National productivity Fund

Mr Kenneth Jeyaretnam wrote this open letter, published in his website, regarding the National Productivity Fund. He is concerned that a lot of money has been transferred into this fund and there is no accountability of the money spent. I share his concern. Link

What is a life annuity and how does it work?

Suppose you have $400,000 in saving at age 65. You decide to set aside $100,000 as an emergency fund or to give to your children when you pass away. You invest $300,000 to get a monthly income.

You are told that the life expectancy for a normal person at age 65 is 20 years, and you belong to this category, i.e .you are not unhealty nor super healthy.

The insurance company (or CPF) offers you two choices:

a)  FIXED ANNUITY FOR 20 YEARS. You can get $1,840 per month payable for a fixed period of 20 years. If you die earlier, the balance of your savings will be paid to your family. However, the money will run out after 20 years, and you will get nothing after than.

b) LIFE ANNUITY. You will get $1,840 per month payable for your lifetime. If you die before 20 years, the balance of your savings will be kept in the fund to pay the monthly income for those who live beyond 20 years. If you live beyond 20 years, you will continue to get the monthly payment as it is taken from those who left the balances in the pool when they die.

Which annuity do you prefer - the fixed annuity for 20 years, or the life annuity?

Under the fixed annuity, you stand the risk that you will live beyond 20 years and your money would have run out by that time. Under the life annuity, you are assured of receiving the income for your lifetime, but it could be shorter or longer than 20 years. You are pooling your "longevity risk" with the other members of the pool.

Your decision will depend on your belief - do you like to pool your risk with the other members of the fund? This assumes that you belong to the group that expects to have a normal life expectancy, i.e. you do not have any reason to believe that you will die earlier or later than most people of the same age as you.

What is your choice?

c-pearl.com

Visit this website for the following information that may be useful to you:
www.c-pearl.com

Condo - details of condos in Singapore
Bus Service - find bus services at any bus stop, or all the stops for any service
Forms - locate forms from government agencies or business organisations (CPF now available, other forms will be provided
Find Word - help for this 4 picture-1 word game
Financial Planning - prepare your financial plan
Financial Projection - new format (being developed).
TKL books - under development.

www.c-pearl.com

Pinnacle Notes

If you are an investor in the Pinnacle Notes, please read this notice urgently.

Dear Mr Tan,

As you may know, the deadline for investors to claim their share of the Pinnacle settlement fund is 2 June.  Would you perhaps post some notice on your blog about the claim deadline?  Attached is an ad that we ran in the ST last week that contains all the relevant information for claiming.  Feel free to post the ad itself. 

Daniel Hume

Kirby McInerney LLP

Click here:
http://c-onyx.com/pdf/2290

Land banking in Georgia USA

I received a letter from a UK lawyer that a comment posted in my blog is defamatory and asked me to remove the comment. I have done so.

I am surprised that this blog, which is already three years old, is still attracting the attention of the unnamed company X. Something must be happening here.

http://tankinlian.blogspot.sg/2012/07/land-banking-in-georgia-usa.html

Do not invest in unregulated investments

Dear Mr Tan,
I read your blog.
Have you heard about this UFUN (www.ufunclub.com)?
A lot of people (Spore, Msia, Thai) are investing and claim they are getting good returns in the first few months. Is this kind of investment safe?
They give dividends (in the form of e-token) to members and the returns are good.
They are inviting a lot of new members to join.
Each investment can be US$500, US$1000, US$5000, US$10000 and US$50000.
‎Pls comment if you know about this UFUN scheme and if some people have already fallen prey to this scheme.

REPLY
I have not heard about this scheme. My comments below apply to questionable schemes in general and are not related to this specific scheme.

I would advice people to avoid investing money in schemes that are not regulated by the authority. It is easy to give your money away, but quite difficult to get it back.

Even if you are getting back the return, in the form of dividends or principle, remember that the money that is used to pay you may come from the investments of other people. Similarly, your money may be used to pay off the earlier investors.

This type of scheme is called a Ponzi scheme. The Ponzi scheme will grow as more and more people join. Eventually, when there are more people wishing to withdraw their investments, the scheme will close down and the promoters will disappear. The investors will not get their money back.

Lighten Medisave burden on self-employed seniors

Contributed by Dr. Tommy Wong

From 1 January 2014, the Medisave contribution rate for non-pensioners and for those who are age 60 and above is 9.5%. This rate applies to both employee (monthly wage ≥ $750) and self-employed (average monthly income > $1,500). There is a cap of $5,700- on the annual contribution for the self-employed. While this practice appears fair on surface, there is actually a hidden burden to the self-employed.

For the employee, the following table shows the contribution rates by the employer and employee to the employee’s CPF account. So even though the Medisave contribution rate is 9.5%, depending on the age, the employee's ​​contribution rate is ​7.5% or 5.0%.

Employee Age (Years)	Contribution Rate (for monthly wages ≥ $750)
	Contribution by Employer (% of wage)	Contribution by Employee (% of wage)	Total Contribution (% of wage)
Above 60-65	7	7.5	14.5
Above 65	6.5	5	11.5

On the other hand, for the self-employed, since there is no employer’s contribution, they have to pay the entire 9.5% contribution all from their own income. So, compared to an employee, his take home pay is lower. For the self-employed whose financial situation is not well off, this is a real burden.

Can the Government review the Medisave contribution rate for the self-employed seniors so that their burden​ can be lightened?​

Dr. Tommy Wong is the author of the book series "Wisdom on How to Live Life" The ebook series can be ordered at http://c-opal.com/pdfbook/6. His website is at http://wisdomlife.page4.me/.

How to use the IRR function

 you have a complicated stream of cash flows under a life insurance policy, you can use the IRR function to calculate the yield, as explained here:http://c-onyx.com/page/1893

Internet banking is difficult with DBS Bank

If I use the standard of the internet banking system of DBS Bank as a gauge, I have to declare that the level of efficiency in Singapore is deplorable. It is so wasteful and inefficient. That is why Singapore has become so costly, and has achieved the distinction of being the most costly city in the world. 
Somehow, the impractical approach adopted by our regulars and businesses towards managing business risks has added layer of costs and waste to the economy. 
It can be so costly so to handle simple business transactions and to make payments.

Here is my painful experience. I spent one hour to make payroll for four employees through Internet Banking for DBS Bank today. 
As there were two new employees, I have to register them as "a new beneficiary". After registration, I could not find these beneficiaries. 
I called their hotline, listen to all kinds of irrelevant messages and spoke to their help staff. 
She asked me to click a few buttons, but none worked. She had to go and check their back end system and call me back.
My admin staff was at my side to double check that the entries were made correctly. She wasted one hour as well.
I may have to revert to paying by cheques.
This is the level of inefficiency that I have to encounter each month. My feedback to DBS Bank over the past year went through deaf ears. They don't care.
I could not move to another bank as they do not have a branch nearby.

Coal mining venture - is this a scam?

Is this investment a scam?
http://c-onyx.com/page/1902

If you offer you a guaranteed interest rate and a buyback option, do you find it to be more acceptable?

Create a pseudo rural sector to raise the reproduction rate

In most countries, the marriage and child birth rate in the cities is low. This is due to the high cost and stress of city life. These countries have a rural sector where the cost of living is low and where most people married at a young age and raise many children.

These countries with a rural sector have an overall fertility rate that is higher than countries with a high urban population.

If Singapore wishes to increase our reproduction rate, we need to build a "rural sector" where some families can afford to marry at a younger age and raise a family. But it is not possible to have a real rural sector in Singapore due to our small land area and the high cost of housing.

We can create a pseudo rural sector which allows some families to marry at a younger age and raise a family.

 How can this be done?

The Deductible under Medishield Life can be removed

I find it quite ridiculous that we take so much trouble to design a medical insurance scheme, called Medishield, that pays a small proportion of the hospital bill. It is better to change the scheme to cover a larger proportion of the hospital bill and make it more meaningful. 
One change is to remove the Deductible or reduce it to small amount. 
Here is the explanation
http://c-onyx.com/page/1894

Hedging a stock portolio

I have $X invested in shares, mostly in Singapore. I do not like the events in Ukraine, Iraq and South China Sea. I wanted to sell some of my share holdings, but it will take some time. 
I decided, as an alternative, to sell $X in futures (S&P and Nikkei). If the stock market falls by 5%, I hope to be able to gain 5% on the futures. However, if the stock market rises by 5%, I will lose 5% on the futures. So, my net exposure should be nil.
My actual holdings in shares will not correlate exactly with the two indices that I have sold. So, there will still be a small net exposure, perhaps of 10% or so. It does not matter. At least, I am more than 90% protected.
When the events are resolved, I can remove the positions in the S&P and Nikkei and continue to hold my long stock position.
This is an example of using the futures to hedge an existing stock portfolio.

I use the online platform called Plus500.com. It is easy to use and is much better than other platforms that I have tried previously.

Tan Kin Lian

CPF milestones and timelines

http://leongszehian.com/?p=9248

5 July event in Hong Lim Park

I have decided to speak at the 5 July event in Hong Lim Park asking if Lee Hsien Loong is the right person to lead Singapore. https://www.facebook.com/events/657651847623510/?ref_dashboard_filter=upcoming

I hope that many of you will turn up to hear my speech. Do register in the page to show that you are joining the event. 

Question: will I support or oppose this motion? Come and hear my views.

A pathetic response from a Member of Parliament

The 76 year old lady begged for her CPF money to be returned to her. MP Hri Kumar could only say that these are the rules, and everyone must abide by the rules - good and bad. They cannot take the good without the bad.
https://www.youtube.com/watch?feature=player_embedded&v=70AbFnGD928

I find the MP's reply to be pathetic. Surely an MP can give a better answer? Does the MP know that the lady, and many others, did not agree to the rules that lock away their CPF money?

A better answer from a good MP is - if you know how to take care of your money, if you know the consequences of your decision, and your personal circumstances justify the return of your CPF money, I will speak on your behalf to ask for your money to be returned to you.

And this special consideration should be given to other people who have good reason to take out their CPF money.

This will create some work for the MP and for CPF, but what are they elected or employed for? They have to use their judgment and do not implement rules blindly !

Poor standard of our civil service

I applied to speak at Hong Lim Park and received an approval e-mail from the National Parks Board.

Dear applicant,

Your application to register your event has been approved. In registering your event, you have agreed to the Speakers’ Corner terms and conditions of approval for events and activities carried out at Speakers’ Corner, Hong Lim Park.

Please note that you will be required to apply for a police permit or licence if any of the organisers and speakers are not Singapore citizens, or if any of the participants are not Singapore citizens or permanent residents.

Please refer to the Public Order Act, Public Order (Unrestricted Area) Order 2013, Public Entertainments and Meetings Act and the Public Entertainments and Meetings (Speakers’ Corner)(Exemption) Order 2013 for information on the situations you will be required to apply for a police permit or public entertainment licence under existing laws.

As an organiser, you are responsible for ensuring that the laws are complied with. We also seek your cooperation in helping to keep Hong Lim Park litter-free.

Please print this page as proof of your registration and bring it on the day of your event. Thank you.

Yours sincerely,
Commissioner of Parks and Recreation

HERE IS MY REPLY
Dear National Parks Board,

There is no information in your email about the event that I have registered for, which you have approved.

MY COMMENT
There is something seriously wrong with our civil service. They cannot get a simple procedure right.
I am not an organizer of the event. I am just applying to speak. Their reply holds me responsible as an organizer.

Should I join Eldershield at 40?

Several people have asked for my views on whether it is advisable for them to buy Eldershield insurance.

Basic Eldershield is recommended and designed by the Ministry of Health and is underwritten by three insurance companies - NTUC Income, Great Eastern and Aviva. Each person, on reaching age 40 will be assigned to an insurance company at random, but is allowed to switch to another company.

Click here to read my views:
http://c-onyx.com/page/1881

Life insurance - before and now

There was a time, long ago, when life insurance was good. The insurance company took your money, invest for the long term, earn a yield of 6.5% and give you a return of 5%, after expenses and profit. 

You are not able to earn a yield of 5% from other investments, except for quality shares, but most people do not know how to invest in these shares.

Today, life insurance gives a bad deal. The insurance company takes your money, earn a return of 5% and gives you a return of 2.5%, after expenses and profit.

You can get a good return by investing in an index fund, i.e. the STI ETF. This can give you a return of 6% or more. This gives you a payout that is more than 50% higher than the payout from a life insurance policy.

If you have a better choice, why put your money in a traditional or investment linked policy and get a poor return?

To learn more about how to invest in a better investment, attend this talk:
http://c-onyx.com/page/1056

What caused the high cost of living in Singapore?

Singapore has become one of the most expensive cities in the world. We did not achieve this dubious distinction from nothing. There are a few important factors.

1. Top most must be the high cost of properties. This has its multiper effect to all parts of the economy, affecting housing, commercial rentals and even the rentals of food courts!

2. The high taxes collected from vehicles, goods and service taxes, levies and other fees.

3. The high prices charged by many large companies that are mostly owned by the government.

4. The wastefulness and inefficiency of the way that we do our business or carry out our activities, due to an excessive and impractical cautious approach and a disregard for cost.

I have made many observations in the social media. Sadly, most Singaporeans are used to the inefficiency and wastage and consider it to be "acceptable".

Well, it is one important factor leading to the high cost of living in Singapore.

http://c-onyx.com/page/1876