There are two important developments on Friday on the global stockmarkets:
* The China stockmarket came down 3%, due to fear of new measures by the government authority to cool the market
* The US stockmarket came down by more than 1%, due to worries about the subprime mortgages and Bear Stearnes fund.
Will this be the start of an overdue correction?
For those who invest for the long term, there is no need to worry about this type of market correction (if it comes). However, for those who are investing for the short time, you should pay special attention to the development for the next week.
Saturday, June 23, 2007
Financial Adviser in Australia
The financial adviser in Australia play a useful role in helping the client to save money on:
* income tax
* superannuation (ie to save for retirement)
The tax system in Australia is complicated. The adviser help the client to arrange the financial affairs to get the best tax saving. The client his happy to pay for the advice, as it is more than covered by the tax saving.
In Singapore, there is little tax saving for most people. Hence, the financial adviser cannot give this value to Singapore clients.
The adviser can help the client to choose the right product. Unfortunately, the adviser gets a commission that is built into the product. This adds to the cost paid by the client. The value added by the adviser is doubtful, as it is impossible for any expert to advise on the fund or product will perform better in the future.
Lesson: Invest in a low cost fund (where you pay less charges to the fund manager and adviser). Invest for the long term.
Read in this FAQ.
* income tax
* superannuation (ie to save for retirement)
The tax system in Australia is complicated. The adviser help the client to arrange the financial affairs to get the best tax saving. The client his happy to pay for the advice, as it is more than covered by the tax saving.
In Singapore, there is little tax saving for most people. Hence, the financial adviser cannot give this value to Singapore clients.
The adviser can help the client to choose the right product. Unfortunately, the adviser gets a commission that is built into the product. This adds to the cost paid by the client. The value added by the adviser is doubtful, as it is impossible for any expert to advise on the fund or product will perform better in the future.
Lesson: Invest in a low cost fund (where you pay less charges to the fund manager and adviser). Invest for the long term.
Read in this FAQ.
Look after the interest of ordinary people
I watched an interview with a US Senator on television.
He argued the case for a change in some tax code, so that "the tax can be applied fairly to all". He said that it is his duty to reflect the wishes of his constitutents in the legislation that is being passed in Congress.
In the globalised economy, it is important that there should be voices to look after the interest of the ordinary people. The US system of democracy appears to handle this matter quite well. The issues that affect the ordinary people are brought up and aired in the Congress.
He argued the case for a change in some tax code, so that "the tax can be applied fairly to all". He said that it is his duty to reflect the wishes of his constitutents in the legislation that is being passed in Congress.
In the globalised economy, it is important that there should be voices to look after the interest of the ordinary people. The US system of democracy appears to handle this matter quite well. The issues that affect the ordinary people are brought up and aired in the Congress.
Importance of savings - a view from an elderly person
I met an elderly person. He told me about his approach towards financial matters, when he was young. I wish to share his thoughts:
* I realise the importance of savings when I was young
* When my friends spend their money on holidays, I keep them as my savings
* I bought property at that time, when it was cheap
* I own a few properties over the years, which appreciated in value
* The savings give me the confidence to do things on my own
* Many young people over-spend and had debts on their credit cards. It is stressful to be pressed to pay these debts.
* I realise the importance of savings when I was young
* When my friends spend their money on holidays, I keep them as my savings
* I bought property at that time, when it was cheap
* I own a few properties over the years, which appreciated in value
* The savings give me the confidence to do things on my own
* Many young people over-spend and had debts on their credit cards. It is stressful to be pressed to pay these debts.
Improve the call center of the Telcos
Dear Mr Tan
NTUC Income has a good call center. The customer does not need to push any button to speak to a staff. Why don't you get the call center of Starhub and SingTel to follow this customer friendly approach?
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REPLY:
I will be happy to give some suggestions to them, if they are willing to listen.
I know that they have already invested a large sum of money to install their telephone system. But, I have an idea to help them to make a change, with minimal expense.
I believe that the cost of handling a customer enquiry will still be the same under my new approach, and the customer satisfaction level can be improved considerably.
Perhaps, the customers should tell these companies to improve their services.
NTUC Income has a good call center. The customer does not need to push any button to speak to a staff. Why don't you get the call center of Starhub and SingTel to follow this customer friendly approach?
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REPLY:
I will be happy to give some suggestions to them, if they are willing to listen.
I know that they have already invested a large sum of money to install their telephone system. But, I have an idea to help them to make a change, with minimal expense.
I believe that the cost of handling a customer enquiry will still be the same under my new approach, and the customer satisfaction level can be improved considerably.
Perhaps, the customers should tell these companies to improve their services.
Improve the public transport now (not later)
There is a letter published in the Straits Times. The writer argued that we should improve the public transport now, rather than later.
I agree. I suggest the following approach:
* get more trains to run on the MRT lines
* provide feeder services to bring people to the MRT stations and bus terminus
* run express bus services (with few stops) between the major towns
* build a second level to the Central Expressway and the Pan Island Expressway
* allow more operators to run the feeder services, using light buses (like Hong Kong)
My basic approach is:
* do the easy things (like what has been suggested)
* do it now
The government decided to improve the road network by building the Kallang Paya Lebar Expressway. But it is taking too long, more than 10 years. It is still not ready.
I guess that it will take 3 to 5 years to build a second level to an existing expressway.
I agree. I suggest the following approach:
* get more trains to run on the MRT lines
* provide feeder services to bring people to the MRT stations and bus terminus
* run express bus services (with few stops) between the major towns
* build a second level to the Central Expressway and the Pan Island Expressway
* allow more operators to run the feeder services, using light buses (like Hong Kong)
My basic approach is:
* do the easy things (like what has been suggested)
* do it now
The government decided to improve the road network by building the Kallang Paya Lebar Expressway. But it is taking too long, more than 10 years. It is still not ready.
I guess that it will take 3 to 5 years to build a second level to an existing expressway.
Does Land Transport Authority listen to the public?
COMMENT POSTED IN MY BLOG:
Mr Tan,
Any idea what is stopping LTA from implementing those simple ideas you have mentioned. These proven ideas had been urged and discussed by the public 15 years ago, - the efficient light feeder buses in Hk s one of them, the faster MTR in HK is another efficient service. But it seems our LTA always seems ignore pulbic advise. They turn left when you tell them to turn right. They went their own way, and now 15 years later, the transport is not economical anymore, and even worse, not efficient at all.
Like everyone said,- they should Listen to your customers first. They dont have to think so hard as customers feedbacks are enough of solutions to solving the transport woes.
They should not waste anymore time wasting taxpayers money that goes against the feedback of customers.
They should overhaul their internal problems. They should be overhaul to listen and be more responsive to the needs of customers, the commuters.
It is not worth employing high-paying expert who does not live in Singapore nor take a bus at all.
Mr Tan,
Any idea what is stopping LTA from implementing those simple ideas you have mentioned. These proven ideas had been urged and discussed by the public 15 years ago, - the efficient light feeder buses in Hk s one of them, the faster MTR in HK is another efficient service. But it seems our LTA always seems ignore pulbic advise. They turn left when you tell them to turn right. They went their own way, and now 15 years later, the transport is not economical anymore, and even worse, not efficient at all.
Like everyone said,- they should Listen to your customers first. They dont have to think so hard as customers feedbacks are enough of solutions to solving the transport woes.
They should not waste anymore time wasting taxpayers money that goes against the feedback of customers.
They should overhaul their internal problems. They should be overhaul to listen and be more responsive to the needs of customers, the commuters.
It is not worth employing high-paying expert who does not live in Singapore nor take a bus at all.
Thursday, June 21, 2007
Invest in a unit trust
SOMEONE POSTED THIS COMMENT IN MY BLOG
The Ideal plan from NTUC Income is a regular-premium ILP. These kinds of products (including the ones from NTUC Income) have extremely high expense ratios compared to Unit Trusts and ETFs.
Before you decide to invest, remember to ask Income to quote you the expense ratio and compare it to a regular-saving Unit Trust.
You can check the FAQ of the Ideal plan. The plan charges 15% of the savings for the first 3 years and that's not including the loads and management expenses.
This is definitely a bad deal compared to a Unit Trust.
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REPLY:
If you can find a unit trust that accept regular savings that can be invested in a fund with low initial and annual charge, you can send them to me.
I understand that most unit trust have high annual charges and expense ratios (which include a trailer fee payable to the financial adviser).
But, if there is really a low cost unit trust, it will be great for consumers. And I shall be happy to recommend it.
The Ideal plan from NTUC Income is a regular-premium ILP. These kinds of products (including the ones from NTUC Income) have extremely high expense ratios compared to Unit Trusts and ETFs.
Before you decide to invest, remember to ask Income to quote you the expense ratio and compare it to a regular-saving Unit Trust.
You can check the FAQ of the Ideal plan. The plan charges 15% of the savings for the first 3 years and that's not including the loads and management expenses.
This is definitely a bad deal compared to a Unit Trust.
----------------------------------------
REPLY:
If you can find a unit trust that accept regular savings that can be invested in a fund with low initial and annual charge, you can send them to me.
I understand that most unit trust have high annual charges and expense ratios (which include a trailer fee payable to the financial adviser).
But, if there is really a low cost unit trust, it will be great for consumers. And I shall be happy to recommend it.
Invest in an index fund
Hi Mr Tan,
I am 30 years old and I have been searching for investment which suits my risk appetite. I finally found your blog and I am quite impressed with index fund. Could you tell me more about it and how to invest in this fund?
My ideal index fund is
1. Global equity which is well diversified.
2. Low sale and annual charge.
3. Modest dividend
--------------------
REPLY:
The closest to an index fund that you can invest now is the ST Tracker Fund that you can buy from the stockmarket. The only problem is that the Singapore stockmarket is at a high level now.
You can read my views in this FAQ.
If you are investing your monthly savings for the next 30 years, you can consider the Ideal plan from NTUC Income. You can invest in the Balanced or the Growth fund. Although it is not an index fund, the charges are among the lowest available in Singapore.
I will ask X to advise you.
I am 30 years old and I have been searching for investment which suits my risk appetite. I finally found your blog and I am quite impressed with index fund. Could you tell me more about it and how to invest in this fund?
My ideal index fund is
1. Global equity which is well diversified.
2. Low sale and annual charge.
3. Modest dividend
--------------------
REPLY:
The closest to an index fund that you can invest now is the ST Tracker Fund that you can buy from the stockmarket. The only problem is that the Singapore stockmarket is at a high level now.
You can read my views in this FAQ.
If you are investing your monthly savings for the next 30 years, you can consider the Ideal plan from NTUC Income. You can invest in the Balanced or the Growth fund. Although it is not an index fund, the charges are among the lowest available in Singapore.
I will ask X to advise you.
Difference between Logic9 and Sudoku
Dear Mr Tan
I find that a difficult puzzle in Logic9 is easier to solve, compared to Sudoku, even though the number of initial blanks are about the same. I find Logic9 more enjoyable. Can you explain the difference between Logic9 and Sudoku?
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REPLY:
Logic9 follows the same rules as Sudoku. You have to fill in the blanks with the numbers 1 to 9 so that it does not repeat in every row, column or box (3X3 squares). This puzzle is printed daily in Today (as Sudoku Plus) and MyPaper (as Logic9).
When I generate a difficult puzzle, I make sure that it has a unique, logical solution. If you follow the right steps, you will be able to solve any difficult puzzle. This is why my puzzles are quite enjoyable to solve for people who like to think logically.
You can find out more about Logic9 here.
If you buy the Logic9 book, you will get 4 tips on how to solve the puzzles, including the difficult level. The booklets are available from many bookstores listed in the website.
I find that a difficult puzzle in Logic9 is easier to solve, compared to Sudoku, even though the number of initial blanks are about the same. I find Logic9 more enjoyable. Can you explain the difference between Logic9 and Sudoku?
----------------------------------------------
REPLY:
Logic9 follows the same rules as Sudoku. You have to fill in the blanks with the numbers 1 to 9 so that it does not repeat in every row, column or box (3X3 squares). This puzzle is printed daily in Today (as Sudoku Plus) and MyPaper (as Logic9).
When I generate a difficult puzzle, I make sure that it has a unique, logical solution. If you follow the right steps, you will be able to solve any difficult puzzle. This is why my puzzles are quite enjoyable to solve for people who like to think logically.
You can find out more about Logic9 here.
If you buy the Logic9 book, you will get 4 tips on how to solve the puzzles, including the difficult level. The booklets are available from many bookstores listed in the website.
Learn Logic9 (Sudoku) at Prime of Life Exhibition
I shall be demonstrating Logic0 (Sudoku) at the Prime of Life Exhibition to be held at 13 to 15 July at Millenia Walk.
The demonstration will be held in the afternoon of 13 and 14 July and the morning of 15 July.
At the demonstration, I shall be teaching three tips on how to solve the difficult puzzles. This will take 20 minutes. After that, the participants have the chance to take part in a contest to win prizes.
Here are the advantages of learning Logic9:
* it is fun, especially when you know how to solve the puzzle!
* keeps your mind alert (and keep alzheimer away)
* attendees at my past talks enjoyed my tips!
The exibition is targeted at the older people, aged 45 and older. More details will be announced by the organiser in due course. Watch out for the newspaper advertisements.
The demonstration will be held in the afternoon of 13 and 14 July and the morning of 15 July.
At the demonstration, I shall be teaching three tips on how to solve the difficult puzzles. This will take 20 minutes. After that, the participants have the chance to take part in a contest to win prizes.
Here are the advantages of learning Logic9:
* it is fun, especially when you know how to solve the puzzle!
* keeps your mind alert (and keep alzheimer away)
* attendees at my past talks enjoyed my tips!
The exibition is targeted at the older people, aged 45 and older. More details will be announced by the organiser in due course. Watch out for the newspaper advertisements.
Travel Insurance Claims
1) Does the insurance company factor in the inflated claims in calculating the premium rate?
Reply: The insurance company uses the claim experience to determine the premium rate. This usually includes a certain proportion of fraudalent claim. If there are more fraudulent claims, the insurance company makes a loss. They will increase the premium rate to cover the loss.
2) Can the insurance company mark a "ceiling" on the claim amount in case of loss of bag during travel, rather than approve the amount submitted by the claimant?
Reply: For some type of loss, there is a limit specified in the policy. Usually this limit is quite high, and there is room for fraudulent claims up to this limit. It can still be quite costly, if many people make fraudlent claims.
Reply: The insurance company uses the claim experience to determine the premium rate. This usually includes a certain proportion of fraudalent claim. If there are more fraudulent claims, the insurance company makes a loss. They will increase the premium rate to cover the loss.
2) Can the insurance company mark a "ceiling" on the claim amount in case of loss of bag during travel, rather than approve the amount submitted by the claimant?
Reply: For some type of loss, there is a limit specified in the policy. Usually this limit is quite high, and there is room for fraudulent claims up to this limit. It can still be quite costly, if many people make fraudlent claims.
Inflated Claims on Travel Insurance
A friend told me that it is now quite common for Singaporeans to make inflated claims on their travel insurance policy. They lose a bag for (say) $200 and they make a claim for $800 on a false invoice.
These claimants do not realise that they are committing a crime of cheating, and can lead to quite severe punishment. It is not worth making such a false claim.
The inflated claims will also cause insurance companies to raise their premium rates for travel insurance. This will not be fair to the honest policyholders who do not make inflated claims.
These claimants do not realise that they are committing a crime of cheating, and can lead to quite severe punishment. It is not worth making such a false claim.
The inflated claims will also cause insurance companies to raise their premium rates for travel insurance. This will not be fair to the honest policyholders who do not make inflated claims.
Target savings at retirement
How much savings do you need at the time of retirement?
Here is my rule of thumb:
* calculate the annual sum that you need to cover your living expenses
* multiply it by 25 times
Assume:
* you retire today
* you have a fully paid home
* your children are all grown up
* you need $1,000 a month for your living expense
* you will need a capital sum of 25 X 12 X $1,000 = $300,000
You can invest 80% of the capital sum (say $240,000) to buy a life annuity (which is likely to give you $1,000 a month, but it depends on your age) and keep the remaining 20% ($60,000) as a contingency fund.
If you retire in 10 years time, you need to add inflation to the target sum at the rate of (say) 2% per year. If your target sum is $300,000 today, it will have to be $366.000 in 10 year's time.
Read this FAQ on Life Annuity.
Here is my rule of thumb:
* calculate the annual sum that you need to cover your living expenses
* multiply it by 25 times
Assume:
* you retire today
* you have a fully paid home
* your children are all grown up
* you need $1,000 a month for your living expense
* you will need a capital sum of 25 X 12 X $1,000 = $300,000
You can invest 80% of the capital sum (say $240,000) to buy a life annuity (which is likely to give you $1,000 a month, but it depends on your age) and keep the remaining 20% ($60,000) as a contingency fund.
If you retire in 10 years time, you need to add inflation to the target sum at the rate of (say) 2% per year. If your target sum is $300,000 today, it will have to be $366.000 in 10 year's time.
Read this FAQ on Life Annuity.
Retirement
Source: Wikipedia
Retirement is the point where a person stops employment completely.
A person may also semi-retire and keep some sort of job, although usually out of choice rather than necessity. This usually happens upon reaching a determined age, when physical conditions don't allow the person to work any more (by illness or accident), or even for personal choice (usually in the presence of an adequate pension or personal savings).
The retirement with a pension is considered a right of the worker in many societies, and hard ideological, social, cultural and political battles have been fought over whether this is a right or not. In many western countries this right is mentioned in national constitutions.
Retirement is the point where a person stops employment completely.
A person may also semi-retire and keep some sort of job, although usually out of choice rather than necessity. This usually happens upon reaching a determined age, when physical conditions don't allow the person to work any more (by illness or accident), or even for personal choice (usually in the presence of an adequate pension or personal savings).
The retirement with a pension is considered a right of the worker in many societies, and hard ideological, social, cultural and political battles have been fought over whether this is a right or not. In many western countries this right is mentioned in national constitutions.
Buy Insurance For A Discount
Dear Mr Tan,
I went to NTUC Income to purchase Enhanced Incomeshield with cash rider for my whole family.
I wanted to purchase the policy directly, instead of going through an agent, and to get a discount. But since you left the organisation, it seem to withdraw this benefit.
After discussion with my wife, we decided to leave the place without purchasing the policy as we find no benefit of purchasing without any discount.
We might as well ask for an agent in case we need service in the future to make a claim. Do you have any good agent to recommend for me who will look after our long term benefit?
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REPLY:
I will get X to assist you.
I went to NTUC Income to purchase Enhanced Incomeshield with cash rider for my whole family.
I wanted to purchase the policy directly, instead of going through an agent, and to get a discount. But since you left the organisation, it seem to withdraw this benefit.
After discussion with my wife, we decided to leave the place without purchasing the policy as we find no benefit of purchasing without any discount.
We might as well ask for an agent in case we need service in the future to make a claim. Do you have any good agent to recommend for me who will look after our long term benefit?
----------------
REPLY:
I will get X to assist you.
Financial Planning for Teachers
I have been invited to give a talk on financial planning for teachers. For those who are not able to attend my talk, you can read about my tips here
Financial Planning for the Young
Financial Planning for Senior
Financial Planning for the Young
Financial Planning for Senior
Hong Kong's public transport system
COMMENT POSTED IN MY BLOG
Hong Kong’s public transport network seems more well-connected and three-dimensional, consisting of railway, MTR, tram cars, bus, minibuses, taxi, ferries, etc; all these are viewed as convenient transportation means for residents. Hong Kong and Beijing' MRT interval seems to be 2 or 3 minutes only. Actually buses carry largest volume of passages in many large cities. "Public transit first" and public bus ways is also common in Hong Kong, Paris and Beijing, etc.
An interesting thing is, Hong Kong people seems more to enjoy the walking, I often see lots of people walking along lanes or walking-skyway in HK island, while Singaporeans seem less willing to walk, with walking-way system everywhere.
Hong Kong’s public transport network seems more well-connected and three-dimensional, consisting of railway, MTR, tram cars, bus, minibuses, taxi, ferries, etc; all these are viewed as convenient transportation means for residents. Hong Kong and Beijing' MRT interval seems to be 2 or 3 minutes only. Actually buses carry largest volume of passages in many large cities. "Public transit first" and public bus ways is also common in Hong Kong, Paris and Beijing, etc.
An interesting thing is, Hong Kong people seems more to enjoy the walking, I often see lots of people walking along lanes or walking-skyway in HK island, while Singaporeans seem less willing to walk, with walking-way system everywhere.
What is Research?
This is a hot subject for all those who are involved or want to be involved in Research as their occupation, profession or career. Research is getting very important in our increasingly competitive world.
Dr. Lee Kum Tatt has vast experience in these activities in his life. He is going to share with us his thoughts on this subject using special cases as his illustrations. Read some of the interesting stories of how research has helped him and others.
Dr. Lee Kum Tatt has vast experience in these activities in his life. He is going to share with us his thoughts on this subject using special cases as his illustrations. Read some of the interesting stories of how research has helped him and others.
Difficult life of a taxi driver in Singapore
I RECEIVED THIS E-MAIL
Hi,
I refer to the post of your blog regarding grouses of taxi drivers in Singapore.
One thing I understand is that KL taxi drivers actually own the taxi after repaying off the whole amount. And more so happy when they costs the same as a Singapore taxi but in RM$. They do not have to answer to anyone.
In Singapore, a normal taxi costs about $60K+. The hirer has to pay rental of $90 on average everyday. After 2 full years, the costs of the taxi can be recovered back but the poor hirer still continue to pay rental to the company. He does not own the taxi. He is still working for the company. Worse still, there are no benefits like MC, CPF, leave, bonus,etc. & has to work like a slave to earn more than $90 per day so as to make an earning. There is no freedom. If the driver wants to rest by taking offday, he still has to pay rental.
Thus how can the Singaporean taxi driver be happy?
I personally feel taxi drivers in Singapore are a bunch of pitiful people.
Hi,
I refer to the post of your blog regarding grouses of taxi drivers in Singapore.
One thing I understand is that KL taxi drivers actually own the taxi after repaying off the whole amount. And more so happy when they costs the same as a Singapore taxi but in RM$. They do not have to answer to anyone.
In Singapore, a normal taxi costs about $60K+. The hirer has to pay rental of $90 on average everyday. After 2 full years, the costs of the taxi can be recovered back but the poor hirer still continue to pay rental to the company. He does not own the taxi. He is still working for the company. Worse still, there are no benefits like MC, CPF, leave, bonus,etc. & has to work like a slave to earn more than $90 per day so as to make an earning. There is no freedom. If the driver wants to rest by taking offday, he still has to pay rental.
Thus how can the Singaporean taxi driver be happy?
I personally feel taxi drivers in Singapore are a bunch of pitiful people.
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