Many customers paid a few thousand dollars on spa packages and lose the money when the spas closed down. If you have to pay in advance to enjoy a discount, do not pay for more than three months of services. Do not take the risk of paying for one or two years.
I do not know if the spa closed down due to bad business, or they were set up to deceive the customers. I hope that the authority will investigate if the owners had intended to collect deposits and run away with the money. If money is taken out by the directors for unauthorised purposes, it would amount to cheating. We should not allow this type of cheating to go unchecked.
Tan Kin Lian
Saturday, April 03, 2010
Poor financial future for Singaporeans
I feel sad for the people of Singapore. Most of them work hard and are frugal. They save for their future and for their children. But, when they come to retire, you do not have enough savings and are asked to continue to work longer.
What went wrong? Most of them get a poor deal from the financial products that they invested in. Take an example of a family which saves $500 a month over 35 years. They should have earned a return of 5% p.a. and received $570,000 for retirement,. But the yield obtained by most of them would probably be 2% p.a. giving them only $306,000 (or 54%). The difference of $264,000 (i.e. 46% of the total) went to pay the high earnings and profits of the financial services industry. I am not aware of any other country in the developed world where as much as 46% is taken away from the hard earned life time savings of the people.
If each family contribute $7,500 a year (i.e. $264,000 over 35 years), the total contribution from one million families would amount to nearly $8 billion a year. This is a lot of money. This is why the top executives in banks and life insurance companies can earn several million dollars a year. And in recent years, higher salaries are being paid for top executives who are willing to be unscrupulous in over-charging customers and giving them a poorer deal.
This arrangement works well for the board of directors, as their fees are benchmarked to the profits and to the government leaders whose remuneration are benchmarked to the top earners in the country. Of course, the people are condemned to a bleak financial future, but the government leaders do not seem to care.
Tan Kin Lian
What went wrong? Most of them get a poor deal from the financial products that they invested in. Take an example of a family which saves $500 a month over 35 years. They should have earned a return of 5% p.a. and received $570,000 for retirement,. But the yield obtained by most of them would probably be 2% p.a. giving them only $306,000 (or 54%). The difference of $264,000 (i.e. 46% of the total) went to pay the high earnings and profits of the financial services industry. I am not aware of any other country in the developed world where as much as 46% is taken away from the hard earned life time savings of the people.
If each family contribute $7,500 a year (i.e. $264,000 over 35 years), the total contribution from one million families would amount to nearly $8 billion a year. This is a lot of money. This is why the top executives in banks and life insurance companies can earn several million dollars a year. And in recent years, higher salaries are being paid for top executives who are willing to be unscrupulous in over-charging customers and giving them a poorer deal.
This arrangement works well for the board of directors, as their fees are benchmarked to the profits and to the government leaders whose remuneration are benchmarked to the top earners in the country. Of course, the people are condemned to a bleak financial future, but the government leaders do not seem to care.
Tan Kin Lian
Friday, April 02, 2010
Singapore Goal 2010
In 1998, Prime Minister Goh Chok Tong said in a National Day speech that one day Singapore could qualify to play in the World Cup. The Football Association of Singapore set Goal 2010 as the year that Singapore could achieve this dream. We are now at year 2010 and this dream is still far away. It seems that the last 10 years have been quite disappointing for Singapore on many angles, including sports. More information here.
Develop your child's thinking with the shape quiz
The shape quiz can help your child's thinking, creativity and problem solving. Watch the video here:
www.easysearch.sg/videos
Special promotion. Buy 10 mini-paks for $15 (usual price $20) as a gift for children and friends.
To order: www.easysearch.sg/ishop
www.easysearch.sg/videos
Special promotion. Buy 10 mini-paks for $15 (usual price $20) as a gift for children and friends.
To order: www.easysearch.sg/ishop
A valuable gift to your children or friend
If you invest $12 and 6 hours in my book, Practical Guide on Financial Planning, you will be able to save $12,000 by avoiding the wrong type of investment. For example, if you save $500 a month in a life insurance policy and the distribution cost is 24 months, you will be losing $12,000 of your savings.
You can also help your children or friend to avoid wasting their savings on the wrong financial product. Present them with this book for them to read and keep. This may be a much appreciated gift.
Order here. www.easysearch.sg/ishop
You can also help your children or friend to avoid wasting their savings on the wrong financial product. Present them with this book for them to read and keep. This may be a much appreciated gift.
Order here. www.easysearch.sg/ishop
Hub and spoke system for public transport
A few people have written to the newspaper to complain about the proposed change to the hub and spoke system for public transport. They do not like having to transfer from one bus to another. They prefer the current system of many buses that travel long distance.
I believe that the hub and spoke system is more efficient and will benefit commuters as a whole. It will simplify the transport system and encourage more people to take public transport. The only drawback is the need to make a transfer, but this can be an advantage as the short walk will be good for health.
Commuters do not like to spend 10 minutes to wait for a transfer. When the new system if fully implemented, I expect that the waiting time will be shorter as there will be more buses to run the shorter routes.
Some people argued that the elderly and disabled will be inconvenienced. I believe that it is better for some other arrangements should be made for them, instead of using public transport.
Tan Kin Lian
I believe that the hub and spoke system is more efficient and will benefit commuters as a whole. It will simplify the transport system and encourage more people to take public transport. The only drawback is the need to make a transfer, but this can be an advantage as the short walk will be good for health.
Commuters do not like to spend 10 minutes to wait for a transfer. When the new system if fully implemented, I expect that the waiting time will be shorter as there will be more buses to run the shorter routes.
Some people argued that the elderly and disabled will be inconvenienced. I believe that it is better for some other arrangements should be made for them, instead of using public transport.
Tan Kin Lian
Platform fee on Fundsupermart
Hi Mr Tan,
I am unsure if you are aware that the famous online Unit Trust distributor Fundsupermart is imposing a platform fee in a month's time.
http://www.fundsupermart.com/
Many retail investors are very unhappy about this new fee to be implemented in such a short notice. In addition, we always try to keep our cost down but FSM, due to various reasons, go in different direction as its clients.
I have not receive any email or letter regarding this change in fee structure until a forumer alerted the rest.
JL
REPLY
Please ask Fundsupermart to show you where, in the contract, they have the legal right to impose such a fee. If you withdraw from this platform, are you able to keep your record directly with the unit trust or move the units to another platform? You can also ask the unit trust that you invested in.
UPDATE
Fundsupermart plans to levy a quarterly fee of 0.125% (0.5% p.a.) plus GST for equity funds. A lower charge applies for investments above $500,000. This is rather high, as the investor has to bear a management fee to the asset manager as well.
An investor told me that she plans to transfer her funds to Dollar Dex. There is no transfer charge. Dollar Dex indicated in their website that they do not plan to implement a platform fee. She said another option is to tranfer to POEMS.
I am unsure if you are aware that the famous online Unit Trust distributor Fundsupermart is imposing a platform fee in a month's time.
http://www.fundsupermart.com/
Many retail investors are very unhappy about this new fee to be implemented in such a short notice. In addition, we always try to keep our cost down but FSM, due to various reasons, go in different direction as its clients.
I have not receive any email or letter regarding this change in fee structure until a forumer alerted the rest.
JL
REPLY
Please ask Fundsupermart to show you where, in the contract, they have the legal right to impose such a fee. If you withdraw from this platform, are you able to keep your record directly with the unit trust or move the units to another platform? You can also ask the unit trust that you invested in.
UPDATE
Fundsupermart plans to levy a quarterly fee of 0.125% (0.5% p.a.) plus GST for equity funds. A lower charge applies for investments above $500,000. This is rather high, as the investor has to bear a management fee to the asset manager as well.
An investor told me that she plans to transfer her funds to Dollar Dex. There is no transfer charge. Dollar Dex indicated in their website that they do not plan to implement a platform fee. She said another option is to tranfer to POEMS.
Goods and services tax (GST)
The Goods & Services Tax is a bad tax in the following ways:
- it is a regressive tax and hits the people at lower income most
- it is a wasteful tax as it incurs a heavy administrative cost to the tax collector and the payer
A better solution is to abolish GST and have higher income tax. If a country needs to lower income tax to attract higher income earners (a strategy for which I personally disagree) and needs to find an alternative source of revenue, here is a better approach to GST:
- levy a flat rate tax of 4% on payroll and investment income (which produce the same revenue than 7% GST)
- the payroll tax is a cost to the employer but can be recovered from employees earning above a threshold salary
There is a mistaken concept that GST is fair as it is imposed on consumption and encourages savings. A better way to encourage savings it to pay a higher rate of interest (which can be achieved through monetary policy) or to exempt interest from tax. Many retirees earns a low rate of interest on their savings and yet have to pay higher prices through GST.
GST has become so complicated, costly and open to abuse that it is time to abolish it and replace it with a more efficient tax.
Tan Kin Lian
- it is a regressive tax and hits the people at lower income most
- it is a wasteful tax as it incurs a heavy administrative cost to the tax collector and the payer
A better solution is to abolish GST and have higher income tax. If a country needs to lower income tax to attract higher income earners (a strategy for which I personally disagree) and needs to find an alternative source of revenue, here is a better approach to GST:
- levy a flat rate tax of 4% on payroll and investment income (which produce the same revenue than 7% GST)
- the payroll tax is a cost to the employer but can be recovered from employees earning above a threshold salary
There is a mistaken concept that GST is fair as it is imposed on consumption and encourages savings. A better way to encourage savings it to pay a higher rate of interest (which can be achieved through monetary policy) or to exempt interest from tax. Many retirees earns a low rate of interest on their savings and yet have to pay higher prices through GST.
GST has become so complicated, costly and open to abuse that it is time to abolish it and replace it with a more efficient tax.
Tan Kin Lian
Cost of a home
Every family needs a home to live in. A high property price translates into the high cost of a home and a high cost of living. When a family buys a costly property, they have to work hard for many years to pay off the mortgage to the home. They cannot afford to be unemployed or to have reduced earnings, as they cannot afford to pay the mortgage.
There was a mistaken belief that high property prices benefit the people at large, as the value of their asset has increased. In reality, they are paying a higher cost of living and have to work harder to survive. They are not able to unlock the value of their asset, as they still need a place to live in (unless they move to a smaller size property).
A small number of people benefit from the escalating property prices - people who own land and properties that they can sell to those who need a home. The families that need a home suffer from the higher cost.
Tan Kin Lian
There was a mistaken belief that high property prices benefit the people at large, as the value of their asset has increased. In reality, they are paying a higher cost of living and have to work harder to survive. They are not able to unlock the value of their asset, as they still need a place to live in (unless they move to a smaller size property).
A small number of people benefit from the escalating property prices - people who own land and properties that they can sell to those who need a home. The families that need a home suffer from the higher cost.
Tan Kin Lian
Work-life balance and the economics of workplace flexibility
Here is a report prepared by the Presidential Council of Economic Advisers in the USA.
Thursday, April 01, 2010
NATO: No action talk only
Someone passed a cynical comment that the comments on land banking in this blog is "no action, talk only". This person posted anonymously and did not indicate whether he is a land banking investor or cynic or just a nuisance. If he is willing to come forward and propose some concrete action, I would be happy to post his offer.
Someone suggested that a rally be held in Hong Lim Park about land banking. Another person suggested to protest against the lavish spending at the annual general meeting of NTUC Income. Can the people who make these suggestions offer to arrange the rally or attendance?
On a positive note, a few investors in land banking are now in contact with each other and discussing some form of collective action, including visiting the office of the land banking company together to ask for re-payment of their investment. However, some investors still think that they will have a better chance to be re-paid if they give the land banking company more time to sell their land.
Tan Kin Lian
Someone suggested that a rally be held in Hong Lim Park about land banking. Another person suggested to protest against the lavish spending at the annual general meeting of NTUC Income. Can the people who make these suggestions offer to arrange the rally or attendance?
On a positive note, a few investors in land banking are now in contact with each other and discussing some form of collective action, including visiting the office of the land banking company together to ask for re-payment of their investment. However, some investors still think that they will have a better chance to be re-paid if they give the land banking company more time to sell their land.
Tan Kin Lian
Painful experience of land banking investor
This message has been edited by Tan Kin Lian. Other investors who wish to join this action to visit the office of X collectively can send an e-mail to kinlian@gmail.com.
Hi
I wish to share my experience. X (land banking company) is not interested or motivated in repaying the investors. Their main focus currently is to hold more road shows to attract more new and unsuspecting investors so as to further line their own pockets.
In my case, I have personally went down to CAD a couple of times and also seen my MP twice to try to recover my money since August last year. However, till today I am still at a loss as to when I could ever recover my money from X.
I also went down to X's office many times to recover my money but they kept giving excuses and use all sorts of ways and excuses to delay payment. I have also called up X 'hundreds of times' but they simply either refused to take my calls or give excuses that their directors are out of town (their directors are basically out of town 365 days in a year).
Personally I think that the best way to get my money is to constantly 'harass' X for payment personally at their office. In fact, that could be the only way to get our money back unless CAD decides to take action against X.
However, X would not be bothered with our 'harassment' if we go to their office individually. Therefore I suggest that if we are serious in getting our money back, maybe we could gather more investors like ourselves and together pay X a visit to settle payment dued to us once and for all. We need to really force X to pay us back our hard-earned money before it is too late.
Hi
I wish to share my experience. X (land banking company) is not interested or motivated in repaying the investors. Their main focus currently is to hold more road shows to attract more new and unsuspecting investors so as to further line their own pockets.
In my case, I have personally went down to CAD a couple of times and also seen my MP twice to try to recover my money since August last year. However, till today I am still at a loss as to when I could ever recover my money from X.
I also went down to X's office many times to recover my money but they kept giving excuses and use all sorts of ways and excuses to delay payment. I have also called up X 'hundreds of times' but they simply either refused to take my calls or give excuses that their directors are out of town (their directors are basically out of town 365 days in a year).
Personally I think that the best way to get my money is to constantly 'harass' X for payment personally at their office. In fact, that could be the only way to get our money back unless CAD decides to take action against X.
However, X would not be bothered with our 'harassment' if we go to their office individually. Therefore I suggest that if we are serious in getting our money back, maybe we could gather more investors like ourselves and together pay X a visit to settle payment dued to us once and for all. We need to really force X to pay us back our hard-earned money before it is too late.
UK - action taken against land banking companies
Comment: surely it is time for the Singapore authorities to act against similar shady practices in Singapore?
http://www.creditman.biz/uk/members/news-view.asp?newsviewID=11496
....were all involved in operating an unscrupulous land investment business. The companies falsely claimed to provide the best land and property in the UK with future development potential and the capacity to deliver maximum returns to investors including selling land they had no right to.
The grounds for winding up the companies were that they made misleading and unfounded statements in marketing the plots of land to the public; sold land on two sites (Worplesdon and Thorndon) that they had no right to sell and that over a third of company receipts were found to have gone to those involved in the running the business, namely.....
In ordering the companies into liquidation Registrar said: “This is a very serious case where considerable amounts of money have been obtained from members of the public. I am satisfied that the evidence, based on a very full report, substantiates all of the allegations. The evidence shows diversion of funds and the intermingling of funds by the companies that can’t be unravelled. I am satisfied that Mr .... and Mr ..... have demonstrated complete lack of co-operation and that this is very obviously a case where winding up orders should be made.”
The investigation also found that the companies had failed to keep proper accounting records; had failed to comply with Companies Act requirements; failed to co-operate fully with the investigation and operated with a serious lack of transparency as to who controlled the companies and with a lack of clarity regarding the structure and roles of the companies.
http://www.creditman.biz/uk/members/news-view.asp?newsviewID=11496
....were all involved in operating an unscrupulous land investment business. The companies falsely claimed to provide the best land and property in the UK with future development potential and the capacity to deliver maximum returns to investors including selling land they had no right to.
The grounds for winding up the companies were that they made misleading and unfounded statements in marketing the plots of land to the public; sold land on two sites (Worplesdon and Thorndon) that they had no right to sell and that over a third of company receipts were found to have gone to those involved in the running the business, namely.....
In ordering the companies into liquidation Registrar said: “This is a very serious case where considerable amounts of money have been obtained from members of the public. I am satisfied that the evidence, based on a very full report, substantiates all of the allegations. The evidence shows diversion of funds and the intermingling of funds by the companies that can’t be unravelled. I am satisfied that Mr .... and Mr ..... have demonstrated complete lack of co-operation and that this is very obviously a case where winding up orders should be made.”
The investigation also found that the companies had failed to keep proper accounting records; had failed to comply with Companies Act requirements; failed to co-operate fully with the investigation and operated with a serious lack of transparency as to who controlled the companies and with a lack of clarity regarding the structure and roles of the companies.
Coping with a critical illness
When a person meets with a critical illness, there are two financial losses:
- medical expenses to treat the critical illness
- loss of earnings
The medical expenses have to be managed in a sensible manner. I know of a few people that spent a lot of money on treating the critical illness, usually at private hospitals and specialists. In many cases, the large sum that was spent did not make any difference. If the illness was serious, the patient died.
I also know of other people who survived cancer or heart surgery. Those who were treated in a restructured hospital did not spend a lot of money as they benefited from the government subsidy. They were also covered by catastrophic insurance (i.e. MediShield or private Shield).
The best way to handle the loss of income is through personal savings that can be drawn down in an emergency. You do not need to depend on critical illness insurance to give a lump sum payment. If you put all your money in a critical illness policy, you may find your claim to be rejected for some technical reason, at a time when you need the money most. It is better to invest the savings on your own and be free of this uncertainty.
The proportion of people that suffered from a critical illness during the working life is estimated to be less than 10%. More than 90% will retire without suffering from a critical illness.
Tip: Spend less than 2% of your earnings on insurance against death or critical illness. Invest the rest of your savings in a low cost investment fund.
Read my book on "Practical Guide on Financial Planning". Spend $12 and save a lot of money (say $12,000) on wasted premiums.
Tan Kin Lian
- medical expenses to treat the critical illness
- loss of earnings
The medical expenses have to be managed in a sensible manner. I know of a few people that spent a lot of money on treating the critical illness, usually at private hospitals and specialists. In many cases, the large sum that was spent did not make any difference. If the illness was serious, the patient died.
I also know of other people who survived cancer or heart surgery. Those who were treated in a restructured hospital did not spend a lot of money as they benefited from the government subsidy. They were also covered by catastrophic insurance (i.e. MediShield or private Shield).
The best way to handle the loss of income is through personal savings that can be drawn down in an emergency. You do not need to depend on critical illness insurance to give a lump sum payment. If you put all your money in a critical illness policy, you may find your claim to be rejected for some technical reason, at a time when you need the money most. It is better to invest the savings on your own and be free of this uncertainty.
The proportion of people that suffered from a critical illness during the working life is estimated to be less than 10%. More than 90% will retire without suffering from a critical illness.
Tip: Spend less than 2% of your earnings on insurance against death or critical illness. Invest the rest of your savings in a low cost investment fund.
Read my book on "Practical Guide on Financial Planning". Spend $12 and save a lot of money (say $12,000) on wasted premiums.
Tan Kin Lian
Personal risk management
We need to accumulate savings and invest them wisely to get an adequate return that is higher than inflation. Most people invest too much of their savings in a life insurance policy that locks them up for 20 years or longer, is inflexible and gives a poor return. When they need cash for emergencies, they have to borrow on credit cards or on their own policy and pay a high interest rate.
Most insurance agents frighten them about the risk of premature death or critical illness (which is less than 10% during their working life) but did not tell them about the risk of insufficient savings for retirement or future emergencies (which represents more than 90% chance of occurrence).
The solution is to buy a low cost term assurance (covering death and critical illness) or personal accident policy (with less than 2% of your earnings) and invest the rest of your savings in a low cost investment fund. If the insurance cover is not available at a low price, it is more important to take care of the 90% risk and have adequate savings for the future.
What are your views about this approach to personal risk management? Share your personal experience.
Tan Kin Lian
Most insurance agents frighten them about the risk of premature death or critical illness (which is less than 10% during their working life) but did not tell them about the risk of insufficient savings for retirement or future emergencies (which represents more than 90% chance of occurrence).
The solution is to buy a low cost term assurance (covering death and critical illness) or personal accident policy (with less than 2% of your earnings) and invest the rest of your savings in a low cost investment fund. If the insurance cover is not available at a low price, it is more important to take care of the 90% risk and have adequate savings for the future.
What are your views about this approach to personal risk management? Share your personal experience.
Tan Kin Lian
Wednesday, March 31, 2010
Public transport in Singapore
What percentage of people in Singapore uses public transport to go to work? I guess that it must be 80%, but I wonder if the proportion is lower? Can someone help to do some research?
Tuesday, March 30, 2010
Old fashion investment advice
Jack Bogle has been giving the same advice for 50 years. Read this article.
His advice, in short: Invest consistently and for the long haul in a widely diversified portfolio of stocks and bonds. Pay attention to taxes and costs. But leave your investments alone.
His advice, in short: Invest consistently and for the long haul in a widely diversified portfolio of stocks and bonds. Pay attention to taxes and costs. But leave your investments alone.
Subscribe to:
Posts (Atom)