it would lead to complacency.
I wish to share my view. "Safe-to-fail" does not necessary lead to complacency. We do what we can, and do not have to over-worry about the unlikely events, if these events do not lead to disaster. This will foster a spirit of enterprise and entrepreneurship.
We have a weakness in Singapore which has been described as the "kiasu" attitude. It is an attitude of extreme caution that lead to the unwillingness to take responsibility, and waiting for the boss to decide. This pervades many stratas of our society, including the mindset of our leaders.
It is time for us to be bold and be willing to change. I am not advocating complaceny, but a balanced approach towards making changes.
Tan Kin Lian
I wish to share my view. "Safe-to-fail" does not necessary lead to complacency. We do what we can, and do not have to over-worry about the unlikely events, if these events do not lead to disaster. This will foster a spirit of enterprise and entrepreneurship.
We have a weakness in Singapore which has been described as the "kiasu" attitude. It is an attitude of extreme caution that lead to the unwillingness to take responsibility, and waiting for the boss to decide. This pervades many stratas of our society, including the mindset of our leaders.
It is time for us to be bold and be willing to change. I am not advocating complaceny, but a balanced approach towards making changes.
Tan Kin Lian
Monday, June 14, 2010
Categories of investments
When you invest your money, you should take note of the following categories of investments:
a) exchange or market traded products
b) structured products
c) unregulated products
Category (a) include shares, bonds, currencies and commodities traded on an exchange or over the counter. You can buy or sell the product and has to pay only the spread and other charges. These costs are transparent to you.
Category (b) include life insurance policies, dual currency investments, linked notes and other structured products. You can only buy the products on the terms designed by the issuer. There is the risk that the issuer has creamed off a large margin to cover their profit and marketing expenses, giving you a poor deal (relative to the risk of the investments). As they are regulated, the investor should study the benefit illustration or prospectus that is mandated by the regulator. If you find these documents to be confusing, you should avoid these investments. You should understand the risk and make sure that you can commensurate return, before you make any investment.
Category (c) are land banking, time share and other unregulated products. These products are the most risky and require careful study. They should only be invested by sophisticated investors. The ordinary investors should avoid these products.
These points are explained in more detail in my book, Practical Guide on Financial Planing, which is written for the layman. I advised investors to invest in category (a) product and to manage the risk through diversification.
a) exchange or market traded products
b) structured products
c) unregulated products
Category (a) include shares, bonds, currencies and commodities traded on an exchange or over the counter. You can buy or sell the product and has to pay only the spread and other charges. These costs are transparent to you.
Category (b) include life insurance policies, dual currency investments, linked notes and other structured products. You can only buy the products on the terms designed by the issuer. There is the risk that the issuer has creamed off a large margin to cover their profit and marketing expenses, giving you a poor deal (relative to the risk of the investments). As they are regulated, the investor should study the benefit illustration or prospectus that is mandated by the regulator. If you find these documents to be confusing, you should avoid these investments. You should understand the risk and make sure that you can commensurate return, before you make any investment.
Category (c) are land banking, time share and other unregulated products. These products are the most risky and require careful study. They should only be invested by sophisticated investors. The ordinary investors should avoid these products.
These points are explained in more detail in my book, Practical Guide on Financial Planing, which is written for the layman. I advised investors to invest in category (a) product and to manage the risk through diversification.
Non-PAP politicians
I am responding to a suggestion by a commenter to create this survey on non-PAP politicians. Here is your chance to give your views. Survey is now closed. 100 responses were received within 8 hours!
UPDATE
Final results based on 100 respones.
UPDATE
Final results based on 100 respones.
Experience and perspective
An engineer in the late thirties told me that tehcnology is changing so fast in this field that it is difficult for him to keep up and compete with the young engineers that are trained in the new technology.
I asked him to focus on his strenghs, which are the experience and perspective that he has gained over the years, rather than to compete in his areas of weakness.
I posed him a problem of how to write an algorithm to compare one image with another image and see if they fit. The images are formed from the tangram pieces. We discussed several options, including comparing pixels by pixels, but he pointed out that this would take too much power and would drain the battery of the mobile phone.
He then suggested an approach, taken from a previous project. Instead of comparing every pixel, the program could compare every 10th pixel across and down. This would reduce the comparison by the factor of 100 to 1, and would still produce the same answer. It was an excellent solution to a problem that had bugged me for a long time.
I wish to quote this example to encourage the older people that your experience and perspective is valuable, but you have to use it effectively. Instead of competing with younger people in new technology, the older people can use their experience and perspective to guide the young, and can continue to play a useful role in the business.
Tan Kin Lian
I asked him to focus on his strenghs, which are the experience and perspective that he has gained over the years, rather than to compete in his areas of weakness.
I posed him a problem of how to write an algorithm to compare one image with another image and see if they fit. The images are formed from the tangram pieces. We discussed several options, including comparing pixels by pixels, but he pointed out that this would take too much power and would drain the battery of the mobile phone.
He then suggested an approach, taken from a previous project. Instead of comparing every pixel, the program could compare every 10th pixel across and down. This would reduce the comparison by the factor of 100 to 1, and would still produce the same answer. It was an excellent solution to a problem that had bugged me for a long time.
I wish to quote this example to encourage the older people that your experience and perspective is valuable, but you have to use it effectively. Instead of competing with younger people in new technology, the older people can use their experience and perspective to guide the young, and can continue to play a useful role in the business.
Tan Kin Lian
Sunday, June 13, 2010
Lasting values
MR Tan Kin Lian,
Singapore’s ‘worship’ for “pragmatism” is as much an “idol”. In my own analysis, “pragmatism” is only a good tool, but a grave guiding values system. It gave Singapore a jump-start in national survival; but we need lasting values to build Singapore into a nation with its own soul. The years of preaching “pragmatism” now produce the unique Singapore phenomenon we witness in public and private arena.
Cashew Nut.
Singapore’s ‘worship’ for “pragmatism” is as much an “idol”. In my own analysis, “pragmatism” is only a good tool, but a grave guiding values system. It gave Singapore a jump-start in national survival; but we need lasting values to build Singapore into a nation with its own soul. The years of preaching “pragmatism” now produce the unique Singapore phenomenon we witness in public and private arena.
Cashew Nut.
Growth in millionaire club
Dear Mr. Tan
The Straits Times front page has an article that showed Singapore to have the largest increase in millionaire households last year. I am somewhat disturbed by this article. Was it written to give an impression that our economic progress is the best in the world? I do not see any improvement in my circumstances and for my friends around me. Was this to prepare for the general election?
My reply
I tried to understand how the statistics was compiled and how it should be interpreted.
It showed the number of households that have an assets more than 1 million dollars (USD). This could be due to the sharp increase in property price last year, which is good for owners of multiple properties, but make no difference to those who own only one property for own occupation. Furthermore, I think that the study measures the value of assets and do not take away the liability (i.e. loans to purchase property).
The growth rate of millionaires was 35% in Singapore, but for China and Indonesia, the growth was 31% and 21% respectively. The report does not measure that proportion of the population that can be classifed as millionaires - but the growth in the numbers of these rich households during 2008.
In one respect, it probaly reflects the widening disparity in income in these countries. For each person to be rich, there must be 100 people that has to be relatively poorer.
The report does convey the impression that the economy is doing well, when in reality, more people are suffering from the high cost of living - driven by high property and asset prices.
The Straits Times front page has an article that showed Singapore to have the largest increase in millionaire households last year. I am somewhat disturbed by this article. Was it written to give an impression that our economic progress is the best in the world? I do not see any improvement in my circumstances and for my friends around me. Was this to prepare for the general election?
My reply
I tried to understand how the statistics was compiled and how it should be interpreted.
It showed the number of households that have an assets more than 1 million dollars (USD). This could be due to the sharp increase in property price last year, which is good for owners of multiple properties, but make no difference to those who own only one property for own occupation. Furthermore, I think that the study measures the value of assets and do not take away the liability (i.e. loans to purchase property).
The growth rate of millionaires was 35% in Singapore, but for China and Indonesia, the growth was 31% and 21% respectively. The report does not measure that proportion of the population that can be classifed as millionaires - but the growth in the numbers of these rich households during 2008.
In one respect, it probaly reflects the widening disparity in income in these countries. For each person to be rich, there must be 100 people that has to be relatively poorer.
The report does convey the impression that the economy is doing well, when in reality, more people are suffering from the high cost of living - driven by high property and asset prices.
Nelson Mandela
I watched the opening concert of the World Cup. I was moved by the public respect that the crowd had for Nelson Mandela or "Madiba". I saw the video clip of his speech when he was elected President. He pledged to spent the remaining years of his life "not as a prophet" but "in the service of the people".
He was prepared to step down from office on completing his term to become a private citizen. This allowed new leaders to be elected democratically, who can adapt the national policy to suit the changing needs of the people. Although South Africa may be economically poorer than Singapore, the people seemed to be quite happy and proud of their country.
I hope that, one day, Singapore will have great leaders like Madiba.
Tan Kin Lian
He was prepared to step down from office on completing his term to become a private citizen. This allowed new leaders to be elected democratically, who can adapt the national policy to suit the changing needs of the people. Although South Africa may be economically poorer than Singapore, the people seemed to be quite happy and proud of their country.
I hope that, one day, Singapore will have great leaders like Madiba.
Tan Kin Lian
Security - role of government and business
The Mnistry of Home Affairs has said that security should not be left to the Government and that businesses should also play their part. They were referring to the recent incident of lax security at the MRT depot in Changi.
I agree. However, it is important for the Government to spend more money on security and that it should be supplemented by business entities. The Government cannot leave this matter to the business entities as there is no clarity on the level of security that is needed and businesses are more focused on their bottom line.
It is important for the Government to put in sufficient funds and effort to ensure a hgih standard of security, law and order, and ask business to play their part to supplement the government's efforts. Our standard of security and many other aspects of public life has dropped during the past decade, due to the policy of cutting cost and leaving things "to the market". We should be prepared to increase our pubic budget in line with the increase in the population.
Tan Kin Lian
I agree. However, it is important for the Government to spend more money on security and that it should be supplemented by business entities. The Government cannot leave this matter to the business entities as there is no clarity on the level of security that is needed and businesses are more focused on their bottom line.
It is important for the Government to put in sufficient funds and effort to ensure a hgih standard of security, law and order, and ask business to play their part to supplement the government's efforts. Our standard of security and many other aspects of public life has dropped during the past decade, due to the policy of cutting cost and leaving things "to the market". We should be prepared to increase our pubic budget in line with the increase in the population.
Tan Kin Lian
Countdown to 2 million visitors (2)
My earlier estimate was that the unique visitors to my blog will reach 2 million by 30 June 2010. This target is likely to be achieved a few days earlier.
City Harvest Church
Title: Minister Shanmugam said that investigation on City Harvest Church when “a complaint was received”. What about the thousands of complaints that were made against structured products?
I refer to the report made on 12 June 2010 on Today newspaper by Alicia Wong. It was reported that Minister Mr Shanmugam said "One shouldn't look at this (City Harvest Church investigation) from the perspective of churches or mega-churches. The way this has been approached is, a complaint was received - a complaint about how funds were used - and the Commissioner of Charities (COC) called in CAD (Commercial Affairs Department)."
It is laudable that government would start an investigation upon “a complaint was received”. The government should use the same resolve on the investigation of structured products.
The government should investigate the financial institutions that are responsible for the issuing and distribution of structured notes (such as Minibond, Pinnacle Notes, High Note etc).
There where thousands of written complaints, as compared to only “a complaint” in the case of City Harvest Church. There are many who are still not satisfied even when partial compensation is made. I hope the government would extend the same assertion to investigate the issuers and distributors of these structured products. In fact its effect is even more far reaching than City Harvest Church or Ri Ci Hospital’s issues. It affects the banking institution and the thrust of banking system at large.
Straits Times should provide coverage of the individuals who are behind these financial products.
In the case of Abbot Min Yi and Pastor Kong Hee, there was extensive coverage of their personal life and works prior to conclusion of the investigation. We have not seen any coverage of the individuals who are behind these structured products who brought anxiety and pain to many Singaporeans.
Cashew Nut
I refer to the report made on 12 June 2010 on Today newspaper by Alicia Wong. It was reported that Minister Mr Shanmugam said "One shouldn't look at this (City Harvest Church investigation) from the perspective of churches or mega-churches. The way this has been approached is, a complaint was received - a complaint about how funds were used - and the Commissioner of Charities (COC) called in CAD (Commercial Affairs Department)."
It is laudable that government would start an investigation upon “a complaint was received”. The government should use the same resolve on the investigation of structured products.
The government should investigate the financial institutions that are responsible for the issuing and distribution of structured notes (such as Minibond, Pinnacle Notes, High Note etc).
There where thousands of written complaints, as compared to only “a complaint” in the case of City Harvest Church. There are many who are still not satisfied even when partial compensation is made. I hope the government would extend the same assertion to investigate the issuers and distributors of these structured products. In fact its effect is even more far reaching than City Harvest Church or Ri Ci Hospital’s issues. It affects the banking institution and the thrust of banking system at large.
Straits Times should provide coverage of the individuals who are behind these financial products.
In the case of Abbot Min Yi and Pastor Kong Hee, there was extensive coverage of their personal life and works prior to conclusion of the investigation. We have not seen any coverage of the individuals who are behind these structured products who brought anxiety and pain to many Singaporeans.
Cashew Nut
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