Why did I join NTUC Income?

Someone asked me, "Why did you choose to join NTUC Income?"

I joined NTUC Income by accident. I was approached.

When the selection committee interviewed me, they had three important conditions for a suitable candidate:

* must be able to run a large organisation
* must be able to lead a sales force
* must be able to manage the trade unions (who are the key shareholders)

I did not have any proven record on all three counts.

I was selected because I was the only qualified actuary who was willing to join NTUC Income, without insisting on a high salary and other conditions.

Later, I learned that other candidates were approached, but they were not willing to join NTUC Income.

How did I overcame by lack of experience?

I adopted the entrepreneurial approach. I learned how to find the right answers. Quickly, 30 years have passed.

Two types of democratic systems

There are two types of democratic systems practiced around the world:

* British system - the members of parliament (elected by the citizens) will choose a prime minister and other ministers from among themselves; usually from the winning party or a coalition

* American system - the citizens choose the members of the Congress (ie Parliament) separately from the President; the President will choose his secretaries (ie ministers) from the entire population, but they have to be approved by Congress

In recent years, I come to favour the American system. The Congress can focus on passing the laws. The elected President can choose capable persons from the entire population to run the government.

The system in Singapore is largely based on the British system. In recent years, we have modified it to have an elected President, but he has certain specified but limited responsibilities.

It is now possible for us to move towards the American system. A future elected President can appoint his ministers from anywhere in the country (including the members of Parliament). This will give a wider base to choose the leaders to run the country.

Just a thought.

Avoid this financial product

Hi Mr. TAN,

I'm curious about the SWISSCASH Investment, which my wife's colleague and family already taken-up. Can you advise in some way if this is genuine, and it's legal in Singapore?

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From an email:

This guys claim that it is a very exciting Savings Programme from Swiss Mutual Fund called Swiss cash. It can help you grow your fund with 200% profits in 15 months.

Since I started on the investment in May 2006, I have already gotten 160% interest (10% interest monthly for the period May - July 2006, 15% interest monthly for the months of August - October 2006, 20% for November 2006 - January 2007, and 25% for February 2007).

I will be receiving another 25% interest for this month and next month, and 30% for the final 3. I have already recovered my principal sum in January 2007 and earned an accumulated gross profit (ie. gross amount less principal sum) of 60% up till this month March 2007. By the end of 15 months, my total profits received will be 200%!

(rest of details deleted)

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My reply:

Here is the view of a financial analyst:

"I have looked into it a few times. It is a scam -- a pyramid scheme."

Invest CPF money with low risk

Dear Mr Tan,

My wife has just collected her CPF and would like to deposit or invest in a short term low risk instrument- preferably not more than 3 years with capital protection. Could you please advise.

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My reply:

I suggest that your wife invest in the money market fund through flexi-cash with NTUC Income. I invest most of my money in this fund. It earns about 3% to 3.5% p.a. and has no lock up period.

Although it is not capital protected, the risk is very, very small.

You can find out more of this product at www.income.coop/faq

You can also visit the business center of NTUC Income at Bras Basah Road.

Good future for an insurance adviser

Dear Mr Tan,

Is being an insurance agent/financial consultant still a viable career option now, as the market is quite saturated right now with many insurance agencies.

What is your view on financial advisor as a career option compared with say property agent?

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My reply:

There is a good future for an insurance adviser who is willing to act in the interest of the customers. They can make a good income. There are so many customers who looks for an honest adviser who is willing to do the best for them.

I know of many insurance advisers in NTUC Income who offer good products to their customers, and help their customers to get a good return on their investments and good coverage at a low cost.

The insurance advisers are able to earn a fairly good level of income, say $5,000 or higher, but they work hard and effectively. They sell more insurance, even though they earn a lower rate of commisison on each sales.

Many of them continue to be successful for 10 or 20 years.

Penny stocks

Dear Mr Tan,

Could you give me some opinion on which are some penny stocks I could buy for a long term (1 to 2 yrs) investment.

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My reply:

I do not invest in penny stocks. So, I cannot advice you. Sorry.

Proud of our cooperative beliefs

Message from a manager of NTUC Income.

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Dear Mr Tan

I will certainly remember you fondly. There are so many memories. Even after you are gone, I hope many of us will continue to do our best for Income.

I am so proud of our co-operative beliefs. I hope we will stay this way and the future Income will be a constant source of delight for you.

You have taught me many many things. Amongst all, to stand up for what one truly believes in.

Low public opinion of financial institutions

Mr Tan

There is a recent newspaper report that show that financial institutions, especially life insurers, have a low level of trust among the public. Why is this the case?

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My reply:

Many financial institutions design products with the aim of making profit for their shareholders. In many cases, their products do not offer good value to the customers.

They employ advisers to sell these inferior products to the customers. The advisers do not present the honest facts about the products.

As the products are difficult to sell, they have to pay high commission to the advisers. This makes the product even less attractive to the customers.

The customers learned, many years later, that the products give a poor return. It is too late for them to change. They are also locked into the product, as a high cost have already been incurred upfront.

This makes the customers loss trust in the financial products, the financial institutions and the advisers.

What is the alternative?

The financial institutions should design products that give fair value to the customers. They should also reduce their marketing and other cost. They can still make a fair margin on the products, but they have to serve their customers well.

Business can be runned honestly and ethically. This will win over the trust of the customers.

Better use of manpower

In a socialist economy, everyone is employed, but people do not work too hard. There are more than sufficient people to provide service to customers.

In a free market economy, the business owner try to reduce the manpower to earn more profit. Some people are unemployed. There are insufficient workers to provide good service to customers.

The unemployed people try to make a living to run a small business. There is oversupply of these enterprises. To survive, they have to work long hours. This is not an efficient use of manpower.

I have seen China move from the first situation to the second situation over the past 20 years. In my recent stay in Huangshan, I was surprised that the hotel seem to be short of service workers.

Which economic model is better?

Perhaps there is no clear answer. It probably lies between the two extremes.

Study shows why exercise boosts brainpower

I exercise regularly for more than 10 years. According to the following study, it helps to boost my brain power. From my personal experience, it looks correct.
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WASHINGTON (Reuters) -- Exercise boosts brainpower by building new brain cells in a brain region linked with memory and memory loss, U.S. researchers reported Monday.

Tests on mice showed they grew new brain cells in a brain region called the dentate gyrus, a part of the hippocampus that is known to be affected in the age-related memory decline that begins around age 30 for most humans.

The researchers used magnetic resonance imaging scans to help document the process in mice -- and then used MRIs to look at the brains of people before and after exercise.

They found the same patterns, which suggests that people also grow new brain cells when they exercise.

"No previous research has systematically examined the different regions of the hippocampus and identified which region is most affected by exercise," Dr. Scott Small, a neurologist at Columbia University Medical Center in New York who led the study, said in a statement.

Sub-prime mortgages

Dr Money

There is a lot of news about the default of subprime mortgage. What is the definition of this mortgage?

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His reply:

Sub-prime mortgages are the risky ones in the US. They include interest only loans. It keeps the interest payments low.

Another type of sub-prime loan is option adjustable rate mortgages, also known as option ARMs.

They work like credit card payments. You make a minimum payment on your mortgage. It doesn't even have to cover the full amount of the interest due.

The interest that is unpaid gets added back to the principal -- which keeps growing like a mushroom cloud.

For some, it is the only way to afford expensive homes.

Of course, the loans are risky. But the interest rates are higher than prime mortgage rates -- so lenders like banks and savings and loan institutions in the US have been attracted to them.

Sincerely,

Larry H.

Use Skype to call home

I am in China. I pay for a whole day boardband access to the internet.

I used Skype-Out to call back to family and friends in Singapoe. Skpye-Out uses the internet connection for the international call, and uses the local system to connect to the telephone of the receiver. I pay only the cost of the local Singapore call.

It is convenient. The quality of the call is good.

Unproductive competition

I visited a shopping center in Kuala Lumpur. It had more than 100 stall selling mobilephones.

I visited a seafood market in Shanghai. It had more than 100 stalls selling seafood. The products are quite similar.

In both cases, there are more stall holders than customers.

This is unproductive competition. They need less than half the stall holders to serve the customers. Maybe, they do not have to work long hours.

We need a better way, rather than the "free market" to make better use of our resources. We should avoid unproductive competition that leads to a poorer quality of life for everyone.

In Europe, where business is more regulated (some people consider it to be Over-regulated), there is a better balance between work and leisure. People can afford to have a better standard of living and lead a better quality of life.

Maybe, there is something that we can learn from Europe?

Minimum wage

Mr Tan,

I like to seek your views.

Some countries have a minimum age policy. But there is no such policy in Singapore. The reason, I understand, is that a minimum wage policy will push investors to to other countries. Do you agree?

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My reply:

I am in favour of a minimum wage policy. A minimum wage will provide the worker with an income that is sufficient to make a decent living.

If there is no minimum wage, the market forces may push the wage to a low level. Our workers have to compete with foreign workers who are willing to come to work in Singapore at a low salary. The cost of feeding their family in their home country is low.

Foreign investors look at the total cost of operating in a country. The total cost comprise of:

* wages
* land
* other costs (eg inefficiency, tax, levy, corruption)

Our economy is quite efficient and corruption is not a problem. We are quite competitive to foreign investors. If wages go up, it can be compensated by a lower cost of land. The total cost can remain quite competitive.

By keeping the wages low, we are largely benefiting the land owners. This is why the cost of land is so high in Singapore.

In my view, we should raise our wages, especially at the lowest level. This is improve the living standard in Singapore. Our people do not have to work long hours, can have more time to be gracious, and maybe raise a bigger family.

Financial planning for Seniors

A detailed paper is presented in my website

FAQ

This paper will be used for a course to be conduced by the Center for Seniors. The course is called Senior Employment Guidance.

Financial planning for the young

Dear Mr Tan,

I am a 19 years old girl who is currently earning to do my further education.

I am earning about $1.5k a month which is not fixed. I have a younger sister who is just 8 years old and an elder brother who is handicapped since birth. My father is doing some odd-jobs earning <$1200 a month. My mother is a housewife. Even the home which we are staying is a rented one and not owned.

I just discovered that my entire family are not covered on any plan. Not even Incomeshield.

In this situation, what kind of plan should I take so that my family is covered? Can I take any plan insuring my elder brother? Is there any plan with low premium where I can actually recommend to my parents for my sister's tertiary education?

I did browse through Income's website looking at Life Insurance Protection. There were a few choices but I am unable to decide which one is suitable for my family.

Hope you can advise me on what I can do and which plan is suitable for my family.

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MY REPLY:

It is good for you to be thinking early about your financial plan.

I recommend that you read the FAQs in my website under "Ask Mr Tan". You can get some information there. If not, I suggest that you visit NTUC Income's business center and talk to a salaried consultant.

www.tankinlian.com

How to be creative

I have posted three interesting stories from Lee Kum Tatt and his wife, about creativity.

Lee Kum Tatt is a creative person. He and his wife like to share some stories about their adventure, over the past years, in creating the Risis orchid and in approaching creative situations.

Read about them in his blog

This will make up for the fewer postings in my blog during the period that I am in China.

Visiting Huangshan, China

I spent the last four days in Huangshan in Anhui Province. It is reputed to be the best mountain to visit in China.

I was not able to access blogspot in Huangshan. So, my posting was interrupted. I could access other websites.

I am now in Shanghai. I can access and post to blogspot.

Book for hotel rooms through the internet

My friend booked a hotel room for me in Philaphedia, United states. The room rate was USD 309 a night. I found this to be too expensive.

I checked the internet and found a room at the same hotel to be USD 160 a night.

I checked with my friend. Apparently, the hotel quoted a higher rate to his company, but offered a lower rate in the internet, on a non-cancellable basis.

Lesson: If you are willing to be committed to a non-cancelleable booking, it is better to book through the internet and enjoy a lower hotel rate.

China - changes in 20 years

My first visit to China was in 1987. I recall my impressions of that visit:

* foreigners are required to use the "foreign exchange certificate", which has a higher exchange rate compared to the local currency.
* tourists pay a higher admission ticket to the tourist spots, compared to locals
* the toilets were unclean
* there are many people to provide service

I am now in China again, nearly 20 years later. I saw the big changes to the lifestyle and the standard of living.

* the cities are now similar to other cities around the world
* there is only one currency
* prices are now the same for locals and tourists
* there is inadequate workers to provide service

Somehow, I miss the old China.