I read a newspaper report that taxis now put up a sign "It is illegal for electronic stores and tailors to tout and overcharge".
What is touting? Are financial products being marketing at MRT stations considered as touting?
What is over-charging? Many financial products have excessive charges that give poor value to consumers.
Will it be illegal for financial institutions (i.e banks and insurance companies) to tout and over-charge for their financial products?
Why only go after electronic stores and tailors, when the overcharging in financial products is 10 times or more?
Thursday, August 07, 2008
Investing in Foreign Currency
A few readers have asked my views about investing in AUD due to its recent drop. It is difficult to make a judgement on the trend, due to its volatiity. Even foreign currency traders find it difficult.
Here are some general tips about investing in foreign currencies:
http://www.tankinlian.com/faq/foreign.html
Here are some general tips about investing in foreign currencies:
http://www.tankinlian.com/faq/foreign.html
Wednesday, August 06, 2008
Premium buses
Some people are willing to pay a higher fare to get a better seat in an airplane. They are called first class and business class. We can have the same arrangement for a bus.
Read more about this concept in:
www.singaporepublictransport.blogspot.com
Read more about this concept in:
www.singaporepublictransport.blogspot.com
Joke: Passed by the manager
Notice in a foreign hotel: The water in this hotel is hygienic. It has been passed by the manager.
Freely negotiated fees
To: Consumer Association
The Competition Competition has mandated that fees should be freely negotiable. The apply this requirement to doctors and property agents.
The Commission think that this is to the benefit of consumers. It is likely to work the other way. If fees are freely negotiated, and the standard and scope of service is not clearly defined, consumers can be put to a disadvantage. The industry players (i.e. doctors and property agents) are more knowledgeable about the playing field and will be able get away with higher charges, as consumers are not aware about the market.
A better approach is for the Commission to get the industry association to define a few standard services and require the providers to advertise their fees for these services.
I hope that the Consumer Association can look into this matter.
The Competition Competition has mandated that fees should be freely negotiable. The apply this requirement to doctors and property agents.
The Commission think that this is to the benefit of consumers. It is likely to work the other way. If fees are freely negotiated, and the standard and scope of service is not clearly defined, consumers can be put to a disadvantage. The industry players (i.e. doctors and property agents) are more knowledgeable about the playing field and will be able get away with higher charges, as consumers are not aware about the market.
A better approach is for the Commission to get the industry association to define a few standard services and require the providers to advertise their fees for these services.
I hope that the Consumer Association can look into this matter.
Tuesday, August 05, 2008
Taxi without driver
Imagine that you can board a taxi that is driven automatically (i.e. without a driver) and take you quickly to your destination, without any traffic congestion.
This is called a PRT. Read about this concept in
www.singaporepublictransport.blogspot.com
This is called a PRT. Read about this concept in
www.singaporepublictransport.blogspot.com
Joke: Black or white
The American from Alabama was in a coffee shop of an expensive hotel in London.
Waiter: How do you like your coffee
American: I like it like my woman, strong and sweet.
Waiter: Black or white?
Waiter: How do you like your coffee
American: I like it like my woman, strong and sweet.
Waiter: Black or white?
Personal Accident Insurance
Hi Mr. Tan
I currently have SAFRA Essential Term (http://www.income.com.sg/insurance/safraterm/ ) and SAFRA Living Care ( http://www.income.com.sg/insurance/safracare/ ) policies.
Effectively, the two policies cover Death, TPD, the 30 major CI, and hospitalization.
In addition, as a employee of my company, I am covered for basic medical expenses incurred for seeing a doctor.
I have an agent from NTUC trying to sell me personal accident insurance. In your opinion, is there any further benefit to me for taking this up?
REPLY
A personal accident policy is low cost and is useful to supplement the cover under your life policies. If the total sum assured under your life policies is not adequate, you can buy a personal accident policy to supplement the coverage. The annual premium to cover $100,000 should be less than $80 for most occupations.
I currently have SAFRA Essential Term (http://www.income.com.sg/insurance/safraterm/ ) and SAFRA Living Care ( http://www.income.com.sg/insurance/safracare/ ) policies.
Effectively, the two policies cover Death, TPD, the 30 major CI, and hospitalization.
In addition, as a employee of my company, I am covered for basic medical expenses incurred for seeing a doctor.
I have an agent from NTUC trying to sell me personal accident insurance. In your opinion, is there any further benefit to me for taking this up?
REPLY
A personal accident policy is low cost and is useful to supplement the cover under your life policies. If the total sum assured under your life policies is not adequate, you can buy a personal accident policy to supplement the coverage. The annual premium to cover $100,000 should be less than $80 for most occupations.
Monday, August 04, 2008
Key man insurance
Dear Mr. Tan,
My friend bought a Prulink product for himself many years back. The company paid the premium. He is the one of two directors and shareholders of this company. This insurance is purchased under the keyman policy. He is the insured person and the company is named as the owner of the policy.
Unfortunately, my friend met with an accident and is paralysed. The insurance paid out S$800,000. Cheque was issued to the company.
Should this money belong to the company or should it be paid to the insuree? Can this money be held at the company since it was paid by the company and was purhcased as a key-man policy? Or, can this money be construed as gratitous payment to be paid to the family member immediately?
REPLY
It depends on the agreement between your friend and the company. If the company took the policy and pays the premium, the company is the owner. The compnay has an insurable interest in the key man of the company, as the disability of the keyman can cause some loss of profit to the company.
If the company has an agreement with the keyman to pay the proceeds to the keyman or his family, then the payment should be made according to this agreement.
My friend bought a Prulink product for himself many years back. The company paid the premium. He is the one of two directors and shareholders of this company. This insurance is purchased under the keyman policy. He is the insured person and the company is named as the owner of the policy.
Unfortunately, my friend met with an accident and is paralysed. The insurance paid out S$800,000. Cheque was issued to the company.
Should this money belong to the company or should it be paid to the insuree? Can this money be held at the company since it was paid by the company and was purhcased as a key-man policy? Or, can this money be construed as gratitous payment to be paid to the family member immediately?
REPLY
It depends on the agreement between your friend and the company. If the company took the policy and pays the premium, the company is the owner. The compnay has an insurable interest in the key man of the company, as the disability of the keyman can cause some loss of profit to the company.
If the company has an agreement with the keyman to pay the proceeds to the keyman or his family, then the payment should be made according to this agreement.
Rights Issue
Dear Mr. Tan
I would like to seek your invaluable adivce on the upcoming rights issue offered by X. Do you think it is a good investment? What actually is a rights issue?
REPLY
If a company wishes to raise additional capital, it offers a rights issue to its existing shareholders. The price is usually lower than the current market price of the shares.
Let me give an example. A company has 10 million shares. It is now trading at $3. The company needs raise an additional $10 million in capital. It decides to issue 5 million shares at $2 to the existing shareholders. Each shareholder is allowed to buy 1 share for every 2 shares that they now own.
Many shareholders will take up the new shares because it is offered at a price ($2) lower than the current market price ($3). After the rights issue have been completed, the share price may drop below $3 due to the dilution of new shares issued at $2.
If the shareholder does not wish to invest in the new shares, the shareholder can sell the rights in the market. The value of the rights depend on supply and demand and is likely to be around $0.30.
I am not able to give an specific comment about the rights issue of X.
I would like to seek your invaluable adivce on the upcoming rights issue offered by X. Do you think it is a good investment? What actually is a rights issue?
REPLY
If a company wishes to raise additional capital, it offers a rights issue to its existing shareholders. The price is usually lower than the current market price of the shares.
Let me give an example. A company has 10 million shares. It is now trading at $3. The company needs raise an additional $10 million in capital. It decides to issue 5 million shares at $2 to the existing shareholders. Each shareholder is allowed to buy 1 share for every 2 shares that they now own.
Many shareholders will take up the new shares because it is offered at a price ($2) lower than the current market price ($3). After the rights issue have been completed, the share price may drop below $3 due to the dilution of new shares issued at $2.
If the shareholder does not wish to invest in the new shares, the shareholder can sell the rights in the market. The value of the rights depend on supply and demand and is likely to be around $0.30.
I am not able to give an specific comment about the rights issue of X.
Joke: Ring bell with elbow
A: Would you like to come to my house-warming party on Saturday?
B: Where is it
A: 6 Chestnut Drive. Please ring the bell with your elbow.
B: Why can't I ring with my finger?
A: You're not coming empty handed, are you?
B: Where is it
A: 6 Chestnut Drive. Please ring the bell with your elbow.
B: Why can't I ring with my finger?
A: You're not coming empty handed, are you?
Double coverage under Medishield and private Shield
Dear Mr. Tan
Being a old timer with Income, I know that you are always helping the policy holders with your valuable knowledge. I have a problem now and hope that you could give me your advice.
I switched from CPF MediShield to IncomeShield Plan B in year 2002 with the payment deducted from my MediSave account annually.
In Year 2007 I subscribed to Enhanced IncomeShield Rider on top of the IncomeShield Plan B. The Rider's was cash payment as required. In view of saving the MediSave account fund with better interest rate, I changed the payment mode for my IncomeShield to cash payment as well in September 2007. As I was not free to make payment on the due date and Income had comfirmed via email that the payment due date has 30 days' grace period as usual. Hence, I made the payment about 1 or 2 weeks later.
To my surprise, when I got my CPF Statement of Account, I realised that my MediShield had reactivated with the deduction of MediShield payment from my Medisave account. I queried CPF on this and was told that this is the usual practice that when the payment was not made on the due date for IncomeShield the MediShield would be reactivated.
I wish to have your advice of whether this is double insured and whether there is any benefits of more coverage when I make a claim or this is totally overlapping of the same coverage. I heard that now CPF's MediShield has better coverage than other similar plans, hence I don't know whether I should terminate which one to save my unnecessary additional payment.
Could I appeal to Income for the reimbursement of the IncomeShield payment for not informing me this consequences which result to my additional incurred cost.
REPLY
You can ask NTUC Income to help you to sort out this problem. You should NOT pay two premiums for the same coverage. NTUC Income should have notified CPF that you are covered under Incomeshield (by cash) and prevent the re-activation of Medishield.
If this is not possible, you should ask NTUC Income to refund your premium for Incomeshield, in full. It is all right to be insured on Medishield only.
All the best.
Being a old timer with Income, I know that you are always helping the policy holders with your valuable knowledge. I have a problem now and hope that you could give me your advice.
I switched from CPF MediShield to IncomeShield Plan B in year 2002 with the payment deducted from my MediSave account annually.
In Year 2007 I subscribed to Enhanced IncomeShield Rider on top of the IncomeShield Plan B. The Rider's was cash payment as required. In view of saving the MediSave account fund with better interest rate, I changed the payment mode for my IncomeShield to cash payment as well in September 2007. As I was not free to make payment on the due date and Income had comfirmed via email that the payment due date has 30 days' grace period as usual. Hence, I made the payment about 1 or 2 weeks later.
To my surprise, when I got my CPF Statement of Account, I realised that my MediShield had reactivated with the deduction of MediShield payment from my Medisave account. I queried CPF on this and was told that this is the usual practice that when the payment was not made on the due date for IncomeShield the MediShield would be reactivated.
I wish to have your advice of whether this is double insured and whether there is any benefits of more coverage when I make a claim or this is totally overlapping of the same coverage. I heard that now CPF's MediShield has better coverage than other similar plans, hence I don't know whether I should terminate which one to save my unnecessary additional payment.
Could I appeal to Income for the reimbursement of the IncomeShield payment for not informing me this consequences which result to my additional incurred cost.
REPLY
You can ask NTUC Income to help you to sort out this problem. You should NOT pay two premiums for the same coverage. NTUC Income should have notified CPF that you are covered under Incomeshield (by cash) and prevent the re-activation of Medishield.
If this is not possible, you should ask NTUC Income to refund your premium for Incomeshield, in full. It is all right to be insured on Medishield only.
All the best.
Vitamin Account
My friend invested SGD 40,000 in a Vitamin Account offered by a bank. This is a structured product. The total payout for the past 3 years is 4.1%. The current value is 89.5%. The investor lost 6.4% for the past 3 years. During this time, the stockmarket showed a positive gain.
Lesson: Avoid all types of structured product, even if it is capital guaranteed. They are likely to give a poor yield if you keep it to maturity (5 years). If you terminate it before maturity, you are likely to suffer a loss.
Read this FAQ:
http://www.tankinlian.com/faq/sinvest.html
Lesson: Avoid all types of structured product, even if it is capital guaranteed. They are likely to give a poor yield if you keep it to maturity (5 years). If you terminate it before maturity, you are likely to suffer a loss.
Read this FAQ:
http://www.tankinlian.com/faq/sinvest.html
Cyber Defamation Law
South Korea plans to introduce a Cyber Defamation Law to regulate Internet freedom.
The new law is intended to deal with harmful Internet messages and to improve security and stem false information. It will bring the online medium in line with its tradtional counterparts.
Some measures being proposed are:
1. Suspend sites that go beyond limits
2. Require people posting their comments to use their real names
I believe that these measures are necessary. I have always used my personal name, in posting views on the Internet.
The new law is intended to deal with harmful Internet messages and to improve security and stem false information. It will bring the online medium in line with its tradtional counterparts.
Some measures being proposed are:
1. Suspend sites that go beyond limits
2. Require people posting their comments to use their real names
I believe that these measures are necessary. I have always used my personal name, in posting views on the Internet.
Financial advice
My blog aims to educate the public about financial matters.
I do not give specific advice to any person. If you want advice, you have to find a financial adviser.
You can get information on the list of FAs regulated by MAS by visiting the MAS website at http://www.mas.gov.sg/. under "Financial Institutions Directory".
Here is the specific list:
http://www.mas.gov.sg/fi_directory/index.html
I do not give specific advice to any person. If you want advice, you have to find a financial adviser.
You can get information on the list of FAs regulated by MAS by visiting the MAS website at http://www.mas.gov.sg/. under "Financial Institutions Directory".
Here is the specific list:
http://www.mas.gov.sg/fi_directory/index.html
What is a financial planner?
Q4: Does MAS regulate all financial planners? What is the difference between a financial planner and a financial adviser?
A: MAS regulates firms and persons that give advice on investment products to consumers. MAS does not regulate tax and estate planning activities.
Under the FAA, only firms licensed as a FA and firms that are exempt FAs can use the term "financial adviser". This helps you identify whether you are receiving financial advice from an entity regulated by MAS. MAS does not restrict the use of titles such as "financial planner", "financial analyst" or "financial consultant". You should be aware that persons who use such titles may or may not be regulated by MAS. You can get information on the list of FAs regulated by MAS by visiting the MAS website at www.mas.gov.sg. under "Financial Institutions Directory".
This advice, and other useful tips, can be found in this webpage:
http://www.moneysense.gov.sg/publications/guides_publications/Consumer_Portal_FAAGuide.html
A: MAS regulates firms and persons that give advice on investment products to consumers. MAS does not regulate tax and estate planning activities.
Under the FAA, only firms licensed as a FA and firms that are exempt FAs can use the term "financial adviser". This helps you identify whether you are receiving financial advice from an entity regulated by MAS. MAS does not restrict the use of titles such as "financial planner", "financial analyst" or "financial consultant". You should be aware that persons who use such titles may or may not be regulated by MAS. You can get information on the list of FAs regulated by MAS by visiting the MAS website at www.mas.gov.sg. under "Financial Institutions Directory".
This advice, and other useful tips, can be found in this webpage:
http://www.moneysense.gov.sg/publications/guides_publications/Consumer_Portal_FAAGuide.html
Sunday, August 03, 2008
Comparing yields on policies taken from two insurers
Dear Mr. Tan
I wish to seek your advice as to whether I am getting a fair share of the maturity sums I obtained from two policies maturing with two different companies.
For a 25 year term endowment policy with sum assured of $15,000 with AIA, I was paid the maturity sum of $30,271.95 which was $5,233.05 short of the projected amount in their original quotation when the policy was first taken up in 1983. On my appeal, they paid a further $2,469.63 making it a total of $32,741.58.
As for the NTUC Income Education Policy with a sum assured of $10,000 for a 20 year term, I was paid the maturity sum of $19,432.50 which was $2,137.50 short of the projected amount in their original quotation first taken up in 1988.
I have appealed to NTUC Income to pay the sum as projected originally but they have rejected this. They did not exercise understanding and flexibility as did AIA.
What I cannot understand is its agents have been telling Singaporeans that they charge lower premium and makes higher payout mainly becaused NTUC Income is a co-operative as against commercial Insurance companies like AIA, Prudential and Great Eastern. Instead, I now find AIA to be more compassionate, understanding and flexible while NTUC Income does not even bother to consider my appeal.
I seek your kind understanding and assistance on this matter. Hope you can advise whether what NTUC Income claims about giving me a better yield as compared to AIA is true.
REPLY
The yield on the AIA policy is 4.69% p.a. (25 years) and the yield on the Income policy s 5.44% (20 years). The yield from Income is better than AIA, although the policy was taken for a shorter period. In both cases, the yield has been satisfactory, as you get more thn 4.5% p.a.
AIA
25 year policy,
Premium: $57 monthly
Maturity benefit: $32,742
Yield 4.69% p.a.
Income
20 year polcy
Premium: $44.30
Maturity benefit: $19433
Yield 5.44% p.a.
I wish to seek your advice as to whether I am getting a fair share of the maturity sums I obtained from two policies maturing with two different companies.
For a 25 year term endowment policy with sum assured of $15,000 with AIA, I was paid the maturity sum of $30,271.95 which was $5,233.05 short of the projected amount in their original quotation when the policy was first taken up in 1983. On my appeal, they paid a further $2,469.63 making it a total of $32,741.58.
As for the NTUC Income Education Policy with a sum assured of $10,000 for a 20 year term, I was paid the maturity sum of $19,432.50 which was $2,137.50 short of the projected amount in their original quotation first taken up in 1988.
I have appealed to NTUC Income to pay the sum as projected originally but they have rejected this. They did not exercise understanding and flexibility as did AIA.
What I cannot understand is its agents have been telling Singaporeans that they charge lower premium and makes higher payout mainly becaused NTUC Income is a co-operative as against commercial Insurance companies like AIA, Prudential and Great Eastern. Instead, I now find AIA to be more compassionate, understanding and flexible while NTUC Income does not even bother to consider my appeal.
I seek your kind understanding and assistance on this matter. Hope you can advise whether what NTUC Income claims about giving me a better yield as compared to AIA is true.
REPLY
The yield on the AIA policy is 4.69% p.a. (25 years) and the yield on the Income policy s 5.44% (20 years). The yield from Income is better than AIA, although the policy was taken for a shorter period. In both cases, the yield has been satisfactory, as you get more thn 4.5% p.a.
AIA
25 year policy,
Premium: $57 monthly
Maturity benefit: $32,742
Yield 4.69% p.a.
Income
20 year polcy
Premium: $44.30
Maturity benefit: $19433
Yield 5.44% p.a.
Joke: Record your gossip
Frank Smith bought his wife an answerphone. His wife recorded this message, "This is the Smith residence. Unfortunately, Mrs. Smith is out, but you can leave a message. Please start your rumour or gossip after the tone. "
Change in business culture of banks
Dear Mr. Tan,
I witnessed the changes in the banking industry first hand. When I joined a bank in 1989, bankers were well regarded even though our salaries were not as high as today. Integrity was the most important quality, as we are given the responsibility to look after depositors' money.
Banking is a business where the product is easy to sell, as we are giving out money and many people need a loan from the bank. Bankers must put the depositors' interest above sales.
The bank will assess your character and your technical skill sets. Once you are selected to join the bank, it is a privilege. If you are selected to be a credit manager you have arrived as the bank has empowered you to give loans. You have a long term career with the bank.
Foreign exchange dealers were there to support the lending business and not there to gamble or speculate on the bank's balance sheet.
Investment bankers are not allowed to take in public deposits. They start with a clean page every day. In essence, they were brokers, they have to hustle to make a living. No qualms about misleading investors. However they were highly paid but they put their money back into the firm as they were partnerships. That acts as a check to their excesses.
Later when they became listed companies, they took even more risk with other peoples money. Inevitably, all the commercial bankers wanted to be investment bankers as they are so well paid.
Allowing commercial banks to become investment banks is a recipe for disaster, as they have the balance sheet and public deposits to gamble with and have access to a large retail franchise to exploit. I never thought I will live to see the day when banks are selling their credit cards in Raffles Place like tourist touts. We sink to a new low when we out sourced it to a third party.
Where is the bank culture now ? Greed is acceptable. Well paid, short term careers is the order of the day because someone else can pick up your mess. Any way you are paid more than if you have worked longer with the institution.
I witnessed the changes in the banking industry first hand. When I joined a bank in 1989, bankers were well regarded even though our salaries were not as high as today. Integrity was the most important quality, as we are given the responsibility to look after depositors' money.
Banking is a business where the product is easy to sell, as we are giving out money and many people need a loan from the bank. Bankers must put the depositors' interest above sales.
The bank will assess your character and your technical skill sets. Once you are selected to join the bank, it is a privilege. If you are selected to be a credit manager you have arrived as the bank has empowered you to give loans. You have a long term career with the bank.
Foreign exchange dealers were there to support the lending business and not there to gamble or speculate on the bank's balance sheet.
Investment bankers are not allowed to take in public deposits. They start with a clean page every day. In essence, they were brokers, they have to hustle to make a living. No qualms about misleading investors. However they were highly paid but they put their money back into the firm as they were partnerships. That acts as a check to their excesses.
Later when they became listed companies, they took even more risk with other peoples money. Inevitably, all the commercial bankers wanted to be investment bankers as they are so well paid.
Allowing commercial banks to become investment banks is a recipe for disaster, as they have the balance sheet and public deposits to gamble with and have access to a large retail franchise to exploit. I never thought I will live to see the day when banks are selling their credit cards in Raffles Place like tourist touts. We sink to a new low when we out sourced it to a third party.
Where is the bank culture now ? Greed is acceptable. Well paid, short term careers is the order of the day because someone else can pick up your mess. Any way you are paid more than if you have worked longer with the institution.
Continue life policy after migration?
Hi Mr. Tan,
My mother is a big fan of your blog and she's been nudging me to seek your advice on my NTUC Income Life Policy Insurance.
I would be going to look for work in Sydney and looking to stay there. Should I terminate my policy and get back my money? Should I continue feeding this policy?
REPLY
In the globalised world, it is quite easy to continue your existing policy in Singapore, even if you live overseas.
You should decide on your existing life policy based on the future yield. Generally, I advise a person to continue an existing life policy, as they have already incurred the upfront charges. Going forward, the policy should be able to give a fairly satisfactory return.
You can ask your insurer to quote you the cash value now and in 5 years time for you to make a decision.
Read this FAQ:
http://www.tankinlian.com/faq/exist.html
For your future financial planning, you should read this FAQ: http://www.tankinlian.com/faq/fptips.html
All the best.
My mother is a big fan of your blog and she's been nudging me to seek your advice on my NTUC Income Life Policy Insurance.
I would be going to look for work in Sydney and looking to stay there. Should I terminate my policy and get back my money? Should I continue feeding this policy?
REPLY
In the globalised world, it is quite easy to continue your existing policy in Singapore, even if you live overseas.
You should decide on your existing life policy based on the future yield. Generally, I advise a person to continue an existing life policy, as they have already incurred the upfront charges. Going forward, the policy should be able to give a fairly satisfactory return.
You can ask your insurer to quote you the cash value now and in 5 years time for you to make a decision.
Read this FAQ:
http://www.tankinlian.com/faq/exist.html
For your future financial planning, you should read this FAQ: http://www.tankinlian.com/faq/fptips.html
All the best.
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