In the past, newspapers could be trusted to tell the truth. They were objective in their reporting and were not driven by commercial consideration.
This laudable practice has changed in recent years. It is now quite common for newspapers to print articles that give a favorable slant to their big advertisers.
At one time, these articles were printed under the headline "Advertorial". This was intended to warn the readers that the article was contributed by the advertiser and that the newspaper did not verify the statements in the article.
Nowadays, the label of "advertorial" has disappeared. Some journalists are engaged to write a story for a big advertiser. The article has to be approved by the advertiser, in return for a big advertising budget.
This is how some newspapers get advertising revenue to cover the large expenses and to make good profits for their shareholders. This is necessary for the commercial success of the newspaper, and is now more important than independent and honest reporting.
Saturday, August 02, 2008
Logic9 (Sudoku)
I am surprised that Logic9 on my website is one of the most frequently visited. It rank second to my FAQs.
http://www.tankinlian.com/logic9/
There are many other websites offering Sudoku puzzles, but it seems that my website has some attractive features. They are:
1. Can play online
2. Easy to play
3. Can play 4 levels
4. Option to choose flowers and letters, instead of numbers.
I shall be updating the website to have more puzzles.
Enjoy.
http://www.tankinlian.com/logic9/
There are many other websites offering Sudoku puzzles, but it seems that my website has some attractive features. They are:
1. Can play online
2. Easy to play
3. Can play 4 levels
4. Option to choose flowers and letters, instead of numbers.
I shall be updating the website to have more puzzles.
Enjoy.
Joke: race horse telephoned
John had a restless night and keep on calling "Eva, darling" in his sleep. His wife Joan asked him who Eva is.
John replied that she was his favourite race horse. His wife accepted the explanation.
On returning home, he found his wife furious. He asked why. She replied "Your race horse telephoned today".
John replied that she was his favourite race horse. His wife accepted the explanation.
On returning home, he found his wife furious. He asked why. She replied "Your race horse telephoned today".
Advice on Financial Planning
Hi Kin Lian,
I have read your articles in your website and found that they were very informative and also gave us very good advices.
I would to find out do you provide financial planning for us. If you do, I would like to seek your advice.
REPLY
I do not give specific financial planning advice. You can read the FAQs in my website and decide for yourself.
Read the FAQ on "Financial Planning for the Young". It tells you how much to set aside for your retirement and how to invest in a low cost fund. You can read the FAQ on "Personal Insurance" to decide on the type of low cost insurance that you need.
I have read your articles in your website and found that they were very informative and also gave us very good advices.
I would to find out do you provide financial planning for us. If you do, I would like to seek your advice.
REPLY
I do not give specific financial planning advice. You can read the FAQs in my website and decide for yourself.
Read the FAQ on "Financial Planning for the Young". It tells you how much to set aside for your retirement and how to invest in a low cost fund. You can read the FAQ on "Personal Insurance" to decide on the type of low cost insurance that you need.
Land Banking Scam
Hi Mr. Tan,
I've just read your blog on land banking scam and though I would share a email that I sent to ST a while back when they had a relatively positive article on land banking back in 2007. I feel ST has not been as investigative as they should have been and many times, have articles that doesn't give a complete picture of investments , almost to the extend that it would appear they dare not provide any additional information or view other that so called "experts" with vested interests.
LETTER TO STRAITS TIMES JOURNALIST
I wonder if you have done a proper investigation into the whole land banking issues, especially about companies like X since there has been numerous discussion about scams by them in the internet ? A simple search on the internet will throw up lots of information about such scams and how these scams works even if the titles or funds are put into escrow until the sales completed.
Your article by not addressing such issues does a great dis-service to the general public. I hope that ST will follow up with the investigative style that expose the previous NKF and that that has made us Singaporean proud of ST.
http://mywealthplanner.wordpress.com/2006/10/28/profitable-plots-investing-in-land-banks-1/
While I have tried to put reply to this article in the forum, I feels that this is insufficient for those readers that do not make use of the internet as much.
I would appreciate if yourself or your editor could look into this and do a proper follow up articles. And in view of the large amount of money changing hand just because of a simple article like this . I've also got calls from various companies trying to sell the land banks ideas and doing some "talks" over this weekend and having read your articles, I'm wondering if the timing of these calls is co-incident or deliberately timed to be after your article.
I've just read your blog on land banking scam and though I would share a email that I sent to ST a while back when they had a relatively positive article on land banking back in 2007. I feel ST has not been as investigative as they should have been and many times, have articles that doesn't give a complete picture of investments , almost to the extend that it would appear they dare not provide any additional information or view other that so called "experts" with vested interests.
LETTER TO STRAITS TIMES JOURNALIST
I wonder if you have done a proper investigation into the whole land banking issues, especially about companies like X since there has been numerous discussion about scams by them in the internet ? A simple search on the internet will throw up lots of information about such scams and how these scams works even if the titles or funds are put into escrow until the sales completed.
Your article by not addressing such issues does a great dis-service to the general public. I hope that ST will follow up with the investigative style that expose the previous NKF and that that has made us Singaporean proud of ST.
http://mywealthplanner.wordpress.com/2006/10/28/profitable-plots-investing-in-land-banks-1/
While I have tried to put reply to this article in the forum, I feels that this is insufficient for those readers that do not make use of the internet as much.
I would appreciate if yourself or your editor could look into this and do a proper follow up articles. And in view of the large amount of money changing hand just because of a simple article like this . I've also got calls from various companies trying to sell the land banks ideas and doing some "talks" over this weekend and having read your articles, I'm wondering if the timing of these calls is co-incident or deliberately timed to be after your article.
Friday, August 01, 2008
Exessive exposure?
In portfolio management, it is important to spread the investments and avoid having large stakes in certain investment. This is called concentration risk.
A stake of more than 5% is considered high. A better level should be not more than 3%.
I am somewhat surprised to read a report in Bloomberg about the following investments:
> GIC invested $18 billion in UBS and Citibank, representing 6% of its portfolio of $300 billion
> Temasek invested $5 billion in Merill Lynch, represented 5% of its portfolio of $100 billion.
Perhaps the total portfolio managed by GIC and Temasek is more than the amounts indicated. If not, the above investments would be considered as excessive.
A stake of more than 5% is considered high. A better level should be not more than 3%.
I am somewhat surprised to read a report in Bloomberg about the following investments:
> GIC invested $18 billion in UBS and Citibank, representing 6% of its portfolio of $300 billion
> Temasek invested $5 billion in Merill Lynch, represented 5% of its portfolio of $100 billion.
Perhaps the total portfolio managed by GIC and Temasek is more than the amounts indicated. If not, the above investments would be considered as excessive.
Joke: Temperamental
Tom: Ther's one word that describes my wife: temperamental.
John: In what way?
Tom: She's fifty percent temper, and fifty percent mental.
John: In what way?
Tom: She's fifty percent temper, and fifty percent mental.
Buy ID7 from Business Center
Dear Mr Tan,
I am a recent graduate and have been in the job market for about a year now. I would like to thank you for your advise with regards to insurance and fianncial planning which have been very insightful. I have had many friends over the past year who have tried to sell me ILPs from the various insurance agencies. Your blog has truly been a good guide in making the right decisions.
I am interested in the flexilink plan and ID7 plan from NTUC. Could you please refer me to NTUC Income agents who are still willing to offer these plans? I had written directly to the NTUC business centre with regards to my interest in ID7, but I had not received any reply from them.
Your advise is much appreciated.
REPLY
I suggest that you visit the business center and talk to a salaried consultant. You should insist on ID7. Do not allow them to sell you another product.
I am a recent graduate and have been in the job market for about a year now. I would like to thank you for your advise with regards to insurance and fianncial planning which have been very insightful. I have had many friends over the past year who have tried to sell me ILPs from the various insurance agencies. Your blog has truly been a good guide in making the right decisions.
I am interested in the flexilink plan and ID7 plan from NTUC. Could you please refer me to NTUC Income agents who are still willing to offer these plans? I had written directly to the NTUC business centre with regards to my interest in ID7, but I had not received any reply from them.
Your advise is much appreciated.
REPLY
I suggest that you visit the business center and talk to a salaried consultant. You should insist on ID7. Do not allow them to sell you another product.
Investing in the stock market
Hi Mr. Tan,
I have limited savings every month ($100 to $200) but I want to invest in the stock market. Is it advisable to invest thru poems share builders plan ? Details at http://www.poems.com.sg/FinancialServices/sbpintrod.asp?value=sbp
REPLY
You can invest through POEMS.
It is better to invest in a well diversified fund, i.e. the STI ETF.
Read these FAQs:
http://www.tankinlian.com/faq/savings.html
http://www.tankinlian.com/faq/investown.html
I have limited savings every month ($100 to $200) but I want to invest in the stock market. Is it advisable to invest thru poems share builders plan ? Details at http://www.poems.com.sg/FinancialServices/sbpintrod.asp?value=sbp
REPLY
You can invest through POEMS.
It is better to invest in a well diversified fund, i.e. the STI ETF.
Read these FAQs:
http://www.tankinlian.com/faq/savings.html
http://www.tankinlian.com/faq/investown.html
Thursday, July 31, 2008
Arguments against a Minimum Wage Policy
The following arguments have been advanced against a "minimum wage policy" in Singapore:
1. Our business will be uncompetitive and will move to other countries
2. This policy is difficult to enforce, specially for small businesses
3. Our locals will be costly and lose jobs to foreign workers in Singapore
4. This policy is against free market principles.
5. The low wage workers are entitled to Workfare supplements
6. It will increase unemployment
Do you agree with these arguments? Are there reasons to support a minimum wage policy?
1. Our business will be uncompetitive and will move to other countries
2. This policy is difficult to enforce, specially for small businesses
3. Our locals will be costly and lose jobs to foreign workers in Singapore
4. This policy is against free market principles.
5. The low wage workers are entitled to Workfare supplements
6. It will increase unemployment
Do you agree with these arguments? Are there reasons to support a minimum wage policy?
Joke: A present from the wife
A: Where did you get this nice suit?
B: It was a present from my wife. I came home unexpectedly early from the office the other evening, and there it was - hanging over the back of a chair in the bedroom.
B: It was a present from my wife. I came home unexpectedly early from the office the other evening, and there it was - hanging over the back of a chair in the bedroom.
Dual Currency Investment
A consumer was persuaded by the bank to invest in a linked-currency product, or also called a dual currency investment. It is explained in this FAQ:
http://www.tankinlian.com/faq/duali.html
He asked me to explain why this product is to the disdvantage of the consumer.
The actual product is quite complex, so it is not easy to understand, and not easy to explain. It involves the use of spot rate and target rate, and the practice or terminology may differ from one bank to another.
I will give a simplified example. Suppose you have SGD 100,000. If you keep it on 1 month deposit, you can earn interest rate of 1.2% p.a. If you buy a AUD-linked product, you may earn say interest at 6% p.a. The difference of 4.8% in interest rate will give you 0.4% for one month.
Suppose that there is a 50% chance that AUD will appreciate by 1% in a month, and 50% chance that it will depreciate by 1%.
If AUD appreciates by 1%, you will not get this gain as you have already been paid the additional 0.4% interest. If AUD depreciates by 1%, you have suffered a loss of 0.6% (after deducting the additional interest of 0.4%).
Why face the risk of losing 0.6%, when your gain is only 0.4% with similar probability?
In real life, there is a risk of making a larger loss of more than 1%. The currency could depreciate by 5% in a month. You will suffer the risk of this large loss, without the benefit of a similar gain, as your actual gain is capped at 0.4%.
The bank officer tells you, "If AUD drops, you can keep AUD and wait for it to recover." This is a misleading advice. You have actually suffered a loss and if you keep it longer, you suffer the risk of a bigger loss.
Look at it from another angle. Due to the arrangement, you had to buy AUD at the earlier price when you could buy it 1 month later at 1% less. So, you have suffered a loss of 1% on AUD and after deducting the 0.4% additional interest, the net loss is 0.6%.
Conclusion: The terms of the dual currency investment are set by the bank in their favor. These terms are usually unfavorable to the consumer. It is best to avoid this type of structured product, as they are structured to your disadvantage.
http://www.tankinlian.com/faq/duali.html
He asked me to explain why this product is to the disdvantage of the consumer.
The actual product is quite complex, so it is not easy to understand, and not easy to explain. It involves the use of spot rate and target rate, and the practice or terminology may differ from one bank to another.
I will give a simplified example. Suppose you have SGD 100,000. If you keep it on 1 month deposit, you can earn interest rate of 1.2% p.a. If you buy a AUD-linked product, you may earn say interest at 6% p.a. The difference of 4.8% in interest rate will give you 0.4% for one month.
Suppose that there is a 50% chance that AUD will appreciate by 1% in a month, and 50% chance that it will depreciate by 1%.
If AUD appreciates by 1%, you will not get this gain as you have already been paid the additional 0.4% interest. If AUD depreciates by 1%, you have suffered a loss of 0.6% (after deducting the additional interest of 0.4%).
Why face the risk of losing 0.6%, when your gain is only 0.4% with similar probability?
In real life, there is a risk of making a larger loss of more than 1%. The currency could depreciate by 5% in a month. You will suffer the risk of this large loss, without the benefit of a similar gain, as your actual gain is capped at 0.4%.
The bank officer tells you, "If AUD drops, you can keep AUD and wait for it to recover." This is a misleading advice. You have actually suffered a loss and if you keep it longer, you suffer the risk of a bigger loss.
Look at it from another angle. Due to the arrangement, you had to buy AUD at the earlier price when you could buy it 1 month later at 1% less. So, you have suffered a loss of 1% on AUD and after deducting the 0.4% additional interest, the net loss is 0.6%.
Conclusion: The terms of the dual currency investment are set by the bank in their favor. These terms are usually unfavorable to the consumer. It is best to avoid this type of structured product, as they are structured to your disadvantage.
Wednesday, July 30, 2008
Avoid Dual Currency Investments
Hi Mr. Tan,
I refer to your FAQ on dual currency investment. I'm also being asked by my bank to invest in such type of investment - SGD/AUD.
I'm really waiting for the AUD to drop (or SGD to improve), to transfer my funds from SGD to AUD and send it to Australia. The bank said, since you're waiting, why not invest in this product.
My question after reading your example is, when would I stand to lose (you mentioned if the currency is converted to the linked currency). I don't quite understand when I would make a loss (my risk).
I understand that I can earn the interest if the SGD rate drops; I understand that I can earn if the AUD rate improves and my currency is converted at the agreed target rate. Either way, it's just whether I earn more or earn less, but I'm still earning, right?
Please give an example if it helps better explain how I will lose on my initial investment?
REPLY
I advise people to avoid the linked currency products. My reasons are set out here: http://www.tankinlian.com/faq/duali.html
I refer to your FAQ on dual currency investment. I'm also being asked by my bank to invest in such type of investment - SGD/AUD.
I'm really waiting for the AUD to drop (or SGD to improve), to transfer my funds from SGD to AUD and send it to Australia. The bank said, since you're waiting, why not invest in this product.
My question after reading your example is, when would I stand to lose (you mentioned if the currency is converted to the linked currency). I don't quite understand when I would make a loss (my risk).
I understand that I can earn the interest if the SGD rate drops; I understand that I can earn if the AUD rate improves and my currency is converted at the agreed target rate. Either way, it's just whether I earn more or earn less, but I'm still earning, right?
Please give an example if it helps better explain how I will lose on my initial investment?
REPLY
I advise people to avoid the linked currency products. My reasons are set out here: http://www.tankinlian.com/faq/duali.html
What the Financial Adviser is expected to do
Q7: What can I expect a FA representative to do when he recommends an investment product to me?
A: A FA representative must take all reasonable steps to:
1. Determine your investment objectives, risk tolerance, financial situation and investment experience;
2. Ensure that the product he recommends is suitable for you, taking into account the information you gave; and
3. Explain to you why the product he is recommending is suitable for you.
You should provide complete and accurate information to ensure that the FA representative is able to recommend a suitable product for you.
This advice, and other useful tips, can be found in this webpage:http://www.moneysense.gov.sg/publications/guides_publications/Consumer_Portal_FAAGuide.html
A: A FA representative must take all reasonable steps to:
1. Determine your investment objectives, risk tolerance, financial situation and investment experience;
2. Ensure that the product he recommends is suitable for you, taking into account the information you gave; and
3. Explain to you why the product he is recommending is suitable for you.
You should provide complete and accurate information to ensure that the FA representative is able to recommend a suitable product for you.
This advice, and other useful tips, can be found in this webpage:http://www.moneysense.gov.sg/publications/guides_publications/Consumer_Portal_FAAGuide.html
Unit trusts and ILP
Dear Mr. Tan,
I am trying to find a suitable investment product. I go to a bank, it sells me unit trusts. I go to an insurance company, it sells me ILPs. Can't insurance companies sell units and bank sell ILPs as well?
REPLY
Banks already sell ILP for insurance companies. These products have the same high charges and give poor value to customers.
Insurance companies do not sell unit trusts. They prefer to sell ILPs which allow them to pay high commissIon to their agent and earn a high profit margin.
I am trying to find a suitable investment product. I go to a bank, it sells me unit trusts. I go to an insurance company, it sells me ILPs. Can't insurance companies sell units and bank sell ILPs as well?
REPLY
Banks already sell ILP for insurance companies. These products have the same high charges and give poor value to customers.
Insurance companies do not sell unit trusts. They prefer to sell ILPs which allow them to pay high commissIon to their agent and earn a high profit margin.
Joke: A keen fisherman
I was watching a funeral the other day and upon the coffin lay a fishing rod, a reel and a fishing basket. I said to the fellow next to me: "He must have been a very keen fisherman?"
The man turned to me and said: "He still is. He's going straight to a fishing match after they've burried his wife."
The man turned to me and said: "He still is. He's going straight to a fishing match after they've burried his wife."
Tuesday, July 29, 2008
Avoid participating policies
Dear Mr. Tan,
I have several policies with X. I received a letter showing a cut in the bonus rates, to be compensated by higher rates of special bonus. But the rates of the special bonus for my different policies are quite different. How do I know if I am getting a fair rate of bonus?
REPLY
I am also quite confused with the different rates of bonus on my policies. More importantly, I find that my participating polices have still not reached the breakeven point after being in force for more than 10 years. I suspect that they have not distributed a fair rate of bonus, in spite of the attractive yield earned on the fund over the past ten years. I have raised this matter with X, but they keep giving me unsatisfactory replies.
My advice to the public is: Never invest in any participating life policy, including whole life policies where the premiums is paid for10 or 20 years. Here are the reasons:
1. The distribution cost is high and can take away up to 2 years of your savings. That is a lot of money to be given away.
2. You will not get a fair rate of return, as the insurance company will pay bonus that are far less than what the investments actually earned
Another actuary, who knows what is going on, told me that he avoids participating policies for the same reason. He will only buy Term insurance. He prefers to invest his savings in unit trusts, as the charges are lower and are transparent.
I have several policies with X. I received a letter showing a cut in the bonus rates, to be compensated by higher rates of special bonus. But the rates of the special bonus for my different policies are quite different. How do I know if I am getting a fair rate of bonus?
REPLY
I am also quite confused with the different rates of bonus on my policies. More importantly, I find that my participating polices have still not reached the breakeven point after being in force for more than 10 years. I suspect that they have not distributed a fair rate of bonus, in spite of the attractive yield earned on the fund over the past ten years. I have raised this matter with X, but they keep giving me unsatisfactory replies.
My advice to the public is: Never invest in any participating life policy, including whole life policies where the premiums is paid for10 or 20 years. Here are the reasons:
1. The distribution cost is high and can take away up to 2 years of your savings. That is a lot of money to be given away.
2. You will not get a fair rate of return, as the insurance company will pay bonus that are far less than what the investments actually earned
Another actuary, who knows what is going on, told me that he avoids participating policies for the same reason. He will only buy Term insurance. He prefers to invest his savings in unit trusts, as the charges are lower and are transparent.
Personal Automated Transport
Do you like a new type of transport that operates like a taxi, at low cost and does not need a driver? Read about it in:
www.singaporepublictransport.blogspot.com
www.singaporepublictransport.blogspot.com
Difference between two statements
What is the difference between these two statements:
statement 1
sum of liability in respect of each policy of the participating fund - $X
statement 2
total liability in respect of all the policies in the participating fund - $X
statement 1
sum of liability in respect of each policy of the participating fund - $X
statement 2
total liability in respect of all the policies in the participating fund - $X
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