Mobile website for FISCA

If you have a mobile phone, you can access the mobile website of FISCA at http://fisca.mviso.com

Regulation on Pay TV contracts

The MDA has now decided that they have to step in and regulate the Pay TV contracts as follows:

• The contract should not exceed 2 years
• There should be pro-rata refund on cancellation of contract.

This move, which is taken after a long time of free market practices, recognizes the weakness of the free market system. The businesses make things complicated and opaque and imposes unfair charges to boost their profits and take advantage of consumers.

There are many similar practices of this kind, for example, in life insurance contracts. In some countries, the regulators have decided to ban front end commission on these long term contracts, as they impose a heavy penalty on consumers, who were not aware about the front end costs.

There are so many bad practices that rip off consumers. The situation is especially bad in Singapore due to our legal system. At least, in USA, lawyers can take up class actions on behalf of consumers - but not in Singapore. 

I hope that our political leaders will learn about the reality of the free market and take the step to protect consumers - rather than leave things to be sorted out in the market. If the market can take care of these matters, there is no need to pay big salaries for ministers, political leaders and top civil servants.

Life in Denmark

One of my SMU students went for a few months of attachment in Denmark. Here is her observations about life there.

Hi Prof Tan, Life in Denmark is very different from Singapore. People here are very relaxed and know how to enjoy their life. In fact, they are one of the happiest people in the world. As you might now, Denmark is a welfare state with the highest income tax rate in the world. However, the welfare system is very well-run and efficient. Thus, the living standard over here is very high and most of the Danes receive good education. Compared to Denmark, Singapore is more bustling because we work way too hard. Here, the shops and supermarkets close at 6pm on average. There are many differences but I am really enjoying my time here so far.
I wish you have been well too. Hope to hear more about your experiences and thoughts about the presidential elections when we meet. 

Good news for Pinnacle Note Holders

I received this wonderful message from the US lawyer handling the class action. They have succeeded in getting the case heard in New York. There is still a lot of work that has to be done, but this is one major hurdle that has been crossed. As this is a class action, any compensation that may be won in the legal suit will be shared with all Pinnacle Note holders, regardless of whether they had been among the original complainants.

Dear Mr. Tan,
You may already have heard, but yesterday the NY Court denied Morgan’s motion to dismiss, which means that we can proceed in NY.  We still have a difficult road ahead of us, but this is a significant victory in the first battle.
Warm regards,
Dan

An endorsement of the FISCA Financial Planning Workshop

Dear Friends,

On the 29 October, I just attend a talk by Tan Kin Lian on the basics of financial planning & investment. I thought it is good and I just wanted to share. (It is the 2nd time I'm attending it since I wanted to make sure I understand some important concepts presented by TKL)

Just when we think we know enough to manage our own finances (especially for those with kids), please consider again. Especially your friendly insurance or property agents (who happens to be your relatives or good friends) offering you financial planning advice, it is when we lose the most money (unknowingly) . These agents are not liars, for most part, they are simply "honestly wrong". A simple question, what is the biggest risk for a young person from age 25 - 55 yrs old ? Please make time to attend TKL's talk and you will know the answer. The knowledge gained will save you loads of $$ in the long term.

This talk is not about some secret recipe to strike it rich overnight or coercing you to buy some software package to make big bucks in the stock market. Instead, it is to share with you the basics of financial planning (budgeting, debts, savings, what insurance policy to buy, how big of a property you can afford, retirement planning, etc..) which has NOT been properly taught to most people. I feel it is time to put it right.

About Tan Kin Lian and his FISCA club:
Tan Kin Lian is the former CEO of NTUC Income. Since stepping down as CEO in April 2007, his activities have included organising public rallies for people who lost their money due to investing in Lehman Brothers' Minibond products to seek redress, and setting up FISCA, an organisation to teach people about long-term financial security.

TKL is a sincere and knowledgeable gentleman who is well versed in insurance products and also overall financial planning due to his previous work. I have benefited much from his talk and reading his books.

His workshops (and books) are developed such that it is easily understood by the lay-person, I have both his books
(1) Practical guide on financial planning
(2) Get Value from your life insurance

Please also consider joining http://www.fisca.sg/ as a member for $36 per annum. FISCA is a non-profit org. and its objective is to improve financial literacy among Singaporeans. As a FISCA member, one get to attend useful talks at a discounted rate of $20/$15 compared to non-members $30.

This is taken from FISCA website:
"FiSCA is committed to being an unbiased, up-to-date financial site with quality articles and advice to help improve financial literacy among Singapore consumers. Being a non-profit driven organization, FiSCA does not solicit sponsorship from commercial companies such as banks, nor do we get revenue through online advertising. We aim to be considered an objective and knowledgeable third party in financial-related issues, in order to provide quality, un-biased information on financial education to the general public. "

TKL has a similar financial planning talk coming up on the 26th November (write up on the event is attached), if you are keen, I can sign you up at a discounted rate of $15 since I'm a FISCA member. (Note: I don't make any money by signing you up or writing all this, just wanted to share this useful talk with you)

Time and money spent on gaining financial literacy is properly the best investment you'll ever made in yourself.

PruFlexi Cash policy taken by a student

A student bought a PruFlexi Cash policy and after paying the premiums for 8 months, he asked my views about terminating the policy.

I asked him to send the benefit illustration to me. The total premium for 3 years would have been $3,600 and the cash value would have been $800, giving a loss of $2,800. If he terminate the policy now, after 8 months, the loss would have been $800. It seemed to be better for him to terminate the policy. The sum insured under the policy was only $15,000.

What was the purpose of buying a policy that offered a miserably low sum insured and resulting in a loss of $2,800 in savings for 3 years? There is a complicated series of cash payments which can be accumulated with interest at 1.5% p.a. After taking all of these payments into account, the yield on the policy looks rather poor. It would have been difficult for a lay person to understand how to evaluate such a policy - as it is quite complicated.

I asked him to check out the facts with the agent, as I could have been missing some essential point.  (Note: I have changed some figures slightly, but the essential facts are shown above.)

GENERAL ADVICE

It is a bad idea for a student to buy any life insurance policy - as it does not serve any useful purpose. Consumers should also avoid buying any complicated financial product that is difficult to understand.

Confusing bonus system for life insurance policy

Dear Mr Tan,
Recently I asked my friend to send me a quotation on income's vivolife policy.

Something that I don't really understand is the "terminal bonus" shown. On page 9, it showed the duration and the percentage of terminal bonuses for the years 2008 - 2010. What I don't understand is a percentage of what? A percentage of the reversionary bonus that had been declared thru'out the years or a percentage of the sum assured per $1,000?

Is the reversionary bonuses that is declared annually same amount for both death and surrendered portion? What I meant is that if for example, year 2010, the insurance company declared $7 per $1000 S.A for this particular policy. Regardless of if I were to surrender or make a claim, the bonus that is still payable in whichever situation is still $7 per $1,000 S.A.

If the above hold truths, then in the B.I of the attached, at year 40, at projected 5.25%, why is there a difference of about $40,000 in the total, when the difference in the guaranteed payout of death and surrender, respectively is about $20,000 difference?

Looking at the surrender terminal bonses and the death terminal bonuses for both 31 - 45 years, the terminal bonuses is shown at 186% - 212% .

REPLY
Please direct your question to the agent who is selling the policy to you, or to the management of NTUC Income.

I do not wish to spend time explaining this type of complicated matters, when it is the duty of the people who create the product to make the explanation. I only advice people to avoid buying any product that they do not understand.

Contractors for household services

The list of contractors for household services has been updated to show more services:
http://www.tankinlian.com/Redirect.aspx?PK=418378434b8e102f8aebde1ae83d78a1

The One Percenters

They are CEOs and money managers, doctors and lawyers, as might be expected. But they are also computer technicians, scientists and even farmers. Some are singers and movie stars (even though they may not like to admit it) and the rest of them are spread among various professions.


These days they are also the most vilified members of American society – also known as the 1 Percenters, who control about two-fifths of the country’s wealth and fuel nearly 100 percent of the protests around Wall Street, through the rest of the country and around the world. 


http://www.cnbc.com/id/44960983/

Hotels fees

Hotels are now charging fees for services that used to be free. This bad practice should be disallowed. This is the bad side of capitalism and the free market. Regulators should now step in to discharge their responsibility to the consumers.

http://money.cnn.com/2011/10/31/pf/hotel_fees/index.htm?section=money_topstories&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_topstories+%28Top+Stories%29

Qantas grounds its flights

SYDNEY - Qantas CEO Alan Joyce is no stranger to clashing with unions. But his extraordinary move to ground the airline's global fleet over labor unrest is his biggest gamble yet and has angered unions, passengers and the Australian government.

The increasingly bitter dispute, which has dragged on since September, covers the sensitive issue of jobs in Australia being outsourced to Asia and even the very survival of the iconic 90-year-old national carrier nicknamed "The Flying Kangaroo."

http://www.cnbc.com//id/45093268

MY VIEWS:

When the workers go on strike, they disrupt the operations and cause inconvenience to the public. In this interesting case, it is the management of Qantas that took the unusual decision to "go on strike" and ground its operations.

I respect the actions taken by the Australian unions in fighting for the rights and job security of their members. Many businesses find ways to increase their profits at the expense of their workers, and the profits can be absurdly large. I do not know if, in the case of Qantas, the airline has to reduce cost to survive, or just to increase its profits.

FISCA Financial Planning Workshop on 29 October

The workshop on 29 October was well attended with over 30 people, mostly young people. The participants told me that the talk made them more aware about the good and bad financial products and was very useful to them. I asked them go get their friends and parents to attend the next talk, which will be held monthly. It is important that they make the right financial decision and avoid giving away a lot of money on bad products.

Several participants said that they came especially to hear my talk! They must have got the recommendations from their friends!

More details of future workshops can be found at http://easyapps.sg/assn/Org/Event.aspx?id=5. Register early!

Speculators are increasing the prices of hard disks

Quote: "Speculators are gouging the market significantly and in some cases making enormous profits out of the people of Thailand's misery," Buckley told Reuters. He declined to say which distributors.

http://www.cnbc.com//id/45082719

My comments: It is bad to allow speculators to make profit by taking advantage of the misery of other people. This applies not only to hard disk prices, but to oil, food and most other essential products. The speculation should be stopped. The world system, under the control of financial speculators and the greedy banks and based on the "free market", has to be changed - to make a fairer world for the ordinary people.

Security at the airport

The security procedures at Changi airport is excessive and is causing a lot of inconvenience. Here is my experience.

1. On arrival at the airport terminal, I have to screen my bags. Why is this necessary when the bags are also screened at the check-in counter and at the boarding room?  I suspect that this is to prevent a bomb going off before check-in. Is this so important?

2. Before entering the departure hall, I have to show my ticket and passport to the policeman.

3. After going through the automated gates and have my finger printed, there are still people to look at my passport. I recall that this procedure was implemented when someone passed the immigration desk though with a wrong passport. Do we need to over-react to this mistake by introducing another set of check?

4. Before entering the boarding room, I have to go through a detailed screening. The laptop and mobile phones and other metallic objects have to be removed  In spite of removing so many items, it is likely that the metal detector will beep and subject me to a physical check.

5. I still have to show my passport to the staff who scan my ticket.

Altogether, I have to show my passport three times and have my bags scanned twice. I suspect that more requirements will be introduced to combat other security concerns. The question is - are these measures overdone?

In the name of security

In the name of security, we do many unnecessary things and cause a lot of hassle to the ordinary people. This makes life stressful.

Look at the excessive security in the airport. I do not mind the necessary security, but the excessive security does not make sense. I shall talk about some of these excessive measures.

Look at the need to register your particulars before you enter a building. It is a regular affair. Why do they need to spend the time to record people entering into a building? How many records are being kept? Are they of any use? In fact, I am worried that the records could be abused - as it is intrusion on privacy. Is privacy and the rights of the individuals important in Singapore also?

With all the excessive security in some places, why is SMRT not paying sufficient attention to prevent outsiders from entering into their depots? Surely, this is more important than checking all the visitors to a building?

We need to speak up on measures that intrude into our lives, and do not serve a useful purpose.

Investor's guide to investing in gold

http://tankinlian.com/admin/file.aspx?id=587

A friend sent me this guide to investing in gold. Reading through this document, one can see that there are many ways of investing in various types of gold products, but the investor should be careful about selecting the trusted parties, as there is a real risk that some of these products are fraudulent. I know of a product which offers a buyback guarantee, but the investor did not know that he is paying for the gold at 50% higher than its real market value!

A safe way is to invest in gold bullion, but it is a big hassle to store the gold. It may be safer to invest in the Gold ETF (e.g. the ETF managed by SPDR) or to invest in gold futures through a regulated exchange.

Desalination

TIANJIN, China — Towering over the Bohai Sea shoreline on this city’s outskirts, the Beijiang Power and Desalination Plant is a 26-billion-renminbi technical marvel: an ultrahigh-temperature, coal-fired generator with state-of-the-art pollution controls, mated to advanced Israeli equipment that uses its leftover heat to distill seawater into fresh water.


There is but one wrinkle in the $4 billion plant: The desalted water costs twice as much to produce as it sells for. Nevertheless, the owner of the complex, a government-run conglomerate called S.D.I.C., is moving to quadruple the plant’s desalinating capacity, making it China’s largest.


http://www.cnbc.com/id/45042111/

Top 1% are getting richer

NEW YORK (CNNMoney) -- From 1979 to 2007, average household income for the nation's top 1% nearly tripled, while middle-class incomes grew by less than 40%, according to a new report from a research arm of Congress.

While those at the top have seen their incomes soar over the past three decades, middle-class and lower incomes have stagnated, the report by the Congressional Budget Office (CBO) found.

http://money.cnn.com/2011/10/26/news/economy/cbo_income/index.htm?section=money_topstories&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_topstories+%28Top+Stories%29

A successful shopping mall in Jakarta

Taman Angrek is a successful shopping maill in Jakarta. It has a large atrium and an indoor skating rink.

How income inequality harms society

http://www.ted.com/talks/richard_wilkinson.html?utm_source=newsletter_weekly_2011-10-25&utm_campaign=newsletter_weekly&utm_medium=email

Singapore fares quick badly on several indicators.

For decades, Richard Wilkinson has studied the social effects of income inequality and how social forces affect health. In The Spirit Level, a book coauthored with Kate Pickett, he lays out reams of statistical evidence that, among developed countries, societies that are more equal – with a smaller income gap between rich and poor -- are happier and healthier than societies with greater disparities in the distribution of wealth.

While poverty has long been recognized as an indicator for such social ills as crime, obesity, teen pregnancy, Wilkinson and Pickett have demonstrated that societal well-being bears no relation to per capita income. They’ve also found that the symptoms of inequality trouble all levels of society. Across the board, mental health, levels of violence and addiction, even life expectancy are affected by the psycho-social stress caused by income gaps and status anxiety.

In the UK, The Spirit Level won support from politicians both left and right. Wilkinson, who is Professor Emeritus of Social Epidemiology at the University of Nottingham, also cofoundedThe Equality Trust, a nonprofit that aims to reduce income inequality by educating and engaging the public while supporting political commitment to address the problem.

He says: "While I'd always assumed that an equal society must score better on social cohesion, I never expected to find such clear differences between existing market economies."

White House studies student loan relief plan

The White House is introducing a student loan relief plan. This will add to the deficit and shows how bad the debt situation has become. Many sectors, including the government, home buyers and students are not able to pay off their debts.

http://www.cnbc.com//id/45037241

Difficult to revive the housing market

This article explains the difficulty faced by the Obama Administration in reviving the housing market in America. If a country allows its property market to build into a big bubble, it will be difficulty to reverse the situation. This is a lesson for Singapore to avoid.

http://www.cnbc.com//id/45021347

Survey - forex training course

If you have attended a forex training course and wish to give your feedback or ask for a refund, please take part in this survey  http://www.surveymonkey.com/s/JS7F7XV

Global Financial Regulator

The Vatican has called for the establishment of a global financial regulator and a tax on financial transactions. It also recognises the excesses, corporate greed and other wrong doing that has been committed in recent years.

http://www.cnbc.com//id/45013499

How to make the PAP work in your favour

Dear Mr. Tan,


In 1993, the retirement age for Singapore workers was raised from 55 to 60, and then in 1999, it was raised again from 60 to 62. Amazingly, during these 18 years (1993-2011), a local university has stubbornly stuck to a retirement age of 55 for their academic staff. Only recently and as a sigh of relief to their staff, the university has finally raised the retirement age from 55 to 62.


Can you imagine what it is like to be forced to retire at 55? During the past 18 years, is it possible that PAP were not aware what this university was doing? With regard to the recent change at the university, could it be to do with the 2011 GE results? So, what could not be changed in 18 years, has now been changed which coincide with six opposition MP in the Parliament. Can you imagine what could happen with more opposition MP?


So, do you know how to make PAP work in your favour?


Retired at 55

Electronic Health Records - advantages

There are advantages for consumers in storing their medical records online. There are some concerns about privacy, but these concerns can be overcome when consumers understand how the system works. The best way to to give it a try and experience the benefits.
http://tankinlian.com/admin/file.aspx?id=586

Top up CPF savings

Here are 3 reasons to top up CPF savings and some tips on choosing between the retirement account and CPF Life. To enjoy the tax savings, the top up has to be done before the end of the year.


http://tankinlian.com/admin/file.aspx?id=584&PK=6a9035fe4e91102f8aebde1ae83d78a1

Singaporeans are reluctant to protest

Signaporeans are reluctant to protest. They generally do not care, if some bad things happen to other people. When it happens to them, they find that the other Singaporeans do not care.

http://singaporemind.blogspot.com/2011/10/singapore-leads-occupy-rally-reluctance.html

Singaporeans should read and understand the meaning behind this story, "First they came for the Socialists" ....
hhttp://www.ushmm.org/wlc/en/article.php?ModuleId=10007392

Top 40 blue chips in Singapore

This table shows the top 40 blue chips traded in the Singapore Exchange. Of special interest are the drop in price from the recent high dividend yield and a stockbroker's forecast of the EPS (earning per share) and PER (price earning ratio for the next two years. These figures should be treated with caution. The stockbroker's recommendation has been removed. Before investing in any share, you should consult your stock broker.
http://tankinlian.com/admin/file.aspx?id=583&PK=6e4c42184de0102f8aebde1ae83d78a1

Investing in a troubled world

Given the uncertainty in the global financial and economic environment, how should ordinary people invest their long term savings to earn an adequate income and to cope with the higher rate of inflation expected in the next few years?

This is the question asked by many people. I like to give my views.

http://tankinlian.com/admin/file.aspx?id=582&PK=b608b34c4da6102f8aebde1ae83d78a1

Haircut on Greek Debt

Private investors will be asked to take a 60% haircut on their investments in Greek bonds. This is much higher than the 21% agreed in August. I expect that the final figure will probably be 40% to 50%.

http://www.cnbc.com//id/44992798

The question is - why are the European banks holding so much Greek bonds? Surely, the jobs of banks should be to provide banking services and give loans to businesses. They should not be an investment fund, using their money (taken from the Central Bank or credit creation) to speculate on this type of investments or to fund foreign governments?

And why is Greece, a country, not able to meet its obligations? Surely, the Government has assets that can be sold - to repay the debts? If Greece is allowed to get away with 60% of its obligations - what about other countries? This will set a bad precedent. Many countries will continue to be bad risks. What about USA? We can expect an uncertain future and more volatility! And the structure of the financial world will be quite different.

The answer to these questions are - there is something seriously wrong with the financial structure of our global system. Our financial system is based on the illusion of market values and is fed by greed, speculation and corruption.
  

Pay of Government Leaders

This table shows the pay of Government leaders, compared to GDP
http://sg.finance.yahoo.com/news/Top-10-Highest-Paid-investopedia-1388928230.html?x=0

Invest in an indexed fund

When you invest for the long term, invest in an index fund (such as an ETF that is based on a market index) and stop trying to pick the stocks to beat the market. There are a few other good tips in this article.

http://money.cnn.com/2011/10/21/pf/expert/investment_returns.moneymag/index.htm?section=money_topstories&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_topstories+%28Top+Stories%29

Learn how to invest in an indexed fund. Attend the financial planning workshop organised by FISCA on 29 October. http://easyapps.sg/assn/Org/Event.aspx?id=5

Medicare in USA

The problem with Medicare in USA (i.e. the health care paid by the Government for retirees) is that it becomes very costly to give the best to the older people and the Government is bearing the cost. In Singapore, the Government wants the people to bear the cost - and they cannot afford it either. The solution? Educate people on what is necessary and what is wasteful and help them to find the right treatment at a cost that they can afford. 

http://money.cnn.com/2011/10/11/pf/medicare_programs.moneymag/index.htm?section=money_topstories&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_topstories+%28Top+Stories%29

Small child who was street smart

A 2 year old girl, Yue Yue, was run over twice in Guangzhou, China. Many people passing by did not help her. Where were her parents?

I recall a horrifying experience some 20 years ago, also in Guangzhou. I stopped at a small town for dinner. After dinner, I was returning to the bus. I saw a small boy, also about 2 years old, on the opposite side trying to cross a busy road with many fast passing vehicles. There was no adults around to take care of the child. I was horrified that he could be hit by a passing vehicle, but there was nothing that I could do, as I was on the other side of a busy road.

After a while, the little boy saw a gap among the vehicles and run across the road safely to her parents who were nearby. I then realised that this boy, although very small, was street smart. He must have crossed the road many times safely. His parents knew that he could take care of himself.

This is so different from the over-protected children in Singapore!

New approach towards new media

The Government is likely to take a new approach and a more active approach towards the new media.
http://newasiarepublic.com/?p=33833

I have seen the bad side of the new media and how people can act irresponsibly when giving their comments (and untruths) and malicious attacks under anonymity. I like to see the new media being used in a more responsible manner and will welcome moves in that direction.

Subsidy for Japanese manufacturers

The Japanese government is introducing a subsidy to help its manufacturers to keep their production in Japan, in the face of a stronger currency. This shows that the system of free trade and open market is now under stress. http://www.cnbc.com//id/44983686

Communist Manifesto - 1848

I read some parts of the book by Karl Marx entitled the Communist Manifesto. He described the struggle between the proletariat (working class) and the bourgeois (capital owners). Today, 163 years later, it is a struggle between the 99% (ordinary people) and the 1% (elite). This can be seen in the "Occupy Wall Street" protest.

National Service Deferment

The Minister for Defence said that there was no preference treatment for National Service deferment. He explained in detail to Parliament how the process for deferment was carried out. However, the newspaper report did not carry the details. I hope that our MPs in Parliament would question the process, to ensure that the relevant questions have been asked and answered satisfactorily.

http://www.straitstimes.com/Parliament/Story/STIStory_725378.html

My preference is for National Service to be made fairer to male citizens, so that they do not need to sacrifice their time and opportunity. This can be done through reducing the duration of national service and/ or compensating them adequately for the time that they have to spend. The Singapore males have to compete with foreigners and females in the job market and should not be placed at a disadvantage.

List of contractors

The list of contractors have been updated to include plumbing, electrical and TV repair. There are now 13 categories of contractors. This list will be converted into a database for easy access at a later date. The contractors have been contacted to establish their responsiveness to calls or emails.
http://tankinlian.com/admin/file.aspx?id=579

Top-up CPF by cash

The charge (by eNETS) to top up a CPF by internet banking is too high. For an amount of $1,000, the charge is $15. For a larger amount, the charge is NOT specified.

To avoid this excessive charge, I decided to pay by cheque ($0.25 for postage). But I have to write a lot of detail at the bank of the cheque including an unweildly transaction number. See below.

This is not the only thing that I have to write. I still have to write the cheque and make sure that the amount in words and letters are correct, the date is correct, the payee is correct. I also have to make sure that the address of CPF is correctly written on the envelope.  This is a sad part of life in Singapore - so much hassle and over-charging.

Top-up CPF account

CPF took an advertisement to advice members to top-up their CPF account (for themselves and their family members). I responded and tried to do it at their website. My experience is shown in this report, which I sent to the Ministry of Manpower. My findings:

1. The CPF online process has bugs.
2. The administration charge is too high.

I hope that our Government will wake up and sort out the shortcomings and over-charging!

http://tankinlian.com/admin/file.aspx?id=581

Large bonus to bankers

Goldman Sachs pays large bonuses to its employees, in spite of making a loss for its shareholders. The amount of bonus is described as "ridiculous". http://money.cnn.com/2011/10/20/news/economy/goldman_sachs_occupy_wall_street/index.htm?section=money_topstories&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_topstories+%28Top+Stories%29

Too many investment choices

This article explains about the difficulty faced by consumers in investing their money, when they have too many choices. http://money.cnn.com/2011/10/20/pf/expert/401k_retirement.moneymag/index.htm?section=money_topstories&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_topstories+%28Top+Stories%29

My recommendation is for most consumers, who are not financially experienced, to invest in an indexed fund, such as the Straits Times Index Exchange Traded Fund. If you are financially experienced, you can make your own choice, i.e. DIY (do it yourself).

Sharing of medical records

There is law in USA regarding the rights of patients for access to their medical records and the duty of the health care providers to protect privacy of these records. We need similar laws in Singapore. http://www.tankinlian.com/Redirect.aspx?PK=2c77701b4c43102f8aebde1ae83d78a1   

Electronic Health Records

Medical costs have been escalating for the past few decades. As people get older, they have to spend more on health care. The experts have identified ways to improve the efficiency of health care and to cut down on wastage. They have suggested that electronic medical records of each person, that is available to their doctors can cut down on repeated tests.

President Obama actively proposed the creation of a central system to keep the health records. Google launched its innovative Google Health system to meet this need. But Google has decided to scrap this system, due to insufficient interest to use it. It seems that electronic medical record will not take off, at least for the immediate future.

What is the problem? If escalating health care cost has to be contained, why did these initiatives fail? Why are people reluctant to use electronic health records - which can help to improve efficiency and bring down cost?

Which of these factors are most important?

1) Doctors want to keep control of the records, so that the patients will keep going back to them
2) The Government failed to pass the law to give political support to these measures
3) Patients are reluctant to have their health records kept electronically
4) Consumers are weak in enforcing their rights and interest.

Please share  your views here.

Financial Planning Test

Take this test and find out how much you really know:
http://tankinlian.com/admin/file.aspx?id=458

You can register for the financial planning workshop to be held soon:
 http://easyapps.sg/assn/Org/Event.aspx?id=5

Problem with big audit firms

There are problems with big audit firms - not only in America but also with the China firms. This could lead to another source of issue between America and China. But the problem of auditing in a world of greed and accounting fraud is more widespread. http://www.cnbc.com//id/44967737

Solar energy industry

America is counting on solar energy industry to create jobs. Already, they are facing strong competition from China. http://www.cnbc.com//id/44968075. This may lead to trade disputes.

Self help group for Singaporeans to find jobs

Dear Mr Tan,
We are a group of Native Singaporeans self help group.

We aim to help jobless Native Singaporeans to look for employers who support Native hirings as many are fed up competing jobs with younger, faster and cheaper new immigrants.

We understand you have an opening for the above which we can help you to advertise on our FB page to attract our interested members.

Please Add Friend and take a look at our FB info, wall and pages. Appreciate you can spread the word around.

http://www.facebook.com/#!/profile.php?id=100002910723487
https://www.facebook.com/#!/pages/True-Blue-Job-Business-Opportunities/298500870176141

Drop in standard of living

This article describes what has happened in America. It reflects the situation for many people in Singapore as well. When there is a widening gap in income, the high cost of living must squeeze those on stagnant wages.

Contractors for various services

Here are contractors for various types of services. They have a website and respond quite promptly to telephone calls or e-mails. We are not able to judge their prices or quality of service.  You have to make your own judgement when you call them.
http://tankinlian.com/admin/file.aspx?id=579

Ban on naked CDS

The European Union has decided to impose a ban on naked CDS - i.e. betting on the default of a sovereign government where there is no existing risk to be covered. They have decided that this type of betting is harmful to their economy. It is a recognition that these financial products are designed mainly for betting, and cause harm rather than good.

Temasek Convertible Bond - Standard Chartered Bank

Temasek Holdings offers a 3 year zero-coupon bond that can be exchanged into shares of Standard Chartered Bank at a premium of 27%. Is this a good investment? Here is my view.

Here is another person's view.

Employment rate of Singaporeans

Quote from Lucky Tan: For many years, the PAP govt has tried to paint a rosy picture to Singaporeans on employment when the real situation on the ground has deteriorated badly especially among older Singaporeans.

Thoughts of a contented Singaporean who has lived in Singapore for 40 years.

Read his article: http://singaporemind.blogspot.com/2011/10/unemployment-truththe-real-statistics.html

Booking an air ticket

I went to the Sri Lanka Airline website to book my air ticket to Colombo. I found this website to be well designed and easy to use  - much better than Jetstar or Singapore Airlines. I got a good price. I asked my travel agent if they are able to match this price - but they cannot. I went to Expedia.com but could not find a comparable price (but the price was a good benchmark). It seemed that the best price can be obtained by booking directly with the airline.

  

Real estate agents

There were 1,200 complaints against real estate agents for the first 9 months, or 5 each working day. The total fees paid for the transactions was $1.25 billion last year, or an average of $37,800 per registered agent (based on 33,000 registered agents, including those that are only partially active). http://www.channelnewsasia.com/stories/singaporelocalnews/view/1160085/1/.html

Improve your vocabulary with Word Power

This app allows you to improve your vocabulary. It runs on the iPhone and iPad. You can unscramble the letters to form the correct word that match the definition. It is suitable for children and adults. It has different levels of difficulty based on the number of letters in the word.

Consumers deserve to be treated fairly

This article explains what the regulators in USA are doing to ensure that consumers are protected fairly in the bills that they receive from their telephone companies. I believe that the regulator in Singapore (IDA) has already implemented similar measures - but I am not sure if they have done to the same extent as in the USA.

Bright Jigsaw

This video shows Vera and her friends trying out the Bright Jigsaw, a new app that will appear soon in iPhone and iPad. You can choose several images and break down the images into a number of small pieces from 3X3 to 8X8. It is challenging and fun and suitable for children and adults.

New Yorkers support the Occupy Wall Street Protests

They like tougher regulations on the banks and support the right of the protesters to demonstrate, so long as they obey the law. See this report. 

Young workers stuck in temporary jobs

This article describes a problem faced by young people in many countries. They are paid a low salary, in spite of spending a lot of money to get a good education.

This situation is caused by the failure of government around the world to set and enforce standards on worker's remuneration and their inability to provide a conducive environment for businesses to operate viably. Some businesses find it hard to survive, and cannot pay their workers well. Some businesses are highly profitable, but still exploit their workers. The government fail to do their job and prefer to leave matters to be sorted out by the market.

Allocating vehicle COEs through a ballot

I have written this paper to set out the case of using the ballot to allocate the available COEs to meet the demand. It takes the views of many people who have written in my blog and Facebook.

Why bid for the car COE?

Dear Mr. Tan
I spoke to numerous people, but did not get an answer that is acceptable. I have been struggling to understand the rationale for the COE bidding exercise. Surely, a balloting for the COE could achieve the same objective of limiting the no. of COE. That is, if the government fix the COE price at a reasonable amount (which could be adjusted periodically), and use balloting for the no. of COE, the same quota would be achieved as well. 

Why is there a need for Bidding, which for whatever reason result in the sky rocketing of the price. In other words, the control of the car population do not have to result in the people paying exhorbitant prices for a cars. Unless the government is all out to make money, which I thought that is not the intent.

REPLY
my personal preference is to have a balloting exercise, instead of bidding for the COE. But our Government believes that bidding (and money) is the best way to allocate scarce resources. I do not agree with their approach, but they are the Government!

If we go on the balloting exercise, there is still a problem. Many people will ballot for the COE and resell the car to the highest buyer. So, the Government decided that the best way to prevent this "black market" is to go bidding in the first place, and let the market decide on who gets the COE.

Visit to Sri Lanka

I plan to visit Sri Lanka next month. I searched Youtube for a video of Sri Lanka and found this excellent video. This is the marvel of Youtube and the internet.

Learn mobile development

If you have a diploma in I.T. and wish to have the chance to learn development on Android or Apple (IOS) without paying a fee, send an e-mail with your resume to inbox@tankinlian.com.  You will be given the facility to learn the platform at our office, projects that you can do, and a mentor to guide you. You need to spend at least two months on the learning, but you have flexibility to spend half of this time at your home.

Spreading work and reducing unemployment

I read a report that in USA, some workers are putting in  70 hours a week. They work hard, so that they can keep their jobs. But, when those with jobs work long hours, there will be less jobs for the unemployed to take up. This is the problem about the free market system.

Countries with caps on working hours (beyond which the employer has to pay premium overtime rate) allows the available work to be spread to more workers. They also have controls over their immigration. A good example is Australia.

How do small business survive in a competitive world, when they have to pay adequate wages to their workers? They pay less for their premises (and avoid the inflated property prices in countries like Singapore and Hong Kong). They also compete in areas where they have competitive advantage, such as the resource and agriculture sector in Australia. By giving adequate wages and employment to their workers, they have an economy that is more sustainable.

My friend, who developed property in Australia previously, told me the restrictions on property development in Australia. 50% of new developments can be sold to foreigners, but these foreigners have to sell their property only to Australians. This helps to control the inflation of property prices due to the influx of foreign funds.

Other countries, such as Singapore, compete by depressing wages.  This is why the situation in Singapore is rather bad.

Occupy Wall Street Protests Goes Global

The protests against corporate greed and failure of government goes global. See http://www.cnbc.com//id/44913817

Except in Singapore. The people are frightened by the strict laws against protest.

Bankrupcy law change could help consumers recover: Experts

Some experts have recommended a change in bankruptcy law in the USA to forgive the debts of consumers (i.e. student loans, mortgage loans and consumer loans) and help the economy to recover, as stated in this report.

This is a dangerous suggestion that has moral hazards, but should not be written off entirely. Already, matters have become very difficult and bad! Anyway, the banks will not agree to write off the loans and will fight hard against such a law.

But I like to suggest this way out. If we study what is happening in Greece, the solution is for the banks to take a haircut and be paid say 50% of what they are due. In the case of consumer loans, the bankruptcy law could allow them to apply for a special fund from the state to pay off the loan at a 50% discount. The money borrowed from the state will have to be repaid in the future, but at a low rate of interest (instead of the usury rate charged by the banks). This will give consumers time to pay off their loans gradually and to rebuild their lives.

 

California Teachers Pension Fund takes a stand

I congratulate the California teachers pension fund for taking a stand against the obscene practices of over-paying CEOs of large companies. Read this report.

Trickle down economics

Quote in my blog: Republicans (in the USA) are fervent supporters of 'Trickle-down Economics' which is proven to be a fraud. Guess who else is also a die-hard believer of this economic nonsense? 

Here is an explanation of "Trickle down economics".

Question: Who is the "die-hard believer (in Singapore) of this economic nonsense"?

Stagflation

America is expected to see a period of stagflation, similar to the 1970s. It is a period of economic stagnation, i.e. no economic growth, high unemployment, coupled with a high rate of inflation. The lack of economic growth means that the high rate of unemployment will continue to be high, and the cost of living will increase, due to inflation. It will be a difficult time for many people. The problem is that this stagflation is likely to spread to other countries, due to the global environment.

What is the cure for stagflation? The economic stimulus adopted during the past three years did not seem to work. We need a new approach.

Lack of demand is cause of unemployment

The Republican politicians blame Government regulations for hampering the creation of jobs. Business owners disagree. It is the lack of consumer demand. Read this report. 

Broker's calls on the 30 stocks of Straits Times Index

The FISCA website has a summary of the recommendations of brokers (buy, sell or hold) on the 30 stocks in the Straits Times Index.  These are the blue chips of Singapore. This is now available for viewing by members and non-members. In future, this type of information will be provided only the members of FISCA, after they have logged in.

Here is the direct link to the article.

Tribute to our teachers

What does a teacher really do? Here is a tribute to our teachers. 

Promoting fair competition

When a few maid agencies get together to agree on the salary for maids, the Competition Commission in Singapore came hard down on them for infringing the competition law.  I wonder if action is being taken against the small businesses that cannot afford expensive lawyers to fight their case. I also wonder if the illegal practices are being following by big businesses that have a much bigger impact on consumers.

Read this story about the call by the law makers in USA to ask the Attorney General to investigate the practice of the banks.  Maybe our law makers and regulators in Singapore can also be more active in looking after the interest of the people, so that the cost of living (which touches the pockets of all Singaporeans) can be moderated?

Oil speculation and cost of living

The financial industry claim that they help to make the market more efficient by getting the right price for each product - using the efficient market theory. This is theory. In reality, the speculation in the market gives the chance for the professionals to make large profits at the expense of the consumers. This article explains what happens and the effect on households. This is why I support the effort of the US regulators to place controls on financial speculation by large banks and hedge funds. Our leaders in Singapore need to realize what is really happening, when they promote Singapore as a financial hub. http://money.cnn.com/2011/10/13/news/economy/gasoline_cost_speculation/index.htm?section=money_topstories&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_topstories+%28Top+Stories%29

A better yield for CPF members

In 2004, Lee Hsien Loong, the then Finance Minister, promised a better yield for CPF members by introducing private pension schemes. This suggestion was covered in this report. http://tankinlian.com/admin/file.aspx?id=575.  If he had followed through with his suggestion, Singaporeans would have been better off today.

Remaining anonymous

I suggested in my Facebook that people should give their views with their names, rather than anonymously. Walter Oh replieed:


 "This is not any ordinary state, the regime here is hypocrite to the core. They may laugh/smile at face value, but behind your back, planning otherwise ... Under such climate. it is better for people to remain annonymous, until a day, where Singapore is really democratic, and the regime willing to listen to alternative voices ... Take the recent President election as an example, why must Singaporeans vote for PAP sanctioned candidate, the brain washed electorate here cannot even distinguish between sincere people willing to go the extra mile from those who just want to keep/maintain status quo ... End up, who's at the losing end, Singaporeans ..."

Spending education dollars wisely

In America, many college graduates chalk up a study loan of US$30,000 and could not find a job. The amount of bad student loans is becoming another problem for the banks.

In Singapore, the local students are able to get subsidised education in the polytechnics and universities, so a large part of the cost is borne by tax payers. However, the students are also worried about their ability to find a suitable jobs.

We face a different type of problem in Singapore. There is high job hopping, during good times. It is wasteful for employers to hire local workers, train them and lose their services in a year or less. Another source of wastefulness is that many young workers do not work in the area of study. For example, many engineers work as insurance or property agents!

We need a better system of  managing our education dollars and fitting students into the right jobs, so that their education and skills are put to good use. This is how a competent and productive workforce is developed. Our current approach is quite wasteful.

CPF scheme - proposed changes

We used to have a scheme that Singaporeans were proud of in the earlier years. Over the years, the CPF scheme had became convoluted, confusing and produced bad outcome for the citizens. It is time to review our CPF system.

Here are my suggestions to make the CPF scheme more attractive, simple and flexible to serve the needs of Signaporeans. 

Taking care of the elderly

This article shows how different countries take care of their elderly. We need to review the approach adopted in Singapore, which is complicated, convoluted and not effective.

Low mortage rates are a ruse

This article explains that the low mortgage rates that are being advertised in America are deceiving the public. Only the higher income people are able to enjoy them. Most borrowers, especially at the lower income groups, end up paying higher rates or are not able to access these low mortgages. This is another example of the failure of the free market system and a case for stronger government regulation.

Excessive risk taking by hedge funds

Hi Kin Lian,

I've read your articles on hedge funds. I agree with them. Many of them take excessive risks to register profits for their funds. When these fund managers make a huge profit, they do get rewarded handsomely with a big bonus.

However during years when they make huge losses(they usually do), their clients bear the brunt of these loses. Fund managers never have to give back their bonuses. They may or may not be fired. If they are fired, they can go to another fund and advertise themselves as making millions years ago.

These fund managers probably do not have to declare to their new employers  their huge loss. This is due to the secrecy of many hedge funds.

Book review - Get Value from Your Life Insurance

Here is a book review by an ex-Investment Banker.


The book is available from www.tankinlian.com/ishop.

Meaningful jobs for a developed economy

Here are the meaningful jobs for a developed economy - to teach the young and to take care of people of all ages, including the elderly. They add value to the lives of people and do not make earnings at the expense of other people (i.e. by making them poorer). We need to have fewer people working the the financial and property sector - creating asset bubbles, and more people doing real, meaningful work. Here is a message to our political leaders!
http://money.cnn.com/magazines/moneymag/best-jobs/2011/fast-growing-jobs/1.html?section=money_topstories&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_topstories+%28Top+Stories%29

The goals of the Occupy Wall Street Protests

The goals of the Occupy Wall Street Protests can be summarized in this statement: Some protesters are upset about taxation; for others, the big issue is the high unemployment rate. Or corporate greed. Or the distribution of wealth.


These goals apply to Singapore as well. Read this report for more details.

What to look for in an endowment policy

At the CNA program on financial planning, a panel speaker said that consumers should look at the guaranteed and the non-guaranteed portion of the benefits under an endowment policy.

This is only partly true. The consumer should also look at the following figures (available from the benefit illustration):

a) The distribution cost
b) The effect of deduction.

The consumer will be shocked that the distribution cost is usually more than one year's premium. What is this figure? It is the amount taken from your savings to pay the insurance agent. Imagine that you work hard to save $6,000 a year. Do you want more than $6,000 of your savings to be taken away to pay the agent?

What does the agent do for the consumer to earn such a large sum of money? Frankly, the agent does not help the consumer to get a higher yield. The consumer can get a higher yield on his or her own by investing in other more appropriate investment products - as explained in my book on financial planning.

To understand what happens when you buy a life insurance policy or an investment linked policy, you can read my book on life insurance.

These books are available from www.tankinlian.com/ishop. You enjoy a discount when you buy from i-shop. More importantly, you can save a lot of money by avoiding the wrong financial products.

FISCA Research on bank services

The FISCA website has an analysis of the interest rate offered on fixed deposits and the interest rate charged on HDB and private properties charged by the banks in Singapore. It also shows the terms offered on their credit cards. This information is available to FISCA members after you have login.

Here is the direct link to the research page - available to non-members who provide their email address.

CPF - my views

Many years ago, I was proud of our Central Provident Fund system. It was simple and good for the people. It allowed them to accumulate their savings for old age. Later, it was used to purchase a HDB flat at an affordable price.

The CPF system started to be changed, for the worse, after 1985. Many changes were introduced that had negative impact on the scheme and produced worst outcome for the citizens. Today, I can only say that our CPF scheme is complicated, convoluted, confusing and is not producing the right outcome.

I will be writing on what the changes that I like to see in our CPF scheme, that will make it good for the people, and for the Government. 

I want to say something about why things had turned out to be so bad for the CPF. The people who manage the CPF, i.e. the Ministry of Manpower (and its predecessor ministry) and the policy planners (i.e. the scholars) were not practical people. They were planners. 

Worse, they were too arrogant to consult the experts in the field. As an actuary and the head of a life insurance company, I could give them some useful ideas - but they were too proud to ask me or to discuss my suggestions (even after I wrote to them). They prefer to find their own solutions - in their ivory tower. These planners later become recruited as ministers in our Government and continue the same approach. 

This is the type of system practised in Singapore that has produced convoluted systems, not only in CPF but in health care, immigration and many other areas of our life.

CPF - views by Lucky Tan

Lucky Tan gives a rebuttal to the points made by Minister of State for Manpower - Tan Chuan Jin.
http://singaporemind.blogspot.com/2011/10/cpf-new-face-new-media-old-ideas.html

 Share your views here.

Occupy Wall Street - Paul Krugman

This is how Paul Krugman views the "Occupy Wall Street" protest.
http://www.kurandatrading.com/archives/occupy-wall-street-blog-from-ny-times/?utm_medium=twitter&utm_source=twitterfeed

Inequality in Singapore

The title of this article suggested that it is about America. But Lucky Tan is talking about Singapore and how conditions in Singapore are so much worse than in America. I agree with his views, which are quite close to my views. http://singaporemind.blogspot.com/2011/10/speeches-from-cnbccom-speakers-corner.html

Drop in US income

The full 9.8 percent drop in income from the start of the recession to this June — the most recent month in the study — appears to be the largest in several decades, according to other Census Bureau data. Gordon W. Green Jr., who wrote the report with John F. Coder, called the decline “a significant reduction in the American standard of living.”


http://www.cnbc.com//id/44840144

My comments: Income has continued to fall for most people. The gap between the rich and poor is widening. More people are finding the cost of living to be unaffordable, This is the failure of the current economic system and need to be addressed.

Earnings of US companies

Will earnings of US companies be good or bad for the reports that are coming out in the fourth quarter?  According to this report, the analysts are quite divided on this matter. I will make a guess that the earnings will be good,. Why? I remember a statement from Warren Buffet that the companies in his group are doing well, except for those involved in the housing sector.

I will take this as a test to see if this is a good indicator. It may be possible that Warren Buffett's companies are doing better than the rest of the economy, but this is not likely to be the case., I think that his companies can be a good gauge for the economy. Be watchful!

Avoid investment scams

Older people have a lot of money obtained through their hard earned savings, profit from sale of a property or from CPF withdrawal. It is easy for these people to be cheated in the investment scams that are quite common in Singapore,.

There are so many scams and many of them are being advertised regularly. It is easy for the ordinary people to be misled into thinking that, if they are allowed to be advertised, these investments are approved. It is hard for them to imagine that they could be cheated.

I know of these scams because many of the victims approached me for help - land banking, wine, guaranteed buyback arrangements. They could even be cheated by life insurance and investment linked products, as the insurance agent hide some of the essential facts from them - i.e. the high distribution cost, annual charges and high penalty on withdrawal.

When the victims complained about losing a lot of money on these scams or bad investments, IT IS TOO LATE. There is little, if any action, that can be taken to recover the loss.

I talk about these scams and bad investments in the Financial Planning Workshop organised by FISCA. I encourage the older people to attend and learn how to avoid these bad investments. 

Tips for young people

I gave a talk on "Financial Planning for the Young" at the National University of Singapore. My key points are:

1. Save 15% of your earnings after you start work
2. Keep the earnings in a bank account until you have accumulated an emergency fund of 6 months earnings
3. It will take you about 3 years to accumulate this fund. Just keep your savings liquid. Do not think about investing the money.
4. You should avoid investing the money in a life insurance policy or investment-linked policy - as you may need the money in an emergency and there is heavy penalty on early withdrawal.
5. You do not have to worry about buying life insurance until  you start a family. But, if you wish to have life insurance earlier, you should buy a term insurance and pay not more than $30 a month for $300,000 of insurance cover.
6. When you are ready to invest, you should invest in a low cost investment fund, such as the Straits Times Index ETF (exchange traded fund).
7. You should attend the 6 hour workshop organised by FISCA to get more details,

I also told the students to tell their parents and older siblings and relatives to attend the Financial Planning workshop organised by FISCA. They have money and are likely to invest in the wrong products and lose a large part of it. When they found that they were misled or cheated, it is TOO LATE for them to recover their money. They have to spend some time and a small sum of money to get educated to avoid losing BIG MONEY.

Invest for the long term - applying the idea

Recently, I decided use my spare cash, which was earning a low rate of interest, to invest in the stock market. My reasons were:

• The stock market had dropped by 20% from its peak
• I am investing for the long term, more than 10 years
• Warren Buffett had said that the companies under Berkshire Hathaway's portfolio were showing good results (except for those involved in the housing market).

A few people asked if it was safe to enter the stock market, and I gave the same view.

I was quite surprised that the stock market did recover strongly the past few days. It was unexpected. However, it does not really matter for a long term investor.

I asked my stockbroker for a list of blue chip shares and REITS showing the drop in their prices since their recent peaks and the dividend yields. I was surprised to find several blue chips that gave a yield of more than 4%. I picked a few of them for investment. The  list of blue chips and REITS can be found here.

Another good investment is the Straits Times Index ETF offered by SPDR and DBS which gives diversificaton.. 

I wish to emphasize that while the stock market may be strong for the time being, the situation could turn around easily due to the uncertainty in the global economic environment. But, if you are investing for the long term, you can ignore the short term uncertainty. The situation will be sorted out in a few years' time.

 

Top 20 REITS - October 2011

Here are the top 20 REITS available in SGX. It shows the current price, the drop from the recent high, the dividend yield and the gearing ratio. Several of the REITS look attractive as they have fallen by more than 20% from the recent high, have an acceptable gearing ratio of less than 35% and gives an attractive dividend yield. Before investing, you should consult your own stock broker. 

Yield on a life insurance policy

You can calculate the yield on a life insurance policy by using an Excel spreadsheet as explained in this article.