The past 15 years have been a period of relatively low inflation. Inflation rate has picked up this year. It is likely to stay high in the future.
We now have to factor inflation into our financial planning. This article contains some tips on how you can take inflation into account.
http://www.tankinlian.com/articles/financial.html
Saturday, June 07, 2008
Save for your child's education
If you wish to save for your child's education, you have two options:
> endowment policy (also called education policy)
> low cost investment fund.
This FAQ explains the difference
http://www.tankinlian.com/faq/education.html
Tip: Save in a low cost investment fund. It gives a better yield and is more flexible.
> endowment policy (also called education policy)
> low cost investment fund.
This FAQ explains the difference
http://www.tankinlian.com/faq/education.html
Tip: Save in a low cost investment fund. It gives a better yield and is more flexible.
Participating Life Insurance Policies
The participating life insurance policies was created more than 100 years ago. The policyholder pays premium into the policy, to be used to pay the death benefits and expenses. The remainder is invested to earn a good rate of return (compared to the yield that the individual policyholders could get on their own). The actuaries were specially trained to treat policyholders fairly and to distribute the surplus fairly in the form of reversionary bonuses.
Much has changed during the recent 20 years. Many insurance companies have been converted into for-profit companies. There is greater competition to get new business, leading to the launching of new series of policies with complicated bonus structures. In this chaotic situation, it is likely that many policyholders will get less than their fair share of the returns.
Many policyholders wonder why their yield on maturity is so low, compared to the investment yield earned by the life insurance fund. Although a large part of the yield is taken away to cover the high cost and expenses, they wonder if they are given their fair share of the remaining yield.
In today's environment, the participating life insurance policy is an unsatisfactory product to the consumer. It gives a poor yield and is not transparent.
Tip: Do not put your long term savings in a participating life insurance product. It is better to buy term insurance for the protection and to invest in a low cost investment fund. Read this FAQ:
http://www.tankinlian.com/faq/savings.html
Much has changed during the recent 20 years. Many insurance companies have been converted into for-profit companies. There is greater competition to get new business, leading to the launching of new series of policies with complicated bonus structures. In this chaotic situation, it is likely that many policyholders will get less than their fair share of the returns.
Many policyholders wonder why their yield on maturity is so low, compared to the investment yield earned by the life insurance fund. Although a large part of the yield is taken away to cover the high cost and expenses, they wonder if they are given their fair share of the remaining yield.
In today's environment, the participating life insurance policy is an unsatisfactory product to the consumer. It gives a poor yield and is not transparent.
Tip: Do not put your long term savings in a participating life insurance product. It is better to buy term insurance for the protection and to invest in a low cost investment fund. Read this FAQ:
http://www.tankinlian.com/faq/savings.html
Sudden Shift left me high and dry
Dear Mr. Tan,
My company had a Workmen Compensation Insurance Policy with X. In a letter to my company dated about 1 month before the expiry (but in fact posted late as I only received it only 2 weeks before the expiry), X said that they will not renew the policy any more.
On checking with my agent, I found that the X's new practice requires my company to buy "fire and theft" insurance with premium of 100% more than the premium for "Work Injury Compensation" (new name for "Workmen Compensation) before it can be accepted.
My questions are as follows:
a) If X changed it practice, why was it communicated so late to its existing customer?
b) If the claims for "Workmen Compensation" was high, why did it not raise the premium for this cover, instead of forcing the customer to buy other policies?
c) Why does the Ministry of Manpower allow this to happen?
d) Is X using its strong market position to unfairly?
After all, this "Work Injury Compensation" system is mandated by MOM. MOM should settle some of these ground rules so that the system can operate in an efficient and fair way. MOM cannot say "let market forces decide" because it is not a completely free market with many buyers and many sellers but a market with many small buyers who are "forced" to buy something and a small number of big sellers)
HW
My company had a Workmen Compensation Insurance Policy with X. In a letter to my company dated about 1 month before the expiry (but in fact posted late as I only received it only 2 weeks before the expiry), X said that they will not renew the policy any more.
On checking with my agent, I found that the X's new practice requires my company to buy "fire and theft" insurance with premium of 100% more than the premium for "Work Injury Compensation" (new name for "Workmen Compensation) before it can be accepted.
My questions are as follows:
a) If X changed it practice, why was it communicated so late to its existing customer?
b) If the claims for "Workmen Compensation" was high, why did it not raise the premium for this cover, instead of forcing the customer to buy other policies?
c) Why does the Ministry of Manpower allow this to happen?
d) Is X using its strong market position to unfairly?
After all, this "Work Injury Compensation" system is mandated by MOM. MOM should settle some of these ground rules so that the system can operate in an efficient and fair way. MOM cannot say "let market forces decide" because it is not a completely free market with many buyers and many sellers but a market with many small buyers who are "forced" to buy something and a small number of big sellers)
HW
What a wasteful world!
AN OPINION.
We are a wasteful world. We bring people from the rural areas into crowded, congested cities. They spend several hours each day commuting to and from work. A lot of time and energy is wasted in this commuting.
We produce material goods that are excessive for a comfortable life. We have too many products and choices. We buy too many things that we do not use, to be thrown away. We keep producing more, and use up the limited materials and minerals.
We work too many hours in an excessively competitive environment. We compete to survive. We destroy our competitors and take over their assets. We have too little time to enjoy leisure.
No wonder - we are short of oil, minerals and food. We see the huge spike in prices. It will lead to more hardship on the poor. It may lead to unrest.
The capitalist, free market system has not given people a good life. It is time to re-think of a new model for the world.
We are a wasteful world. We bring people from the rural areas into crowded, congested cities. They spend several hours each day commuting to and from work. A lot of time and energy is wasted in this commuting.
We produce material goods that are excessive for a comfortable life. We have too many products and choices. We buy too many things that we do not use, to be thrown away. We keep producing more, and use up the limited materials and minerals.
We work too many hours in an excessively competitive environment. We compete to survive. We destroy our competitors and take over their assets. We have too little time to enjoy leisure.
No wonder - we are short of oil, minerals and food. We see the huge spike in prices. It will lead to more hardship on the poor. It may lead to unrest.
The capitalist, free market system has not given people a good life. It is time to re-think of a new model for the world.
AUD Fixed Deposits
I searched the Internet to find out the interest rate on 3 month fixed deposit offered by various banks in Singapore.
Note: Large deposit is usually for SGD 200,000 or more. But it differs according to the bank.
Tip: Source the internet to get an idea about the interest rate offered by the bank on the deposit. Usually, 3 month is a good period to invest, unless you wish to take a longer term view. You can convert your SGD to the foreign currency with a online stockbroker and transfer the foreign currency to the bank that offers the best interest rate.
Small Large
deposit deposit
ICICI 8.29% 8.34%
ANZ 7.58% 7.58%
RHB 7.3% 7.3%
DBS 6.99% 7.21%
UOB 6.38% 6.58%
HSBC 6.2% 6.5%
Note: Large deposit is usually for SGD 200,000 or more. But it differs according to the bank.
Tip: Source the internet to get an idea about the interest rate offered by the bank on the deposit. Usually, 3 month is a good period to invest, unless you wish to take a longer term view. You can convert your SGD to the foreign currency with a online stockbroker and transfer the foreign currency to the bank that offers the best interest rate.
Get a better yield on your savings
Singapore banks make huge profits, or $1 billion or more. Their profit come from the following sources:
> High margin between the interest rate that they charge to borrowers and the interest rate that they pay to depositors
> High charges on conversion of foreign currency, e.g. spread of more than 0.5% (compared to 0.15% charged by efficient online brokers).
> High fees for bank transfer and other services.
I hope that the banks can give a better deal to their customers, as follows:
> Pay higher interest rate on fixed deposits
> Reduce the spread on currency conversion
> Reduce their bank charges
There are many online portals that can offer lower charges and fees, and better conversion rates. If you search the internet, you can also find banks that offer better interest rate on fixed deposits. I advice consumers to be more active in searching for the best deal through the internet.
> High margin between the interest rate that they charge to borrowers and the interest rate that they pay to depositors
> High charges on conversion of foreign currency, e.g. spread of more than 0.5% (compared to 0.15% charged by efficient online brokers).
> High fees for bank transfer and other services.
I hope that the banks can give a better deal to their customers, as follows:
> Pay higher interest rate on fixed deposits
> Reduce the spread on currency conversion
> Reduce their bank charges
There are many online portals that can offer lower charges and fees, and better conversion rates. If you search the internet, you can also find banks that offer better interest rate on fixed deposits. I advice consumers to be more active in searching for the best deal through the internet.
FAQ: Traded Endowment Policies
1. What is a traded endowment policy?
A traded endowment policy is a policy that is sold by the policyholder to an investor. The investor pays a sum that is higher than the surrender value offered by the insurance company.
The investor will continue to pay the premium under the policy and will collect the death or maturity benefit on the policy.
The investor expects to get a good rate of return on the amount paid to buy over the policy, and the future permiums paid.
2. Is it advisable to invest in a fund of traded endowment policies, where the fund manager undertakes to manage these policies?
It depends on the following:
> Is the fund manager reliable and trustworthy?
> What are the charges taken away by the fund manager?
> What is the underlying gross and net yield of the fund, after deducting the charges?
> What is the underlying risk of the traded endowment policies?
3. What is the underlying risk of the traded endowment policies?
These traded endowment policies carry the following risks:
> The future bonuses paid under the policies may be reduced. This will reduce the expected yield.
> The insurance company may become insolvent
> The fund manager may overlook to keep the policy in force, leading to its termination
These risks have to be factored in considering the net yield on the fund.
4. What is a satisfactory rate of return, considering the risk?
If the investment is in the UK, you should compared the expected yield on the traded endowment fund with the yield from UK Government Bonds.
You should expect to get at least 2% to 3% higher than the bond yield of similar duration, to compensate for the higher risk.
If the fund has a duration of 5 years and the UK bond yield for 5 years is 5%, you should expect to get a net yield (after deducting the fund manager’s fees) of 7% or 8% from the traded endowment fund, to make it worth the risk.
5. Do you invest in traded endowment policies?
I avoid investing in this type of product as I am not familiar with the risk, the yield and the integrity of the fund manager.
I prefer to invest in Government bonds or equities, as these products are traded on the exchange and there is liquidity. flexibility and price transparency.
Tan Kin Lian
A traded endowment policy is a policy that is sold by the policyholder to an investor. The investor pays a sum that is higher than the surrender value offered by the insurance company.
The investor will continue to pay the premium under the policy and will collect the death or maturity benefit on the policy.
The investor expects to get a good rate of return on the amount paid to buy over the policy, and the future permiums paid.
2. Is it advisable to invest in a fund of traded endowment policies, where the fund manager undertakes to manage these policies?
It depends on the following:
> Is the fund manager reliable and trustworthy?
> What are the charges taken away by the fund manager?
> What is the underlying gross and net yield of the fund, after deducting the charges?
> What is the underlying risk of the traded endowment policies?
3. What is the underlying risk of the traded endowment policies?
These traded endowment policies carry the following risks:
> The future bonuses paid under the policies may be reduced. This will reduce the expected yield.
> The insurance company may become insolvent
> The fund manager may overlook to keep the policy in force, leading to its termination
These risks have to be factored in considering the net yield on the fund.
4. What is a satisfactory rate of return, considering the risk?
If the investment is in the UK, you should compared the expected yield on the traded endowment fund with the yield from UK Government Bonds.
You should expect to get at least 2% to 3% higher than the bond yield of similar duration, to compensate for the higher risk.
If the fund has a duration of 5 years and the UK bond yield for 5 years is 5%, you should expect to get a net yield (after deducting the fund manager’s fees) of 7% or 8% from the traded endowment fund, to make it worth the risk.
5. Do you invest in traded endowment policies?
I avoid investing in this type of product as I am not familiar with the risk, the yield and the integrity of the fund manager.
I prefer to invest in Government bonds or equities, as these products are traded on the exchange and there is liquidity. flexibility and price transparency.
Tan Kin Lian
Investing in foreign currency deposits
Here are my tips for investing in foreign currency deposits. They are based on my personal experience:
1. Get a good rate when you convert from Singapore dollars to the foreign currency. Find out the buy and sell rate for the currency. Take the middle of these rates (which is usually the interbank rate). Find out the spread charged by the bank, which is the rate that you pay, compared to the interbank rate. A good spread is 0.15%. If the spread is more than 0.2%, you should take the trouble to convert the money elsewhere.
2. You can convert the money with an online stockbroker, such as Phillips, and pay a spread of 0.15%. You may have to pay some bank charges, but the amount is quite small. You can compare the total cost, i.e. the spread and the bank charges, to decide which is the best option for you.
3. You can call a few banks to check the interest rate that they pay on the fixed deposit. If you tell your bank about the rate quoted by other banks, they are likely to match it.
4. On withdrawal of the fixed deposit, you can convert the foreign currency into Singapore dollar in the same way, i.e. move the foreign currency to the online stockbroker to get a better conversion rate.
Here is an example. You wish to convert SGD 100,000 into Australian dollars. The bank quotes the buy and sell rate as 1.3015 and 1.3210. The middle rate, or interbank rate is 1,3112 (i.e. mid-way between the buy and sell rates). The spread charged by the bank is 0.75% (i.e. 1.3201 divided by 1.3112).
If you convert the money at Phillips (through POEMS), you are given a spread of 0.15% above the interbank rate. You will be charged 1.3132. However, as the interbank rate changes each few seconds, you will find this rate changing as well.
If you are converting $50,000, you will be able to save $390 by converting with Phillips. You may have to pay $100 or less in bank charges. You can still make a saving by taking some trouble. If you are converting a larger sum, say $100,000 or more, your saving will be more.
If you convert the money at Philiips, you can transfer it to another bank to earn a better interest rate on the fixed deposit.
1. Get a good rate when you convert from Singapore dollars to the foreign currency. Find out the buy and sell rate for the currency. Take the middle of these rates (which is usually the interbank rate). Find out the spread charged by the bank, which is the rate that you pay, compared to the interbank rate. A good spread is 0.15%. If the spread is more than 0.2%, you should take the trouble to convert the money elsewhere.
2. You can convert the money with an online stockbroker, such as Phillips, and pay a spread of 0.15%. You may have to pay some bank charges, but the amount is quite small. You can compare the total cost, i.e. the spread and the bank charges, to decide which is the best option for you.
3. You can call a few banks to check the interest rate that they pay on the fixed deposit. If you tell your bank about the rate quoted by other banks, they are likely to match it.
4. On withdrawal of the fixed deposit, you can convert the foreign currency into Singapore dollar in the same way, i.e. move the foreign currency to the online stockbroker to get a better conversion rate.
Here is an example. You wish to convert SGD 100,000 into Australian dollars. The bank quotes the buy and sell rate as 1.3015 and 1.3210. The middle rate, or interbank rate is 1,3112 (i.e. mid-way between the buy and sell rates). The spread charged by the bank is 0.75% (i.e. 1.3201 divided by 1.3112).
If you convert the money at Phillips (through POEMS), you are given a spread of 0.15% above the interbank rate. You will be charged 1.3132. However, as the interbank rate changes each few seconds, you will find this rate changing as well.
If you are converting $50,000, you will be able to save $390 by converting with Phillips. You may have to pay $100 or less in bank charges. You can still make a saving by taking some trouble. If you are converting a larger sum, say $100,000 or more, your saving will be more.
If you convert the money at Philiips, you can transfer it to another bank to earn a better interest rate on the fixed deposit.
Friday, June 06, 2008
Adequate Wage in Singapore
Extracted from http://www.theonlinecitizen.com/
http://theonlinecitizen.com/2008/06/giving-equal-access-to-social-benefits/
I wish to say a few words on why there should be a minimum wage. It is necessary to ensure that the weakest members of our society, i.e. the poor and lower educated, are given a wage that is sufficient to meet the cost of living and raise a family. They should not be required to work 12 hours a day or two jobs, just to earn enough.
Most countries in the world has a minimum wage, including the low income and high income countries. Even the USA, which is the worlds biggest proponent of the free labour market, has a minimum wage.
A minimum wage may not increase the business cost significantly. It just reduces the huge profit earned by the business owners, salaries of the top management and the rental costs. The share of business cost of the minimum wage earners is probably not significant, except for labour intensive industries.
There is less economic pressure for a minimum wage policy in a big country. If necessary, a person can move to live in a low cost part of the country. Some people can go back into farming, for example.
But in a small country like Singapore, the choices are limited. So a minimum wage policy is necessary.
The argument against a minimum wage is that it will drive jobs to other countries. Let us look at the facts. Are our jobs going overseas? Hardly!
We have the opposite situation. Many jobs are created in Singapore, that have to be filled by low wage workers from other countries.
I am surprised at the large number of these foreign workers. They increase the demand on our public infrastructure and facilities and increase the congestion in Singapore. Is this good for Singapore?
These low cost foreign workers compete with our local workers. Many of our local workers cannot find jobs and have to be unemployed. The unemployed are criticised for being “choosy”. Is this true? Many of our elderly are willing to take menial jobs as cleaners just to survive. I respect them. I hope that we can give them a decent wage for their work.
We must remember that there is a high cost of living in Singapore. More so, for a worker who has a family to feed. We cannot expect them to accept the same wage that is adequate for a foreign worker who feeds a family in a low cost country.
Tan Kin Lian
http://theonlinecitizen.com/2008/06/giving-equal-access-to-social-benefits/
I wish to say a few words on why there should be a minimum wage. It is necessary to ensure that the weakest members of our society, i.e. the poor and lower educated, are given a wage that is sufficient to meet the cost of living and raise a family. They should not be required to work 12 hours a day or two jobs, just to earn enough.
Most countries in the world has a minimum wage, including the low income and high income countries. Even the USA, which is the worlds biggest proponent of the free labour market, has a minimum wage.
A minimum wage may not increase the business cost significantly. It just reduces the huge profit earned by the business owners, salaries of the top management and the rental costs. The share of business cost of the minimum wage earners is probably not significant, except for labour intensive industries.
There is less economic pressure for a minimum wage policy in a big country. If necessary, a person can move to live in a low cost part of the country. Some people can go back into farming, for example.
But in a small country like Singapore, the choices are limited. So a minimum wage policy is necessary.
The argument against a minimum wage is that it will drive jobs to other countries. Let us look at the facts. Are our jobs going overseas? Hardly!
We have the opposite situation. Many jobs are created in Singapore, that have to be filled by low wage workers from other countries.
I am surprised at the large number of these foreign workers. They increase the demand on our public infrastructure and facilities and increase the congestion in Singapore. Is this good for Singapore?
These low cost foreign workers compete with our local workers. Many of our local workers cannot find jobs and have to be unemployed. The unemployed are criticised for being “choosy”. Is this true? Many of our elderly are willing to take menial jobs as cleaners just to survive. I respect them. I hope that we can give them a decent wage for their work.
We must remember that there is a high cost of living in Singapore. More so, for a worker who has a family to feed. We cannot expect them to accept the same wage that is adequate for a foreign worker who feeds a family in a low cost country.
Tan Kin Lian
Call hotline for the best quote
Hi Mr. Tan,
I read from your blog, you mentioned that X offers competitive rates for motor insurance. For many models of cars, the rates are up to 15% lower than our competitors.
How can this be, when I was quoted a higher rate compared to another insurance company? I was quoted $518 for my next renewal with X, 50% NCD + 5% loyalty discount. A good friend recently renew his motor insurance with another company and he was quoted $460 for his renewal on the same terms.
I emailed and called X for clariffication. No one could give me a satisfactory answer. When I asked a customer officer if X could give me a better requote, she said NO and its not negotiable.
How wonderful. Seems like i have no incentive or reason to stick to X anymore, as X is now charging more than others. That's all I have to say for now. Thank you for reading this email.
AT
REPLY
In past years, X offered competitive quotes. I understand that the increased their premium rates by about 20% (or more) this year. They are no longer the most competitive.
I now advise consumers to call the hotlines of insurance companies to get the best quote. Read this FAQ:
http://www.tankinlian.com/faq/motord.html
I read from your blog, you mentioned that X offers competitive rates for motor insurance. For many models of cars, the rates are up to 15% lower than our competitors.
How can this be, when I was quoted a higher rate compared to another insurance company? I was quoted $518 for my next renewal with X, 50% NCD + 5% loyalty discount. A good friend recently renew his motor insurance with another company and he was quoted $460 for his renewal on the same terms.
I emailed and called X for clariffication. No one could give me a satisfactory answer. When I asked a customer officer if X could give me a better requote, she said NO and its not negotiable.
How wonderful. Seems like i have no incentive or reason to stick to X anymore, as X is now charging more than others. That's all I have to say for now. Thank you for reading this email.
AT
REPLY
In past years, X offered competitive quotes. I understand that the increased their premium rates by about 20% (or more) this year. They are no longer the most competitive.
I now advise consumers to call the hotlines of insurance companies to get the best quote. Read this FAQ:
http://www.tankinlian.com/faq/motord.html
Thursday, June 05, 2008
Restore the Annual Bonus
Hello
I note this part from the Income's Chairman's speech:"Should the special bonus in future reduce due to adverse financial conditions, we are committed to restoring it when conditions improve."
That is good to know. But if that is the policy, why not do it for the annual bonus? It was cut in 2003 because of adverse financial circumstances. Since then, the company has done well, with returns averaging 7.8 per cent over the last 10 years.
So, why not put those words into practice: "...we are committed to restoring it when conditions improve."Conditions have improved. Where is the restored bonus?
Sincerely,
Larry Haverkamp
I note this part from the Income's Chairman's speech:"Should the special bonus in future reduce due to adverse financial conditions, we are committed to restoring it when conditions improve."
That is good to know. But if that is the policy, why not do it for the annual bonus? It was cut in 2003 because of adverse financial circumstances. Since then, the company has done well, with returns averaging 7.8 per cent over the last 10 years.
So, why not put those words into practice: "...we are committed to restoring it when conditions improve."Conditions have improved. Where is the restored bonus?
Sincerely,
Larry Haverkamp
Extract from speech by Income's chairman
Extract from the speech by chairman of Income, made at the annual general meeting on 30 June 2008:
Some policyholders have raised specific concerns on the special bonus in blogs. Allow me to address them.
> While special bonuses are not guaranteed, they are designed to ensure that the reduction in annual bonus is compensated. As I have indicated earlier, the new bonus structure is aimed at improving, the total payout to policyholders.
> Should the special bonus in future reduce due to adverse financial conditions, we are committed to restoring it when conditions improve.
> I have stated that this Board will look after the policyholders’ interests. Towards this end, the Board will ensure that the bonus allocated to policyholders result in payouts is fair and consistent with the experience of the Life Fund.
Some policyholders have raised specific concerns on the special bonus in blogs. Allow me to address them.
> While special bonuses are not guaranteed, they are designed to ensure that the reduction in annual bonus is compensated. As I have indicated earlier, the new bonus structure is aimed at improving, the total payout to policyholders.
> Should the special bonus in future reduce due to adverse financial conditions, we are committed to restoring it when conditions improve.
> I have stated that this Board will look after the policyholders’ interests. Towards this end, the Board will ensure that the bonus allocated to policyholders result in payouts is fair and consistent with the experience of the Life Fund.
Avoid switching to another high cost policy
Dear Mr. Tan,
I would like to seek your help and advice on the policies which i purchased from X a few years back. I am 25 years old and started work 2 years ago. I bought my first Protection policy in 2002. Later, I bought a Living policy in 2006.
Recently a few insurance agents advised me to terminate my policies with X. They said that I am paying a very high premium for my policies. Especially for the Living policy. Two agents from Y and Z offered an alternative policy at a lower premium.
I have been reading your blog and am curious if I am really paying a costly price for my policies under X? Due to the high living standard in Singapore, i would like to spend my money wisely and purchase the most competitive policy in the insurance market.
Should I terminate my policies with X and buy the policy recommended by Z? Is there any other alternatives which i can look into?
G
REPLY
As a general guide, you should not terminate a policy and buy a new policy from another agent. Each time that you buy a policy, the agent earns big commission that takes away two years of your savings. I suggest that you approach the insurance agent from X, and ask for his or her advice, on whether the agents from Y and Z are giving you proper advice.
If you wish to make a change, you should buy a low cost term insurance and invest your money in a low cost investment fund. Low cost means that there is no adviser who earns a lot of money from giving you the advice.
Read this FAQ:
http://www.tankinlian.com/faq/savings.html
I would like to seek your help and advice on the policies which i purchased from X a few years back. I am 25 years old and started work 2 years ago. I bought my first Protection policy in 2002. Later, I bought a Living policy in 2006.
Recently a few insurance agents advised me to terminate my policies with X. They said that I am paying a very high premium for my policies. Especially for the Living policy. Two agents from Y and Z offered an alternative policy at a lower premium.
I have been reading your blog and am curious if I am really paying a costly price for my policies under X? Due to the high living standard in Singapore, i would like to spend my money wisely and purchase the most competitive policy in the insurance market.
Should I terminate my policies with X and buy the policy recommended by Z? Is there any other alternatives which i can look into?
G
REPLY
As a general guide, you should not terminate a policy and buy a new policy from another agent. Each time that you buy a policy, the agent earns big commission that takes away two years of your savings. I suggest that you approach the insurance agent from X, and ask for his or her advice, on whether the agents from Y and Z are giving you proper advice.
If you wish to make a change, you should buy a low cost term insurance and invest your money in a low cost investment fund. Low cost means that there is no adviser who earns a lot of money from giving you the advice.
Read this FAQ:
http://www.tankinlian.com/faq/savings.html
Online Trading Platforms
Sir,
I refer to your blog entry on your subscribing to Fundsupermart: http://tankinlian.blogspot.com/2008/03/fundsupermart.html
I recommend that you check out the service provided by Phillips Capital (at http://www.poems.com.sg) as well. I have accounts on both, and I have noticed that POEMS sometimes has lower sale charges for their unit trusts. (I do not have vested interests in either companies and am speaking as an individual investor.)
As an example, Fundsupermart has a 2% sales charge for the DBS Shenton Global Opportunities fund. For POEMS, it is 1.5% (I think you need to have an account before you can see these details). Also, there are ways to get even lower charges on POEMS.
POEMS provides avenues to invest in ETFs in global markets and S'pore govt treasury bills, while Fundsupermart does not. Fundsupermart provides an avenue for investing in S'pore govt bonds, while POEMS does not.
One key downside about using POEMS is its (very) badly designed user interface, but I can live with that!
JT
I refer to your blog entry on your subscribing to Fundsupermart: http://tankinlian.blogspot.com/2008/03/fundsupermart.html
I recommend that you check out the service provided by Phillips Capital (at http://www.poems.com.sg) as well. I have accounts on both, and I have noticed that POEMS sometimes has lower sale charges for their unit trusts. (I do not have vested interests in either companies and am speaking as an individual investor.)
As an example, Fundsupermart has a 2% sales charge for the DBS Shenton Global Opportunities fund. For POEMS, it is 1.5% (I think you need to have an account before you can see these details). Also, there are ways to get even lower charges on POEMS.
POEMS provides avenues to invest in ETFs in global markets and S'pore govt treasury bills, while Fundsupermart does not. Fundsupermart provides an avenue for investing in S'pore govt bonds, while POEMS does not.
One key downside about using POEMS is its (very) badly designed user interface, but I can live with that!
JT
Wednesday, June 04, 2008
Give a better currency rate
I used to convert my Singapore dollars into foreign currency with my bank. I learned recently that the spread (i.e. difference between the buy and sell rate) is about 1.3% compared to 0.3% charged by an online stockbroker. The difference of 1% is for a two way trade. For one way, the difference is 0.5%.
If the amount is $100,000, the difference in charges of 0.5% is $500. I have to pay a TT fee of $10, so I can save $490 by going through the online stockbroker. I hope that my bank can give a better currency rate, so that I do not need to go through another source (which is quite troublesome).
If the amount is $100,000, the difference in charges of 0.5% is $500. I have to pay a TT fee of $10, so I can save $490 by going through the online stockbroker. I hope that my bank can give a better currency rate, so that I do not need to go through another source (which is quite troublesome).
Renewal of Motor Insurance
A few people found their motor insurance premium increased by 20% or more, on the renewal of the insurance this year. They did not make any claim during the past year. The increase was due to the escalating claim cost faced by the industry and the poor management of these claims.
They asked my advice on how to get a lower premium rate. I asked them to get a quote from the hotlines of the insurance companies shown in this FAQ:
http://www.tankinlian.com/faq/motord.html
A few consumers have found that India International (Tel: 6347 6100 Fax: 6225 7743) to offer the most attractive quote.
A few months ago, I visited their office to renew the motor insurance for my wife's car. I found their service to be satisfactory. The office environment is friendly. I asked about their claim procedure and was satisfied with it. The premium rate is almost 20% lower than the rate quoted by my existing insurer.
If you like to try, you can send a fax to India International for a quote. If the quote is competitive, you can visit their office and talk to the employee, before you decide to make a switch. You can send your feedback to me.
They asked my advice on how to get a lower premium rate. I asked them to get a quote from the hotlines of the insurance companies shown in this FAQ:
http://www.tankinlian.com/faq/motord.html
A few consumers have found that India International (Tel: 6347 6100 Fax: 6225 7743) to offer the most attractive quote.
A few months ago, I visited their office to renew the motor insurance for my wife's car. I found their service to be satisfactory. The office environment is friendly. I asked about their claim procedure and was satisfied with it. The premium rate is almost 20% lower than the rate quoted by my existing insurer.
If you like to try, you can send a fax to India International for a quote. If the quote is competitive, you can visit their office and talk to the employee, before you decide to make a switch. You can send your feedback to me.
Foreign currency conversion rate
Are you getting a good conversion rate when you buy and sell foreign currency, such as Australian dollar or British pound?
Look at the buy and sell rate. The difference is called the spread. This is the charge imposed by the bank to cover their expenses and profit. It is the cost incurred by the customer to convert from Signapore dollar into the foreign currency and to convert it back at a later date.
If the spread is less than 0.5%, it is a good rate. If it is more than 1%, it is too expensive.
I found the spread charged by a local bank to be as follows:
TT - telegraphic transfer
OD - on demand, i.e. currency notes
The spread is slightly lower for sums above $50,000
LOWER SPREAD AT POEMS.COM.SG
I found the spread on foreign currency at POEMS (Philips Securities) to be 0.3%. In the future, I will convert my money at POEMS and ask them to transfer it to a bank to place on fixed deposit.
Look at the buy and sell rate. The difference is called the spread. This is the charge imposed by the bank to cover their expenses and profit. It is the cost incurred by the customer to convert from Signapore dollar into the foreign currency and to convert it back at a later date.
If the spread is less than 0.5%, it is a good rate. If it is more than 1%, it is too expensive.
I found the spread charged by a local bank to be as follows:
TT OD
USD 1.1% 1.6%
Euro 1.1% 1.3%
GBP 1.3% 1.7%
AUD 1.6% 2.1%
NZD 1.7% 2.2%
Other 2.6% 3.4%
TT - telegraphic transfer
OD - on demand, i.e. currency notes
The spread is slightly lower for sums above $50,000
LOWER SPREAD AT POEMS.COM.SG
I found the spread on foreign currency at POEMS (Philips Securities) to be 0.3%. In the future, I will convert my money at POEMS and ask them to transfer it to a bank to place on fixed deposit.
Tuesday, June 03, 2008
Debt Trap
Dear Mr. Tan
I am in debt and would like to seek your advice on how to manage my financial problem. I was badly hit during 1997 (CLOB shares). I am still unable to get out of my debt trap.
REPLY
Please try this organisation - Credit Counselling Singapore:
http://www.ccs.org.sg/
I am in debt and would like to seek your advice on how to manage my financial problem. I was badly hit during 1997 (CLOB shares). I am still unable to get out of my debt trap.
REPLY
Please try this organisation - Credit Counselling Singapore:
http://www.ccs.org.sg/
Investing a Lump Sum
Dear Mr. Tan,
I have some 600k that is liquid yielding very low return. Can you advise what I can do? Many investment banker illustrate how regular saving plans can yield BIG if we have TIME and CASH to invest (both I have). My experience is the variable - which instrument can consistently hit the projected return? What do you say?
REPLY
I hope that you find these FAQs to be useful:
http://www.tankinlian.com/faq/savings.html
http://www.tankinlian.com/faq/age60.html
I have some 600k that is liquid yielding very low return. Can you advise what I can do? Many investment banker illustrate how regular saving plans can yield BIG if we have TIME and CASH to invest (both I have). My experience is the variable - which instrument can consistently hit the projected return? What do you say?
REPLY
I hope that you find these FAQs to be useful:
http://www.tankinlian.com/faq/savings.html
http://www.tankinlian.com/faq/age60.html
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