http://www.straitstimes.com/STForum/Story/STIStory_510873.html
My comment:
It is important for the Police to investigate a potential fraudulent practice promptly, rather than expect the public to provide evidence. The public do not have the resources and the power to carry out an investigation to produce the evidence.
There are several potentially fraudulent practices, such as land banking and get rick quick schemes. If the Police does not investigate, more people will fall victim to the frauds.
Tuesday, April 06, 2010
Kirby McInerney on CNBC
Dear Best Friends and Business Associates,
Roger Kirby will be appearing on CNBC Asia Squawk Box Wednesday morning at 7:30AM Singapore time. He'll be interviewed from NY, and the anchors will be Martin Soong and Karen Tso. The topics that he will be discussing include:
1) What does your firm do for Asian investors?
1) What does your firm do for Asian investors?
2) What rights to Asian investors have in a US court?
3) What results have Asian investors received/could receive in a US court?
4) Are these cases worth it financially given the time involved in reaching a resolution?
5) Do you expect more cases to be brought?
6) Is fraud on the rise? In what sectors? In what ways?
7) What kind of regulation will prevent the fraud that has been committed?
Teo Guan Hock
Do not trust unrealistic projections
Dear Mr. Tan,
I would like to seek your advice on a policy which I had signed up, which is still within the 14 day free look period.
1) The benefit illustration of my policy showed that the "effect of deduction" drops significantly in the 25th year as compared to the 20th year. Would you know the reason for this?
Reply: I do not trust this type of projection where the effect of deduction drop "magically" after 20 years, i.e. the maturity value increases "magically" on the 25th year. When the time comes, the insurance company will find many excuses to tell you whey they are not able to pay out the "magical" increase. Remember, these figures are not guaranteed.
2) I am a bit confused as to which year I should take to calculate the "effect of deduction". Assuming 5.25% Investment Return, the effect of deduction at the 20th year is 37% while at the 25th year, it is 17%. The difference is vast and if I take the 20th year calculation, the policy is obviously too expensive but if I take the 25th year calculation, the policy appears reasonable. Can you advise which is the correct figure I should use?
Reply: Do not trust the "magical" figure shown on the 25th year.
3) I informed my agent that distribution cost works out to be 7.3% which is quite high in my opinion. However, he informed me that over 25 years, the distribution cost only works out to be 0.3% a year and that if I buy ETF yearly, the transaction costs will work to be around there. Is this argument valid?
Reply: If you invest in ETF, the distribution cost is 0.3% of the total invested sum, compared to 7.3% for the life insurance policy. It is dishonest for the agent to divide the 7.3% by 25 years and say that the cost is the same. The agent is telling you a blatant lie.
4) I informed my agent that I have heard horror stories of policies falling way off projected returns upon maturity. However, he mentioned that in the past, the projections were very high and that now, MAS has regulated the projections to be a very reasonable and definitely acheivable 5.25%. Again, is this true?
Reply: The horror story will happen again in the future, due to the unrealistic projection on the 25th year.
5) I highlighted that saving through ETF or investing in equities may yield more but my agent informed me that it is easier said than done and it takes a lot of discipline to keep investing and monitoring shares and buying the policy would be a disciplined way to save for the future. What do you think of this?
Reply: It is easy to keep investing in ETF. You will have better control of your money. There is no need to monitor the ETF as it is well diversified and invested in 30 large shares.
6) Finally, do you think that this policy is reasonable and I should keep it or is it too expensive and I should terminate it while I still can?
Reply: I would take advantage of the 14 day free look period, and give up the policy for a full refund.
You can buy my book, Practical Guide on Financial Planning here. Spend $12 and save a few thousand dollars. Be educated. Do not be misled by dishonest agents.
I would like to seek your advice on a policy which I had signed up, which is still within the 14 day free look period.
1) The benefit illustration of my policy showed that the "effect of deduction" drops significantly in the 25th year as compared to the 20th year. Would you know the reason for this?
Reply: I do not trust this type of projection where the effect of deduction drop "magically" after 20 years, i.e. the maturity value increases "magically" on the 25th year. When the time comes, the insurance company will find many excuses to tell you whey they are not able to pay out the "magical" increase. Remember, these figures are not guaranteed.
2) I am a bit confused as to which year I should take to calculate the "effect of deduction". Assuming 5.25% Investment Return, the effect of deduction at the 20th year is 37% while at the 25th year, it is 17%. The difference is vast and if I take the 20th year calculation, the policy is obviously too expensive but if I take the 25th year calculation, the policy appears reasonable. Can you advise which is the correct figure I should use?
Reply: Do not trust the "magical" figure shown on the 25th year.
3) I informed my agent that distribution cost works out to be 7.3% which is quite high in my opinion. However, he informed me that over 25 years, the distribution cost only works out to be 0.3% a year and that if I buy ETF yearly, the transaction costs will work to be around there. Is this argument valid?
Reply: If you invest in ETF, the distribution cost is 0.3% of the total invested sum, compared to 7.3% for the life insurance policy. It is dishonest for the agent to divide the 7.3% by 25 years and say that the cost is the same. The agent is telling you a blatant lie.
4) I informed my agent that I have heard horror stories of policies falling way off projected returns upon maturity. However, he mentioned that in the past, the projections were very high and that now, MAS has regulated the projections to be a very reasonable and definitely acheivable 5.25%. Again, is this true?
Reply: The horror story will happen again in the future, due to the unrealistic projection on the 25th year.
5) I highlighted that saving through ETF or investing in equities may yield more but my agent informed me that it is easier said than done and it takes a lot of discipline to keep investing and monitoring shares and buying the policy would be a disciplined way to save for the future. What do you think of this?
Reply: It is easy to keep investing in ETF. You will have better control of your money. There is no need to monitor the ETF as it is well diversified and invested in 30 large shares.
6) Finally, do you think that this policy is reasonable and I should keep it or is it too expensive and I should terminate it while I still can?
Reply: I would take advantage of the 14 day free look period, and give up the policy for a full refund.
You can buy my book, Practical Guide on Financial Planning here. Spend $12 and save a few thousand dollars. Be educated. Do not be misled by dishonest agents.
CNA More quit workforce in their 50s
Read this article in Channel News Asia.
My comment:
I believe that most people want to work to an older age, but they are likely to be retrenched due to restructuring of the company, the desire of the company to increase their profits by employing lower cost workers and the weak protection of workers' rights.
My comment:
I believe that most people want to work to an older age, but they are likely to be retrenched due to restructuring of the company, the desire of the company to increase their profits by employing lower cost workers and the weak protection of workers' rights.
Different management style
Dear Mr Tan,
After serving NTUC for 30 years, I must say that we have lost a caring leader that really look after the welfare and investment of policy holders. With the new comer, all the existing management staff who have followed you for many years have to give way !!! One of the “victim” is a friend of mine and I could not believe the way he has been treated. After spending almost all his life in this career, learning from your style of hard working and not to waste unnecessary money for any expenses related to work, he has to face a new comer after you left. With a promise of two years contract, he was asked to leave only half a year later after he has given his full collaboration to new staff understudy from him !
It appears the new management style of working is totally different from yours and the new policy is no longer “attractive” as before ! It is unfortunate to see such things happened in one of the most modern city in the world.
G
Monday, April 05, 2010
Time to review COE system?
Published in Straits Times on 5 April 2010
The current system of bidding for Certificates of Entitlement has been operating for more than twenty years. When it was first introduced, it was envisaged that the end buyers would be bidding for the certificates.
Over the years, the bidding for these certificates appear to be dominated by the motor dealers who make a large profit on the trading of these certificates, adding to the total cost of ownership of a vehicle. The bidding system also encourages speculation and price volatility due to greed and fear.
One obstacle for the end buyer to bid directly is the high price of the certificate and the lack of financing for this item.
I wish to suggest the following modifications to the system reduce the speculative activity:
- Allow the successful bidder up to of six months to find a suitable vehicle
- Require the successful bidder to pay only 10% at the time of bidding and the remaining 90% on purchase of the vehicle
- Change the bidding cycle to three months (instead of the current one month).
The proposed changes will create a fairer and more transparent market for the certificate of entitlements and remove the unhealthy speculation.
Tan Kin Lian
Dear Mr Tan,
I saw your letter to the ST Forum today. I applaud you that you raised this issue for consumers like me. I was held captive by the COE system. The COE bidding discourages end users to bid due to the high upfront cash layout as deposit. Genuine bidders with limited cash will be left out. We are left at the mercy of the car companies who do not provide transparent cost structure.
Very often, you will not get a good car price if you got for your own COE. LTA insists that COE is transparent but COE is obviously a tool for car company to hide profits. I do not have the history of when COE started, (how many people have? we buy cars at most 5 times in our life time?) e.g. why there is this 'Open Category' where car companies can hold them and trade later, exchanging hands ... There seems to be more happening than we, as consumers, know. This is not transparent and definitely unfair.
S Y Tan
The current system of bidding for Certificates of Entitlement has been operating for more than twenty years. When it was first introduced, it was envisaged that the end buyers would be bidding for the certificates.
Over the years, the bidding for these certificates appear to be dominated by the motor dealers who make a large profit on the trading of these certificates, adding to the total cost of ownership of a vehicle. The bidding system also encourages speculation and price volatility due to greed and fear.
One obstacle for the end buyer to bid directly is the high price of the certificate and the lack of financing for this item.
I wish to suggest the following modifications to the system reduce the speculative activity:
- Allow the successful bidder up to of six months to find a suitable vehicle
- Require the successful bidder to pay only 10% at the time of bidding and the remaining 90% on purchase of the vehicle
- Change the bidding cycle to three months (instead of the current one month).
The proposed changes will create a fairer and more transparent market for the certificate of entitlements and remove the unhealthy speculation.
Tan Kin Lian
Dear Mr Tan,
I saw your letter to the ST Forum today. I applaud you that you raised this issue for consumers like me. I was held captive by the COE system. The COE bidding discourages end users to bid due to the high upfront cash layout as deposit. Genuine bidders with limited cash will be left out. We are left at the mercy of the car companies who do not provide transparent cost structure.
Very often, you will not get a good car price if you got for your own COE. LTA insists that COE is transparent but COE is obviously a tool for car company to hide profits. I do not have the history of when COE started, (how many people have? we buy cars at most 5 times in our life time?) e.g. why there is this 'Open Category' where car companies can hold them and trade later, exchanging hands ... There seems to be more happening than we, as consumers, know. This is not transparent and definitely unfair.
S Y Tan
Role of insurance agents
Insurance agents can play a useful role in marketing insurance to consumers. However, the insurance products must be designed to be fairly priced and to give good value to consumers. The design of the product is the responsibility of the management and the actuary.
Many general insurance products carry a commission rate of 10% to 15% of the premium. This is acceptable, if the premium is based on the risk that is covered by the policy. This rate of commission can be applied to health and term insurance policies.
For savings and investment policies, the commission rate should be much lower, e.g. similar to the chargespayable for the purchase of shares and bonds, e.g. brokerage is 0.3% of the amount invested. It is wrong for the commission and distribution cost to take away one or two years of the savings.
I hope that the life insurance companies and their management and agents change their practice to offer life insurance products that are fair and good for consumers. This will allow insurance agents to hold their heads high that they are serving their clients well.
I like to ask my readers to be fair in making your comments and not to use this blog to "bash" insurance agents. Please state your views objectively.
Tan Kin Lian
Many general insurance products carry a commission rate of 10% to 15% of the premium. This is acceptable, if the premium is based on the risk that is covered by the policy. This rate of commission can be applied to health and term insurance policies.
For savings and investment policies, the commission rate should be much lower, e.g. similar to the chargespayable for the purchase of shares and bonds, e.g. brokerage is 0.3% of the amount invested. It is wrong for the commission and distribution cost to take away one or two years of the savings.
I hope that the life insurance companies and their management and agents change their practice to offer life insurance products that are fair and good for consumers. This will allow insurance agents to hold their heads high that they are serving their clients well.
I like to ask my readers to be fair in making your comments and not to use this blog to "bash" insurance agents. Please state your views objectively.
Tan Kin Lian
Book-keeping scam
A FEW weeks ago, two Republican House members asked Ben Bernanke, the chairman of the Federal Reserve, whether the Fed knew — before Lehman’s bankruptcy examiner revealed it — about the bookkeeping scam at Lehman known as “Repo 105.”
Well, the truth is this: The collapse of Enron back in 2001 revealed that the biggest financial institutions, here and abroad,were busy creating products whose sole purpose was to help companies magically transform their debt into capital or revenue ...
http://www.nytimes.com/2010/04/04/opinion/04koniak.html?pagewanted=all
Well, the truth is this: The collapse of Enron back in 2001 revealed that the biggest financial institutions, here and abroad,were busy creating products whose sole purpose was to help companies magically transform their debt into capital or revenue ...
http://www.nytimes.com/2010/04/04/opinion/04koniak.html?pagewanted=all
High rate of tax
America is discussing how to curb the high salaries of top CEOs.
In my view, the best way is to impose tax of 90% on salaries above 50 times of the average national wage. The current average net compensation in America is $40,000. This will mean that the special tax will apply to salary above $2 million. The salary of the President of America is only $400,000.
There is an argument that high tax will drive away the top CEOs. I disagree. The top CEOs have to work in a company that is likely to use the human resources or market of the domicile country. It is not easy for the top CEOs to relocate to another country. For example, the health care companies in America make their profit in that country and cannot be relocated overseas. This also applies to the profits from the other big professions, such as law and accountancy.
The financial services industry may be one that can be relocated overseas. However, the top bankers and financial traders make their profits from excessive speculation and leverage, which is likely to be curbed and is not sustainable anyway.
The wonderful outcomes of a high tax on excessive earnings are:
- prevent the rampant profiteering at the expense of consumers
- can abolish the wasteful and unfair Goods and Services Tax.
There should also be an international agreement among the countries to prevent the use of a tax haven strategy to attract the high income earners to move their profits or earnings into that country. It is almost like cheating other countries of their tax revenue.
Tan Kin Lian
In my view, the best way is to impose tax of 90% on salaries above 50 times of the average national wage. The current average net compensation in America is $40,000. This will mean that the special tax will apply to salary above $2 million. The salary of the President of America is only $400,000.
There is an argument that high tax will drive away the top CEOs. I disagree. The top CEOs have to work in a company that is likely to use the human resources or market of the domicile country. It is not easy for the top CEOs to relocate to another country. For example, the health care companies in America make their profit in that country and cannot be relocated overseas. This also applies to the profits from the other big professions, such as law and accountancy.
The financial services industry may be one that can be relocated overseas. However, the top bankers and financial traders make their profits from excessive speculation and leverage, which is likely to be curbed and is not sustainable anyway.
The wonderful outcomes of a high tax on excessive earnings are:
- prevent the rampant profiteering at the expense of consumers
- can abolish the wasteful and unfair Goods and Services Tax.
There should also be an international agreement among the countries to prevent the use of a tax haven strategy to attract the high income earners to move their profits or earnings into that country. It is almost like cheating other countries of their tax revenue.
Tan Kin Lian
Lost & Found Portal
Have you lost a mobile phone, notebook computer, pet or other item. Report it at the Lost & Found portal. If you have found an item, you can also report it here. Our staff will match the reports and contact the owner and the finder. This service is free. Click here.
Please help to publicise this service through your blog, twitter, facebook and other social media.
Please help to publicise this service through your blog, twitter, facebook and other social media.
Sunday, April 04, 2010
Al Jazeera English TV
Al Jazeera English TV is dropped from SingTel Mio TV from April 1, 2010. Here is a selection of some of their videos
http://dlzj.wordpress.com/2010/04/03/al-jazeera-english-dropped-from-singtel-mio-tv-from-april-1st/
http://dlzj.wordpress.com/2010/04/03/al-jazeera-english-dropped-from-singtel-mio-tv-from-april-1st/
Microsoft .NET developer
I wish to look for developer who is familiar with Microsoft .NET to work on a project or to work at my office. Preference will be given to a person living in or near Ang Mo Kio. If you are interested, send an email with your resume to kinlian@gmail.com.
If you wish to attend a course, there may be a government scheme to give you a training allowance and work for me after completing the training course.
If you wish to attend a course, there may be a government scheme to give you a training allowance and work for me after completing the training course.
Private medical practice
Some of the trends in USA may come to Singapore. Read the views of some doctors here.
Modify the COE system
The COE system for allocating licences for new vehicles has been used for more than 20 years in Singapore. It is a crude system that produces the following negative impacts:
- it encourages speculation on the COE prices and lead to price escalation due to fear of further increases
- the motor dealers take advantage of the system to make speculative profits at the expense of consumers.
Is there a better system? I like to propose the following modification to smoothen price volatility, reduce speculation and allow consumers to bid directly:
- have COE bidding for six months (and not monthly)
- the car owner is allowed six months to buy a car (and the COE will start from the date of purchase)
- the car owner needs to pay a deposit of 10% to make a bid and the balance on receiving the COE
- an owner who sells a new car within one year has to pay a levy (to prevent speculation)
Tan Kin Lian
- it encourages speculation on the COE prices and lead to price escalation due to fear of further increases
- the motor dealers take advantage of the system to make speculative profits at the expense of consumers.
Is there a better system? I like to propose the following modification to smoothen price volatility, reduce speculation and allow consumers to bid directly:
- have COE bidding for six months (and not monthly)
- the car owner is allowed six months to buy a car (and the COE will start from the date of purchase)
- the car owner needs to pay a deposit of 10% to make a bid and the balance on receiving the COE
- an owner who sells a new car within one year has to pay a levy (to prevent speculation)
Tan Kin Lian
Great websites
I wish to look for great websites on the following:
- financial education
- education (popular universities)
- travel (great places to visti)
I will put the links in this page:
http://www.easysearch.sg/Links.aspx
If you know of these websites, please send a link to kinlian@gmail.com or post them as a comment. I will put them as links in my portal.
- financial education
- education (popular universities)
- travel (great places to visti)
I will put the links in this page:
http://www.easysearch.sg/Links.aspx
If you know of these websites, please send a link to kinlian@gmail.com or post them as a comment. I will put them as links in my portal.
Unconscionable remuneration
U.S. health insurance giant WellPoint Inc. revealed Friday that it boosted its chief executive's compensation 51% last year. Chief Executive Angela F. Braly saw her total compensation shoot to $13.1 million, from $8.7 million a year earlier. "It's unconscionable," said Mark Weiss, a Century City podiatrist whose policy will jump 35%.. "How much more does somebody need?"
http://www.latimes.com/features/health/la-fi-wellpoint3-2010apr03,0,3259739.story
Someone complained to me that top executives in life insurance companies in Singapore are getting big salary increases while the bonuses to policyholders are being cut. It is sad that the regulator does not realize that they have a responsibility to protect the welfare of policyholders in getting a fair return on their long term savings.
http://www.latimes.com/features/health/la-fi-wellpoint3-2010apr03,0,3259739.story
Someone complained to me that top executives in life insurance companies in Singapore are getting big salary increases while the bonuses to policyholders are being cut. It is sad that the regulator does not realize that they have a responsibility to protect the welfare of policyholders in getting a fair return on their long term savings.
Electric vehicles for short distance travel
More people are now using bicycles for short trips, e.g. to the MRT station. They have to use pedestrian walkways as there are no separate lanes for bicycles and it is dangerous to cycle on the main roads. Pedestrians have complained about the safety hazard.
Some cyclists have asked for separate lanes to be provided for them. However, this is not an efficient solution. If more people cycle to the MRT station, there will be insufficient parking space for the bicycles and the risk of theft and vandalism. Bicycles are not suitable for rainy days.
A better system is to use small electrically driven vehicles (like a golf cart) on a for time based hiring. The vehicles can be parked in various locations in a town and used by the public (who have to register as members) to move from one station to another. This system requires the initiative of the town council to provide parking spaces and to have separate paths for the vehicles.
Paris is implementing such a system.
Tan Kin Lian
Some cyclists have asked for separate lanes to be provided for them. However, this is not an efficient solution. If more people cycle to the MRT station, there will be insufficient parking space for the bicycles and the risk of theft and vandalism. Bicycles are not suitable for rainy days.
A better system is to use small electrically driven vehicles (like a golf cart) on a for time based hiring. The vehicles can be parked in various locations in a town and used by the public (who have to register as members) to move from one station to another. This system requires the initiative of the town council to provide parking spaces and to have separate paths for the vehicles.
Paris is implementing such a system.
Tan Kin Lian
Investing in Foreign Currency
Some people like to invest in foreign currencies to earn a higher yield. For example, they can earn 3.1% on Australian dollars (1 month deposit) compared to 0.2% on Singapore dollars. However, they have to consider the spread of 1.7% in converting to Australian dollars and back. The higher interest rate is taken away entirely by the spread for short time deposits.
You can reduce the spread to 0.1% by investing in Australian dollars through the forex trading market. For example, if you wish to invest in AUD 50,000 you can buy the same amount in the forex market. Although you have to put in a margin of only 2%, i.e. AUD 1,000, you can keep the remaining 98% of the invested sum in Singapore deposit and enjoy the same investment result.
Subscribe to:
Posts (Atom)