Monday, December 31, 2007

New Year Celebration in Taipei

There will be a big celebration to welcome the new year in Taipei. A big firework display will be launched from Taipei 101, which is currently the tallest building in the world. Most people in Taipei will be watching the fireworks.

We will be watching the fireworks from the roof top of my daughter's apartment. It is just 1 kilometer away from Taipei 101. We have to get a pass and pay an admission fee to access the rooftop - as it will be in high demand.

Winter in Taipei

It is now winter in Taipei. Although there is no snow here, the temperature can be quite cold. It gets below 10 degree Centrigrade. I enjoy the cold temperature, as it is a good change from the hot climate in Singapore.

Personal accident insurance

I encourage all young people to buy a personal accident insurance to cover $100,000 for an annual premium of less than $100 (for most occupations).

Here are the reasons:

1. It is easy to buy this insurance. You do not have to provide any information about your health status or to take a medical examination.

2. Most young people face an accident risk. They are unlikely to face a health risk, until they are much older.

3. You can invest your savings in a diversified, low cost equity fund to get a better return. Most of the return goes back to you, instead of being spent on agent commission, expenses and profit for the insurance company.

4. Do not buy your life insurance too early, especially the costly plans, such as endowment, whole life or critical illness. You can think about life insurance later, when you have started a family. At that time, you can make a better choice. You will learn that it is better to buy Term insurance.

5. If you wish to buy Term insurance earlier, it is also appropriate. Term insurance covers death from accident and sickness, and is slightly more expensive than accident insurance. It does not cover permanent and temporary disablement (unlike personal accident insurance).

6. The cost of personal accident insurance is so low, that you do not have to think twice about it.

Audio driver for my notebook computer

My notebook computer was running slowly. I decided to remove the unused programs and deframent the hard disk

After re-starting the computer, I learned that the sound card did not work. I had removed the audio driver by mistake, thinking that it was an unused software.

I wish to share this interesting experience.

I searched Google for "Sony Vaio audio driver" and was given a listing of several websites. A few websites were discussion among other owners who also lost their audio driver.

I visited the Sony Online website. It asked for the model number of my notebook. I entered the model number (taken from the back of the notebook) and was told that it was an "unrecognised model".

The discussion forum showed another owner with the same model number. It seemed that this is just a marketing reference and that the actual model number could be found on the front monitor.

I was able to get the correct model number and to locate the audio driver in the internet. I download and installed it in my notebook. It worked - to my considerable surprise!

Previously, I had to depend on a techie to solve the problem for me. I learned today, how it can be done.

Lesson: There is a wealth of information that can be obtained through the internet. Each day, I am discovering its usefulness.

Personal accident insurance

Here is an example of a standalone personal accident insurance from the market. Several insurance companies offer similar terms

1. Compensation as % of sum insured

Death: 100%
Double Indemnity on weekends, public holidays and school holidays: 100%
Permanent Disablement: up to 100% depending on extent of disablement (defined in schedule)
Temporary Disablement: up to 0.1% per day, up to 104 weeks
Medical Expenses: up to $10,000 any one accident
Emergency Evacuation and Repatriation

2. General Exclusions (i.e. not covered by the policy):

pre-existing physical or mental defects
war risks
climbing or mountaineering necessitating ropes or guides
judo, karate and some hazardous sports

Note: you can pay a higher premium rate to cover some of these risks.

3. Example of a typical plan

Death: $100,000
Double Indemnity: $200,000
Permament Disablement: Up to $100,000
Temporary Disablement: $100 a day up to to 104 weeks
Medical Expenses: Up to $2,000

4. Premiums (inclusive of 7% GST) for the typical plan, depends on occupation:

Class 1: $72 (most office bound jobs)
Class 2: $92 (production and outdoor jobs)
Class 3: $127
Class 4: $209

5. You pay a lower premium for the basic cover, i.e. death and permanent disability cover, excluding temporary disablement and medical expenses.

6. You can apply for higher or lower coverage and pay a proportionately adjusted premium. If you change your occupation, the premium rate will be adjusted on each year's renewal.

7. The premium rate for a standalone personal accident policy is much lower than a rider to a life policy (providing similar coverage). It offers higher protection at a lower cost, compared to a life insurance policy.

Class 1: Profession of administrative, supervisory or clerical nature such as accountant, lawyer, banker, doctor, teacher, nurse, secretary, clerk.

Class 2: Professions of outdoor nature, work involving overseas travel or whose duties involves the occasional use of tools or machinery such as foremen, grocers, hairdressers, salesmen, tailors, surveyors, tourist guides.

Class 3: Profession involving manual work or use of tools or machinery, such as carpenter, builder, painter, driver, technician, hawker, unarmed security guard.

Class 4: Full time national serviceman, fireman, policeman, armed security guard, woodworking machinist.

Accident and hospital benefit riders

Have you taken an accident or hospital benefit rider with your life insurance policy? They are sold to provide enhanced protection under your policy.

They look attractive, but has a big drawback. The premium rates are quite expensive, compared to standalone policies.

If you buy a standalone personal accident policy to cover $100,000, you need to pay about $80 a year. To buy the same cover as a rider, you will have to pay two times the premium. The hospital benefit rider also charges much higher than a standalone policy.

The standalone policy has to offer more competitive rates, as you are able to shop around and get the best deal from the insurance companies, including the general insurance companies.

If you buy a rider with a life policy, you are a captive customer and has to pay the premium rates that is being sold to you by the agent.

What can you do now?

Look at the premium and the coverage on your riders. Get a quote for a standalone policy that provides similar coverage. If the saving is significant, you can cancel your riders and buy the standalone policy. As the rider does not have any saving component, you do not lose out by cancelling the rider.
You can invest the savings in your premium to accumulate more funds for your retirement.

National Palace Museum, Taipei

I visited the National Palace Museum. Here are some facts from Wikipedia.

Taipei's National Palace Museum, located in the Shihlin District, is the pride of Taiwan. It ranks as one of the four best museums in the world, in a class with the Louvre, the British Museum and the Metropolitan Museum of Art.

The museum holds the world's largest collection of Chinese artifacts, around 700,000 items in all. Since the museum only has space to display around 15,000 pieces at any given time, the majority of the treasures are kept well protected in air-conditioned vaults buried deep in the mountainside. The displays are rotated once every three months, which means 60,000 pieces can be viewed in a year and it would take nearly 12 years to see them all. Furthermore, the collection continues to grow through donations and purchases.

Some of the oldest artifacts in the collection of the museum are pieces of prehistoric pottery over 5,000 years old. The vast majority of these art objects are from the private collection of China's emperors.

Included in the collection are artifacts made from jade, bronze, porcelain, lacquerware and enamel. There is also tapestry and embroidery, and many priceless documents and books containing excellent examples of ancient Chinese calligraphy.

Allow for inflation

Hi Mr Tan,

I was reading your article on "Sufficient funds for retirement". You mentioned that to retire comfortably, we need savings of 200K to 400K when we retire. Does that exclude CPF ?

However, for a person retiring in say 5 yr's time, 200K to 400K could be sufficient, but say for a person retiring in 30 yrs' time, due to inflation, this sum of money could be much more.


The sum includes CPF. You should allow for inflation at say 2% per annum. In 30 years time, you will need about twice of the amount to keep the real value of money.

Read this FAQ:

Sunday, December 30, 2007

Night market in Shilin, Taipei

I visited the busy night market in Shilin, Taipei. I encountered an interesting experience.

The street was very busy. Suddently, a stall holder started to pack up his goods. We asked him for the reason. He said that the police is making a raid on the illegal stalls.

Within two mintures, a convoy of about 20 illegal stalls were moved in an orderly fashion down an alley to be kept away from the scene. When the police arrived, there were no illegal stalls. After the police left, the stalls were back in business, within half an hour.

How were the stalls alerted? They posted someone to lookout for the police. When the police came, a message was passed by mobile phone.

Wow! This is a new way to use technology!

Slow economy in Taiwan

My friend told me that the economy has been weak in Taiwan during the past ten years. This is caused by two factors:

1. Relocation of manufacturing to China
2. The unstable political situation.

The people are still cheerful.

Earnings of taxi driver in Taipei

I spoke to two taxi drivers in Taipei.

They work hard and drive a taxi for 12 hours a day, 365 days a year. They earn an average of NT 50,000 a month (SGD 2,500) after deducting their expenses.

They used to earn more a few years ago. Business has reduced due to the slow economy and the opening of the MRT lines.

In spite of their difficult life, they are polite and helpful.

The Pen is Mightier than the Sword

This article is Dr. Lee Kum Tatt's message to start the New Year of 2008 with his wife's introductory comments.

Saturday, December 29, 2007

Snow Mountain Tunnel

I travelled through the Snow Mountain Tunnel today. Here is a description from Wikipedia.

The Hsuehshan Tunnel (雪山隧道) or "Snow Mountain" tunnel, is the longest tunnel in Taiwan, located on the Taipei-Yilan Freeway (Taiwan National Highway No. 5).

The road connects the city of Taipei to the northeastern county of Yilan (Ilan), cutting down the journey time from two hours to just half an hour.

One of the key aims of constructing the tunnel was to connect the western coast of Taiwan, where 95% of the population live, to the eastern coast of the island and in doing so tackle the unbalanced development on the island.

It is constructed with one pilot tunnel and two main tunnels for eastbound and westbound traffic. The total length is 12.942 km, making the Hsuehshan Tunnel the second longest road tunnel in East Asia and the fifth longest road tunnel in the world.

While excavating the tunnel, engineers encountered difficult geological problems. There were serious tunnel collapses with groundwater flooding took place periodically during tunnel construction. Altogether, 25 lives were lost during 15 years of construction.

It opened in June 2006 to severe traffic jams. The Hsuehshan Tunnel broadcasts a dedicated radio station on two FM channels inside the tunnel. Drivers can tune to either of the two FM stations to hear announcements regarding the Heushshan Tunnel, rules for driving inside the tunnel, and music.

Taroko Gorge, Hualien, Taiwan

Taroko Gorge is located on the eastern coast of Taiwan, about 4 hours drive from the capital Taipei. Taroko has the largest marble gorge in the world. After Taipei, this is the most visited site in Taiwan.

The Park is 36 kilometres from north to south and 42 kilometres from east to west. The park has many high mountains and steep gorges, with many peaks towering above 3,000 metres in height, and with many natural watersheds.

The spectacular Taroko Gorge and the scenic beauty of the Liwu River can be viewed conveniently from the Central Cross-Island Highway. The many waterfalls, diverse forms of plant and animal life, and the indigenous Taroko people, together create the rich texture of this unique natural ecosystem.

The Taroko Gorge is basically the 20km stretch of the Cross Island Highway between Taroko National Park HQ and Tiansiang. The narrowest and most amazing parts of the gorge are at the Swallow's Grotto and Tunnel of Nine Turns. The Eternal Spring Shrine was built to commemorate the 212 workers who lost their lives building the cross island highway. The names of the workers are inscribed in rock on the inside of the shrine.

Adequate Taxis in Taipei

There are plenty of taxis in Taipei. It is easy to get a taxi within 1 minute. The supply is more than adequate to meet demand. The service is excellent.

The taxi fares are at the right level. They are 4 to 8 times of public transport. They are not cheap, but not expensive either.

The taxi drivers work hard to meet their operating expenses and to earn a net income. There seem to be enough people willing to drive a taxi. This ensures that there is a correct balance of supply and demand. It is an excellent source of meaningful work for unemployed people.

The excellent public tranport and taxi service in Taipei probably make it less necessary for the city dwellers to own a private car.

The regulated taxi system in Taipei seems to work extremely well, in getting an efficient system that serves the commuters and taxi drivers well.

Perhaps it is time for Singapore to learn from the experience of Taipei in managing their public transport and taxi service?

Friday, December 28, 2007

Technique to solve Logic Quiz

Try this quiz during the new year holidays.

The original quiz is purported to be created by Einstein. Only 2% of the population could solve it. Most visitors to my blog (like you) probably belong to the 2%.

You can read the quiz in this webpage:

Click on "Technique" at the bottom of that page, to learn the steps on how to solve the quiz.

There you are. You now belong to the 2%.

After that, you can try more quizzes here:

Cost and benefit of health insurance

Dr. Money gives a few practical advice regarding your health insurance. He teaches you how to measure the cost and benefit and make the right choice.,4136,142914,00.html?

More articles from Dr. Money

Existing life insurance policies

Dear Mr. Tan,

I have just retired. I am not sure if I should continue to pay the premium on my current life insurance policies, especially those that require me to pay for the whole of life. I can afford to pay the premium, but I am not sure if the return is worth while. What is your advice to me?


If you are able to continue to pay the premium, you can look at the return on your existing policies over the next 5 or 10 years. If the return is higher than other types of investment, then you can continue these policies.

Read this FAQ:

Difficult to get a taxi in Singapore

My friend in Taiwan told me that he found it difficult to get a taxi when he was in Singapore. He said politely, "Perhaps Singapore's economy is doing well, that everyone wants to take a taxi."

My first trip on Taipei MRT

I took my first trip on the Taipei MRT today. I bought a stored value ticket for NT 500 (SGD 25). The deposit is NT 100 and the stored value is NT 400.

A trip of up to 6 stops cost NT 20 ($1) cash, NT 16 ($0.80) on the stored value card. The train is not crowded. I was able to get a seat on the forward and return journey.

The experience is better than Singapore MRT. Taipei MRT has received the No 1 award for reliability, safety and quality standards.

Strategies to make profit

There are three strategies for a company to make profit:

1. Operate efficiently, reduce cost, offer good value to customers and make a fair margin.
2. Exploit the market situation and customer ignorance to increase profit
3. Design products to "rip off" the customer; pay high commission to people to market the product.

I want to encourage businesses to adopt stragegy 1 (i.e. the ethical approach). It is very sad to see more businesses adopt the other two strategies.

Avoid high charges

Dear Mr. Tan,

Should I go for those linked with investment (XXX Life Manager Plus) or those (YYY Guaranteed 15 for Life) that only need to pay for 15 yrs and covered for life?


Both of these policies have high charges. A large portion of your premium goes to pay the commission of the agent.

My advice is to buy Term insurance and invest the difference in a low cost, diversified equity fund.

Read the following FAQs.

Feeder Bus Service

Some commuters do not like the feeder bus system. They consider it a hassle to take a feeder bus, change to a train, and take another feeder bus. They prefer to have no transfer, if possible.

I find a feeder system to be acceptable, if:

1. Waiting time for the feeder bus is less than 5 minutes
2. Walking distance is short
3. The feeder bus goes directly to the destination, with minimal detour.

By accepting transfers, we can have a more efficient system, with better connections, less waiting time, and lower cost.

In 2000, I took the train in Switzerland from Zurich Airport to St Moritz in the mountains. The journey involved two transfers of train. I have to take the airport train to Zurich main station, change to another train to the foot of the mountain and make a further change to go up to the mountain.

All the transfers were done on the same platform of the station. I get down a train and wait less than 10 minutes for a connecting train. It was quite convenient and easy, although it was my first time to take the train in Switzerland.

The train journey cost about SGD 50. If I took a limousine, the fare would be more than SGD 1,000.

Taipei Rapid Transit System

From Wikipedia, the free encyclopedia

Began operation March 28, 1996
System length In service: 74.4 km
No. of lines 8
No. of stations 67
Daily ridership 1,214,728 (in November 2007)
Operator Taipei Rapid Transit Corporation (TRTC)
Taipei Rapid Transit System
Traditional Chinese: 台北大眾捷運系統
Estimated cost: US$ 32 billion (phase 1 and 2)

The Taipei Rapid Transit System, also known as the MRT (Metropolitan Rapid Transit), or by locals simply as the Metro Taipei is a rapid transit system connecting the Taipei metropolitan area. The system is currently operated by the Taipei Rapid Transit Corporation (TRTC).

Since Taipei Metro joined the Nova International Railway Benchmarking Group and the Community of Metros (Nova/CoMET) in 2002, it has started collecting and analyzing data of the 33 Key Performance Indicators set by Nova/CoMET in order to compare them with those of other metro systems around the world, as a reference to improve its operation. Taipei Metro also has gained keys to success from case studies on different subjects such as safety, reliability, and incidents, and from the operational experiences of other metro systems.

According to a study conducted by the Railway Technology Strategy Centre of Imperial College, and data gathered by Nova/CoMET, the Taipei Metro has ranked number 1 in the world for three consecutive years in terms of reliability, safety and quality standards.

The Taipei Metro is one of the most expensive rapid transit systems ever constructed.

Since its completion, the TRTS has reduced travel time from one end of Taipei to the other from up to three or more hours to less than an hour, and has been effective in relieving some of Taipei's traffic congestion problems.

The TRTS also includes several public facilities such as Maokong Gondola, underground shopping malls, parks, and public squares. Modifications to existing railway lines to integrate into the MRT are underway.

Taxi Fares for 5 km trip

Here is a rough comparison of taxi fares for a 5 km trip during the peak hours.

London GBP 9 SGD 30
Sydney AUD 12 SGD 16
New York USD 8 SGD 12
Singapore SGD 7 (plus ERP and CBD)
Hong Kong HKD 40 SGD 8
Taipei NT 160 SGD 8

Taxi fares are no longer cheap in Singapore. The most expensive is London.

Thursday, December 27, 2007

Shops in Hualien

Hualien is a tourist town in the east of Taiwan. The shops are closed in the day. The roads are almost deserted. There are only a few cars moving around.

The shops open for business at night. The streets are busy.

I have never seen a town operate like this before. In many places in Europe, the shops are open during the day and closed at night.

Taxi Fares in London

Taxi fares in London are quite complicated.

The meter calculates the maximum fare based on:
Time of day
Distance travelled
Taxi speed

The passenger will be expected to pay the full fare displayed on the meter at the end of the journey unless the driver and passenger agree on the final fare to be charged before the start of the journey.

Taxi fares
There are three tariffs, as follows:
Tariff code 1: Monday to Friday 06:00 - 20:00
Tariff code 2: Monday to Friday20:00 - 22:00, Saturday and Sunday 06:00 - 22:00
Tariff code 3: Every night 22:00 - 06:00 and Public holidays

Fare for tariff code 1:
1 mile £4.20 - £6.20
2 miles: £6.60 - £9.40
4 miles: £11 - £15
6 miles: £14 - £20

For tariff code 2 and 3, the fare is upto 20% higher than tariff code 1.

There is a minimum fare of £2.20 at all times.

Extra charges
Extra charges must be added on the meter at the start of the journey. There are no extra charges for luggage or additional passengers.

Telephone Bookings: up to £2 if the taxi is booked by telephone
Heathrow extra: £2 for journeys that start from Heathrow Airport ranks
Christmas and New Year: £4 for journeys
Bank cards: 10 per cent and 15 per cent of the metered fare

Taxi Fares in Sydney

Current Fares - Effective From 27 August 2007

Hiring Charges: $3.00
Distance Rate:
Tariff 1: $1.79 per kilometre Between 6 a.m. and 10 p.m. daily
Tariff 2: Tariff 1 + 20% Between 10 p.m. and 6 a.m. daily
Radio Booking fee: $1.60 surcharge in addition to the fare.
Waiting time: $46.20 per hour (72.17c per minute - less than 25.77 KPH)
Luggage Rates:
First 25kg no charge - then 10c for each subsequent 25kg or part thereof. Maximum payable 55c
Toll and ferry Charges:

The hirer must pay all road, bridge, ferry, tunnel and airport tolls that apply to the journey.

Maxi Cabs:
Except in the case of a multiple hiring, where 75% of the authorised fare applies, all the above maximum fares and charges apply only in the case of the maxi-cab hire from a taxi zone or hailed on the street to carry up to 5 passengers. For any other hiring (except a multiple hiring) up to 150% of the above maximum fares and charges may be charged.

Note: A return toll is payable on the Sydney Harbour Bridge and in the Sydney Harbour Tunnel. Any electronic toll administration fee is not payable by the hirer.

Taxi Fares in New York

Taxi FaresCabs are cash only. While cabs are relatively expensive for a single person, they can actually be a bargain with 3 or more riders. The rates for taxicabs are as follows (last updated 2007-07):

Initial fare.............$2.50
Each 1/5 mile (4 blocks).$0.40
Each 1 minute idle.......$0.40
Peak surcharge...........$1.00 (after 4pm until 8pm Mon-Fri)
Night surcharge..........$0.50 (after 8pm until 6am)
Additional riders........FREE

Pay only what's on the meter, plus a 15-20 percent gratuity. There are additional charges for crossings outside the metropolitan area and New Jersey. Passengers are required to pay one way. If you are going to airports, there are set fees plus toll and tip.

Easy to get a taxi from Taipei Main Station

On returning from Hualien, my wife and I hailed a taxi at the roadside outside Taipei Main Station. Although this was a busy time of the night, a taxi picked us within 1 minute. Surprising, but it is true.

The journey to our apartment in Taipei was 6 km. It cost NT 180 (about SGD 9). Most of the journey was on the expressway, which was fast flowing (unlike the congested expressways in Singapore).

The traffic system in Taipei is definitely much better than Singapore. It is time for us to learn from Taipei.

Train from Taipeh to Hualien

I took the train from Taipei to Hualien. It was an interesting experience.

My train ticket showed the train number and time of departure from Taipei Main Station. I asked the station staff for the platform and was given clear direction.

At the platorm, a passenger advised me to look at the coach and seat number printed on the ticket and to locate the right section of the platform to board the coach. There is a number in the platorm to indicate the coach number.

There is a digital sign to indicate the departure time of the train that is currently on the platform.

In case the previous train is late, the sign will indicate that the train is the previous train and the passenger can be alerted to avoid boarding the wrong train.

On the return journey from Hualien to Taipei, I have no dificulty in getting the right platform, train and coach. I enjoyed the journey.

Wednesday, December 26, 2007

Taxi fares in Singapore

Fares and surcharges
Applicable to CityCab, Comfort, Yellow-Top Cab, SMRT Taxis. Different fares apply to other operators

Flagdown fare: S$2.80 (≤ 1 km)
Meter fare
S$0.20 (every 385 m thereafter or less > 1 km and ≤ 10 km)
S$0.20 (every 330 m thereafter or less > 10 km)
Waiting: S$0.20 (every 45 seconds or less)
S$3.50 (0730 - 0930 and 1700 - 2300 hours Monday - Friday)
S$2.50 (all other times including public holidays)
S$5.20 (advance)
Peak hours
35% of metered fare (0700 - 0930 and 1700 - 2000)
Late night
50% of meter fare (0000 - 0559 hours)

Public holidays
S$1.00 (1800 hours eve to 2400 hours of New Year's Day, Hari Raya Puasa, Deepavali, Christmas Day, first and second day of Chinese New Year.
Should public holiday fall on a Sunday, the surchage will be imposed till 2400 hrs on Monday)
S$3.00 (1700 - 0000 hours, Monday - Saturday, except public holidays)
S$5.00 (Singapore Changi Airport: Friday - Sunday from 1700 to 0000 hours)
S$3.00 (Singapore Changi Airport: all other times)
S$3.00 (Seletar Airport)
S$2.00 (Singapore Expo)

Higher flag-down rates for certain models.

All Electronic Road Pricing charges incurred on the trip are to be borne by the customer. An additional 10% administrative charge on the total fare is also incurred when payment is made on credit or charge cards. Higher fares apply for premium taxi services that employ premium vehicles, such as CityCab's Presido and MaxiCab, Yellow-Top Cab's Sovereign limousines, SMRT's Prestige and London Taxi and Airport Transfer service, and so on.

Observation: Singapore must win the award for the most complicated taxi fare structure in the world.

Taxi fares in Hong Kong

Here are the taxi fares in Hong Kong (red taxi)

1. First 2 km, HK 15 (SGD $3)
2. Every 0.2 km or 1 min of idling, HK $1.4 ($0.30)
3. Call a taxi HK 4 ($0.80)

Lower taxi fares apply for travel within New Territories (green taxi) or Launtau (blue taxi).

Average fare for 5 km including telephone calling, HK 40 ($8)

Observation: The fares are simpler and cheaper compared to Singapore. There are cheaper form of public transport.

Taxi fares in Taipei

Taxi fares are charged as follows:

1. Starting fare for first 1250 m, NT 70 (SGD $3.50)
2. Surcharge after midnight, NT20 ($1)
3. Calling a taxi - no charge
4. Distance fare for 250 m or 84 secs of idling, NT5 ($0.25)

Fare for 5.11 km daytime, NT157 ($8)

The new fares, which took effect recently, was decided by the Taipei City Government based on three proposals submitted by interested parties. The decision was accepted by the taxi operators. The revised fare was necessary based to cover higher operating cost, due to higher oil prices.

Observation: The taxi fares in Taipei are much simpler than Singapore. The fares are regulated and produce a satisfactory outcome for commuters and taxi drivers.

Tuesday, December 25, 2007

CPF Dependent Protection Scheme

Dear Mr. Tan,

May I know what is the difference between DPS (Dependent Protection Scheme) and ordinary term insurance? Why does CPF board limit the coverage to a maximum of $46,000? It seems that I cannot opt for higher sum assured.


DPS is a yearly renewable Term. The premium rate depends on the age in each year. It is lower when you are young and increases when you grow older.

An ordinary Term fixes the premium rate for the selected term, say 10 or 20 years.

As DPS is a developed as a national scheme, the Government decided to fix the coverage at a certain level that is applicable to everyone.

If you wish to have a higher coverage, you have to buy a Term insurance to supplement it.

Walkway connecting buildings

There is a second level walkway connecting many buildings in the district around the Taipei City Hall. It takes the pedestrians off the street level and brings them to many large stores and offices.

The walkway is broad and can take many people. It is almost like walking on the street, but without cars. As the climate is cool during winter in Taipei, it is quite pleasant to walk along the walkways.

Some people said that it is expensive to build the elevated workway. In my view, it is relative. I believe that the cost is only a small fraction of the money that is spent to build the expensive buildings.

I hope, one day, that many cities and towns will have elevated walkways like this. It encourages people to walk a long distance to the train station or bus terminal.

Property Agent's Commission on Extending a Lease

Hi Mr. Tan,

I like to seek your advice on the commission payable to the property agent for extending a lease.

Two years ago, I leased out my apartment through an agent. The agent charged me 1 month of rental, which was a lot of money.

I am now negotiating with my tenant to extend the lease. I was shocked to find that the property agent had included in the lease agreement (without my knowledge) a clause that requires me to pay commission for extending the lease.

I have never agreed to this condition. Am I required to pay this commission? In my case, the agent provided bad service to me and the tenant during the past two years. Why should I continue to pay commission again?

I hope that you can advise me.


I understand that the standard tenancy agreement does not have this clause. It seems that some property agent inserted the clause to give them additional income, but it is unfair to the owner.

I suggest that you negotiate a new agreement with the tenant. You can agree with the tenant on whether any commission is to be paid to the agent, and which party is required to pay the commission. Quite likely, the tenant will prefer to deal directly with you, and avoid this additional cost.

As you do not have any agreement with the agent on this matter, you are not bound by the terms of the old tenancy agreement, as it has been superceded.

I hope that you find this to be helpful. As this is a legal matter, you may wish to get the opinion of a lawyer as well.

Feeder Bus

There is high demand for taxis in Singapore due to the difficulty of taking public transport in places that are not served by the MRT trains.

There are many bus services in Singapore. Commuters who wish to take a bus for a short journey find the services to be confusing and overwhelming. There are too many buses travelling in different directions.

In my view, we need to introduce feeder bus. These are services that travel within a a town, such as Toa Payoh, Ang Mo Kio or Bedok and take commuters to the town center, MRT station or bus terminal.

It is easy for the commutter to understand this system. Each town needs only two or three feeder services.

I understand that the light buses in Hong Kong acts like a feeder service to take people to the train station. Many people consider the public transport in Hong Kong to be very convenient.

A good time to invest in equities

Hi Mr. Tan,

You advised people to invest in an diversified, low cost equity fund for the long term. What is the best time to make this investment? Is it safe to invest now? Will there be a recession in the USA next year? Will it affect the Asian countries and Singapore?


If you are investing for the long term, i.e. 10 years or longer, it does not matter if there is a recession next year.

At the current level, Singapore equities are about 15% lower than the peak. I think that this is a good level to start investing a lump sum. There is still a risk that it may go down, but it does not matter for a long term investor.

If you are investing a monthly sum, you can start at any time as you will be "averaging" the cost of your investments.

MRT in Taipei

The mass rapid transit system(MRT) in Taipei, together with the metropolitan area's dedicated bus route network, forms a convenient transportation system.

The MRT currently has five lines in operation:

Brown Line (Mucha)
Red Line (Tamshui)
Orange Line (Chungho)
Green Line (Hsintien)
Blue Line (Kunyung to Hsinpu).

The five lines are dotted with a variety of attractions and scenic spots. As a result, visitors can take a leisurely journey through the northern part of Taiwan employing the MRT services.

Helpful cashier

My daughter went to a drug store in Taipei to look for a specific medication. She could not find it on ths shelf. She approached the cashier.

The cashier said that the medication is not sold in the store. Without being asked, she immediately told he customer where she can buy it from another nearby store. That is helpfulness.

Why is it possible for the cashier to be helpful?
1. She is a local person, who knows the customers and their lifestyle
2. She has worked there for a few years and acquired good knowledge of the product.

I shall do some research to find out if the cashier earns an adequate salary. This will encourage her to stay in the same job for a long time.

There are lessons to be applied in Singapore, if we still aim to be a gracious society.

Beware of bad products

Hi Mr. Tan,

Someone described in your blog, that life insurance as "legalised rip-off". Is this a fair statement?


There are many insurance products that give good value to consumers. They serve a need and are priced fairly. Read this FAQ:

There are other products that are bad for consumers, as follows:

1. They are designed to maximise profit for the insurance company
2. They pay high commission to the agent to sell the product
3. The agent are trained to use emotion to sell the product
4. The product has many complicated features that have doubtful value
5. The agent worked hard to push the product
6. The agent and the insurance executive will not buy the product for themselves

You should identify and avoid the bad products (including bad products sold by banks).

Monday, December 24, 2007

Taipei 101

I visited Taipei 101 after dinner in a nearby building. Here is the description of this building from Wikipedia.

Taipei 101 (台北101) is a 101-floor landmark skyscraper located in Taipei, Taiwan. The building, designed by C.Y. Lee & Partners and constructed by KTRT Joint Venture, is the world's tallest completed skyscraper.

Taipei 101 received the Emporis Skyscraper Award in 2004. It has been hailed as one of the Seven New Wonders of the World (Newsweek magazine, 2006) and Seven Wonders of Engineering (Discovery Channel, 2005).

The building serves as an icon of Taipei and Taiwan as a whole. Fireworks launched from the tower feature prominently in international New Year's Eve broadcasts, and the landmark appears frequently in films, television shows, print publications, anime media, games, and other elements of popular culture.

Taipei 101 is managed by the International division of Urban Retail Properties Corporation based in Chicago USA.[1]

The name of the building reflects its location in Taipei's 101 business district along with its floor count. The number is pronounced in English simply as One Oh One.

On 2007-07-21 Taipei 101 was overtaken in height by the Burj Dubai in Dubai, UAE, upon the completion of that building's 141st floor.[2] Taipei 101 retains its title until the Burj Dubai is completed, though, as international architectural standards define a "building" as a structure that can be occupied.

Set limit on commission

Dear Mr. Tan,

I am quite shocked to learn from your blog that up to 21 months of savings can be taken away to pay the agent to sell an investment-linked policy. If the monthly saving is $500, the total deduction is $10,500. Why should the agent earn so much money to sell a policy?

I am sure that the consumer is not aware about the total cost. Which consumer is willing to give away so much of the hard earned savings to pay commission to the agent?

I understand that the consumer is provided with a lot of information about the insurance product, including the charges. Many consumers are overwhelmed by the information, so they blindly trust the agent. When they find out the truth, it is too late.

Surely, the Government should set some reasonable limit to protect the consumer?


I agree that there is a need for consumers to be better protected in Singapore. The commission rates for life insurance policies are too high.

In many countries, the regulators imposed certain limits on the commission rates, to protect the interest of the consumers. I hope that a similar practice can be adopted in Singapore.

Sufficient funds for retirement

According to a recent survey, 80% of Singaporeans want to retire at age 60. Do they have suffiicient funds to retire? How much money do they need to retire?

I carried out a survey with the participants in a class on financial planning. Most of them come from the lower income group. The results surprised me.

To cover food, utilities and other essentials, a couple needs about $1,000 a month. This assumes that they have a home that is fully paid for. It may be possible to get by with $800 a month, but this does not leave any margin for unexpected expenses.

To provide a monthly sum of $1000, with adjustment for inflation, a person retiring at age 65 needs accumulated savings of $200,000 to last an average remaining lifespan of 20 years. If the person wishes to retire at 60, he will need $230,000.

If you wish to have a more comfortable lifestyle, you will need $2,000 a month. Your accumulated savings has to be $400,000 when you retire at 65, or $460,000 when you retire at 60.

If you do not have this sum of accumulated savings (that is needed for the bare minimum or a comfortable lifestyle), you have the following options:

a) Extend your retirement age to 65 to 70 years.

b) Retire from full time work at 60 to 65, and continue to work part time to earn a supplementary income.

To ensure that you have sufficient savings to last a lifetime, in case you live a very long life, you need to buy a life annuity (which provides pooling of longevity risk).

When you are working, it is important for you to make adequate savings for retirement. You must save 10% to 15% of your earnings, and invest in a low cost investment fund that can earn you a good rate of return.

Do not spend too much money on unnecessary insurance that depletes your savings for retirement. Do not buy financial products that give a poor return, due to high expenses.

Read this FAQ:

Christmas is not a public holiday

I arrived in Taipei on December 24. It is a working day. Tomorrow, 25 December is also a working day. Christmas is not a public holiday in Taiwan.

People working in American companies take one or two days of annual leave to celebrate Christmas.

Politeness in Taipei

During her previous visit to Taipeh, my wife observed that the people in Taipei are polite and helpful. Their culture has improved considerably in recent years.

I am now in Taipei. My experience over a few encounters with the local people has been positive.

Save for child's education

Dear Mr. Tan,

I have read comments from many people in your blog. Some people recommended that parents should save for their child's tertiary education. An education is the best gift for your child. Other people said that the priority is for one's own retirement needs. What are your views?


The first priority is to have adequate savings for your own retirement needs. You need $200,000 to $400,000 at age 65 to retire comfortably. Do you have this sum?

If you have more than adequate savings, you can set aside the excess savings for your child's tertiary education. The saving can be made in your own account. You can decide on the amount to be set aside for your child's education when the time comes..

You should do a cost benefit analysis for the education expenses. How much are you spending? What additional income can your child earn from the overseas education? What is the payback period? Are there other options to get a more affordable education?

I usually recommend students to study in university in Singapore, as it is highly subsidised. A student can study in an overseas university, if you are on scholarship. Do not spend half of your retirement savings on your child's education. It is not wise.

High speed train in Taiwan

The distance from Taipeh to Kaoshiung is 340 kilometers. It takes 5 hours by ordinary train and 1.5 hours by fast train. The speed of the fast train is 300 km per hour.

The distance from Singapore to Kuala Lumpur is 300 km and now takes 7 hours. I hope that there will, in the near future, be a fast train from Singapore to Kuala Lumpur that can cut down the travel time to 1.5 hour.

We are supposed to be good neighbours. Yet, it is so difficult to have a project that will benefit the people of both countries.

Sunday, December 23, 2007

Excellent signage at Vivocity

I visited Vivocity for the first time today. On leaving the train, I could see the signage leading all the way to Vivocity. This is the best signage that I have seen, among all the MRT stations.

I have travelled to other MRT stations and found that the signage to the nearby buildings and shopping malls to be inadequate. This applies to Bishan, Bugis, Tiong Bahru and Raffles Place stations. I got the impression that there was a reluctance at these stations to show the commercial buildings. Why?

Generally, I find the signages at MRT stations and buildings in Singapore to be inadequate and not friendly to commuters. I was quite refreshing to see a change at Vivocity.

Avoid traffic congestion

I attended an community event at Vivocity today. I decided to drive to the MRT station near my home and take the MRT to Vivocity.

The guest of honour came a little late, due to traffic congestion. I told her that I did not have any problem, as I took the train. I was able to read a book on the journey.

The organiser told me that he just returned from Hong Kong. The public transport system there is much better than Singapore. I have received similar comments from other people who are familiar with the system there.

Like a swan

Look at the posture of the ballet dancer in this picture.

She looks like a graceful swan.

This is the magic of dance. The dancer's movements follow the movement of a particular character. This is the art of the chereographer.

Holiday in Taiwan

I will be travelling to Taiwan tomorrow for 12 days. I am staying with my daughter who works there, but may be travelling to various cities in Taiwan. This will be the first time that I am spending Christmas and the New Year outside of Singapore

I shall continue to update my blog, but it will not be as regular as when I am in Singapore. I wish all my visitors, season's greetings all the best for 2008.

Last minute ticket sales for Swan Lake

Ticket sales for Swan Lake picked up considering for the last three nights. Many people buy tickets at the last minute. Tonight is the last chance for you to watch this ballet at the Esplanade.

Term Insurance Rates

Lower price for your motor insurance

What is an easy way to get a lower price for your motor insurance, without having to go through a lot of trouble?

Read the tip in this FAQ:

And this FAQ:

Charges of an Investment Linked Policy (ILP)

Are you aware about the various charges that you have to pay under an Investment Linked policy?

Are they big or small? Will they eat into your savings and investments? Which ILP have the lowest charges?

Read about the charges in:

Improve the taxi situation

I wanted to write my thoughts on how to improve the taxi service in Singapore.

I decided to start with some research. Other people have written about the subject before. I found the following article in the internet.

Yawning Bread: Taxi problem is not a taxi problem

I find the analysis of the problem to be useful. I agree with most of the points.

And here are som exchange of views

I shall be writing more on this topic.

Saturday, December 22, 2007

Different Types of Investment Funds

I advocate investing in a large, well diversified fund with low charges. Examples are the Combined Fund from NTUC Income and the STI Exchange Traded Fund (available through the Singapore Exchange).

Some people asked for my opinion on selecting actively managed funds. There are more than 500 of these funds available for investments. These funds that are country specific (e.g. China, India) or sector specific (e.g. energy, technology, financial). They usually have high expense ratio (of 1.5% to 3% per annum).

If you wish to invest in these funds, you have to seek the advise of a financial adviser. They charge a annual wrap fee (between 0.5% to 1%) to help you pick the funds. They will monitor the funds for you. The wrap fee is on top of the fund management fee.

I am not familiar with these actively managed, narrowly focused funds. I will not be able to advise you on these funds or on how to select the adviser.

A good approach is:

a) Invest 80% of your retirement savings in diversified, low cost funds
b) Invest 20% in actively managed funds (through an adviser).

Read these FAQ:

All the best in your investment decision.

A marketing tool

Hi Mr. Tan,

I have read the material about the WWAng Instant Target. I am not clear about how can I use it for my marketing?

Reply: Some property agents bought the database to select the occupiers living in a certain block or street. They print personalised letters to be sent to the occupiers. In some cases, they follow up with a telephone call. The database provides the names, address and telephone numbers of the occupiers.

Insurance agents and other marketing people can also use the database to market to people living in a locality.

Why is it called WWang?

Reply: It was a name created by my friend. He said that "Wang" means "money". So, perhaps you can make a lot of money in using the database for marketing.

For more information:

Agent to source for quotes

Dear Mr. Tan,

Thank you for you tips on how to get quotations from several insurance companies on motor insurance. Do you think that an insurance agent can source the quote for me?


You can ask the insurance agent to source the quote for you. They are familiar with the insurance companies, so it is easier for them to get the information and save you from the hassle.

However, the agent needs to be paid for the service. They will probably earn 10% to 15% commission from the insurance company. But, if they are able to get you a lower quote, then it is worth to let them earn this commission.

Make sure that the agent is able to get the quote from several companies, so that you really enjoy a lower premium.

Invest for the long term

Hi Mr. Tan,

In your opinion, how long will the subprime crisis continue to haunt the global stockmarket? Will Asian be affected and how seriously? Is it safe to invest in stocks now?


The experts are still uncertain. I can only give my personal gut feel.

I believe that the bad news on the subprime have mostly been disclosed. The large banks have made big provisions for their subprime losses.

Several large soverign funds, including GIC and possibly Temasek, have taken large stakes in the big American banks and stockbrokers. Perhaps they recognise that the current prices have fully reflected the bad news.

It may be a good time to make a long term investment as most stockmarkets have corrected more than 10%.

The challenge next year is a slowdown or a possible recession in the American and other economies and the high oil price. This is likely to be manageable as the central banks will adjust the interest rate to keep the economy moving along.

We have to accept these cycles and invest for the long term.

Friday, December 21, 2007

Family Insurance

Mr. Tan,

I am over 45 years old, got married last year and has a new born baby. Is it advisable for me to buy the Family Insurance Policy from NTUC Income for my family?


This product is suitable for your family. It provides good coverage (death, disability, critical illness and medical expenses) at an affordable cost.

Invest in Bonds

Dear Mr. Tan,

I'm an avid reader of your blog. Thanks for sharing your insights at your blog.

I will like to find out from you about corporate bonds. Given the volatility in the stock market, is it better to invest in SGS and corporate bonds? Is the average returns for corporate bonds about 5%?

How do i go about buying corporate bonds?


You should consider the Singapore Bond fund that is offered by NTUC Income. It is invested in Singapore Government securities and corporate bonds.

You can find out more information from NTUC Income or read this webpage:

If you are investing for the long term, it is better to choose an equity fund, as it can give a higher return.

Happy Holidays

Season's Greetings
from Tan Kin Lian and family:

Snowball fight

Office party

Logic Quiz


More quizzes:

Top up your relatives CPF accounts

From 1 Jan 2008, you can top up your and your relatives' Special, Medisave and Retirement accounta in the CFP (i.e. SMRA accounts). Relatives include parents, grandparents, spouse and siblings (brothers and sisters).

Last year, top-ups was allowed only for spouses and has to be made by cash.

Two new rules:
(i) You can now top-up using CPF money
(ii) if you use cash, you can usually claim tax relief.

My view: If you make the top up with cash, your relative can earn 4% plus 1% interest. This is the best "risk free" rate that can be earned today.

How to make your CPF money work HARDER

Larry Haverkamp (Doc Money) explain how you can take advantage of the recent change in CPF.

Read his tips on:

1) The first $20,000 in OA
2) The next $40,000 in SMRA
3) Top up relatives' SMRA
4) Defer your payout

Click here:,4136,144298,00.html?

A new way to publish a book

My friend published a book on It operates on an entirely new model, as follows:

1. The author puts up a soft copy of the book on the website.
2. The author decides on the royalty.
3. The price of the book is the printing charges plus the royalty
4. The buyer can order the book.
5. The book is printed based on demand and is mailed to the buyer
6. The unit cost is lower for a large print volume.
7. The author can request for the book to appear on several online bookstores.

This is a wonderful new way to publish a book. I will be publishing a book on Logic Quiz and on Logic 9 (Sudoku).

Lesson: The internet allows new way to do all types of business.

Reverse Mortgage

Greetings, Mr. Tan,

I am currently doing a research on reverse mortgages in Singapore. I hope that you can help me with the answers to the following:

1. Whi is reverse mortgages not popular with Singaporeans and financial institutions?
2. How is NTUC Income able to provide RM while the banks are sitting back?


When I was head of NTUC Income, I took the following view:

1. It is safe to lend money on the mortgage of a property
2. We can lend out a small monthly sum and allow the interest to accumulate with the loan
3. We can project the accumulated borrowings and compare it with the value of the property.
4. We will aim to keep the value of the borrowings to be less than 70% of the projected value at a future date, when the borrower is likely to repay the loan, e.g. on death or sale of the property
5. If the property reaches the 70% threshold earlier, for example due to a drop in property value, we will stop the lending and ask the borrower to repay the loan within 6 to 12 months.

NTUC Income was able to give out a few hundred reverse mortgage loans over a period of 10 years. There were only a small number of cases, where the owner had to sell the property prematurely, due to a collapse in the property value.

I believe that the market for reverse mortgage can be developed in Singapore. I hope that the other financial institutions will enter into this market.

Why were they not interested? Perhaps they feel that the market is too small at this time and will wait for it to be developed. Perhaps, they feel that the risk is difficult to manage (which is not the case, in my opinion).

All the best in your research.

Book on Logic Quiz

I met a few relatives during a family gathering. I printed the Logic Quiz and asked them to solve it. They were engrossed on the quiz.

You can learn the technique:

And try more quizzes:

I will be publishing a book

Swan Lake at the Esplanade

I watched Swan Lake at the Esplanade.
I enjoyed the stage props, dancing, music, story line. It came out well.
It will be staged over the next three days, from Friday to Sunday.

Thursday, December 20, 2007

Investing in each other's products

My friend in America sent me this explanation on why the banks and stockbrokers have so much money in sub-prime assets.

1. The originating banks were not allowed to hold their own products.
2. They buy each other’s products and used them to increase the value of their earnings.
3. The products are quite complex; no one could figure out how to value them
4. Each separate mortgage has a different set of rules regarding a change in interest rates.
5. Most of the mortgages originate from brokers whose only interest is to earn a mortgage fee.
6. The lenders do not carry out due diligence; they package the loans and pass the risk to the investors.
7. There is a complex set of events which finally lead to this crisis

He told this old story. A buyer got a rotten Herring and complained about it to the broker who sold it to him. The broker said. "Oh that was a trading Herring not an eating Herring.”

Term with critical illness cover

Hi Mr Tan,

I am 30 year old, looking to buy life insurance. I understand that you advocate buying Term and investing the difference.

I wish to buy Term and also cover critical illness. However, my insurance agent think there is no point in buying this product. What is your advice?


Your agent wants you to buy "whole life" critical illness policy for a large sum, so that he or she can earn a high commission on the policy.

Read this FAQ to make the best choice.

You can also read another posting in this blog to show how much you can get by investing the difference, compared to the cash value under the whole life policy.

Big writeoffs for sub-prime losses

Mr Tan,

Why are there so much writeoff for bad loans by the big American banks and brokers?

I thought that they package the products to sell to other investors. It seems that they are stuck with a lot of these products in their own funds. Surely, they know the risk and the defaults with the sub-prime mortgages?


In a large institution, there are many layers of people:

1. the managers who create and handle the loans
2. the top managers and CEO
3. the board of directors
4. the shareholders.

Under the profit sharing system, the managers and directors received big bonuses and share options during good times by "creating shareholder value". The sub-prime mortgages did contribute to a lot of profit during the past years, which is why the business has grown to be so big.

I do not know at what level the managers should know what is going on. It is difficult to say, when the institution is so big and complex.

When the "crunch" comes, these institutions have to write off several billion dollars of losses. Some of the key managers have to leave their jobs for "destroying shareholder value". But they are not required to pay back the big bonuses that they earn during the good years. The shareholders have to shoulder the losses.

This is not fair, but it is the system of the free market.

Horrified by shark attacks?

Are you horrified by shark attacks? Especially in Australia? If you read stores in the media, you will not dare to swim in Australian waters!

According to a report, more people in Australia die each year from lightning strikes or bee stings than shark attacks.

Lesson: Do not over-insure for risks that have a low chance of occurring. If you wish to insure against shark attacks, you should also insure against lightning strikes, bee stings, air crash and traffic accidents. A low cost personal accident policy will cover these risks.

Do not pay too much for insurance, as you will not have enough money for your retirement (which is more likely to occur to you than the insured event)!

Insurance agents who look after your interest

Dear Mr Tan,

After reading your blog for the past few months and comments posted by insurance agents, and based on my personal encounters with agents over the past years, I have come to the following conclusions (please correct me if I am wrong):

1. Insurance agents made a good fortune by earning high commissions on insurance policies
2. Many drive expensive cars and travel in style for overseas trips and holidays.
3. They oversell on critical illness and other insurance policies and push customers to buy big policies.
4. They push customers to buy the most expensive medical insurance (is it to earn a higher commission?)
5. The insurance policies give a poor return and locks up the customer for many years.
6. The scare us with horror stories of how people are devasted by prolonged sickness or death.

Are they behaving ethically?


You have described one category of insurance agents. They look after themselves at the expense of their customers.

There is another category of insurance agents who serve their customers well and look after the interest of their customers. They sell insurance products that give good value to the customers (compared to similar products sold in the market). They work very hard to earn a modest income.

You should select an ethical agents who can look after your interest.


My website for the Logic9 game is temporarily down, due to a change of the hosting server. It will be fixed in a few days time.

Charges of an Investment Linked Plan (ILP)

Dear Mr Tan,

What are the charges that I have to pay, when I invest through an ILP?


If you buy an investment-linked plan (ILP) through an insurance company, you have to bear the following charges:

1) Lump sum investment (i.e. Single premium)

You pay the Spread, which is the difference between the Offer Price and the Bid Price of the fund. This difference is usually between 3% to 5%. The spread can be reduced during promotions.

You buy the units at the Offer Price and sell at the Bid Price. So, you lose out on the Spread.

There is a minimum amount for a lump sum investment, for example, $5,000. You will be allowed to top up your investments at any time with "recurring single premiums" subject to a certain minimum.

In addition, there is an annual charge that is deducted from the fund. This charge can take from 1% to 2% of the fund, and is deducted from the yield.

You may also have to incur an initial and annual policy fee. The amounts tend to be quite small. It may be waived if you have a larger investment.

You have to pay for the mortality charge separtely, In some cases, this charge may be waived. In other cases, it can be quite costly. A journalist describes it like "a time bomb".

2) Regular investments (i.e. monthly investments)

You have to pay all of the charges described above (for the lump sum investment) plus an additional Distribtion Cost.

The Distribution Cost is used primarily to pay the commission to the agent and other marketing expenses. This cost is shown indirectly as an "allocation".

For example, the ILP policy will state that 20% of the premium is allocated for investment during the first year, and 50% is allocated during the second and third year. 100% is allocated from the fourth year onwards.

This means that 80% is taken away during the first year, 50% during the second year and 50% during the third year. The total is 180% or 21 months.

This website shows the additional Distribution Cost from various ILP plans in the market

The Flexi Link plan from NTUC Income has the lowest charge among the various ILP plans (apart from Do It Yourself). You do not have to pay the additional Distribution Cost. The expense ratio of the Combined Fund from NTUC Income is among the lowest of all the funds.

Some savvy investors can enjoy low cost by buying unit trusts directly from the internet portals, such as Fundsupermart or DollarDex. However, the expense ratios of many unit trusts are quite high (i.e. more than 1.5% per annum).

Wednesday, December 19, 2007

Innovative, animated, e-greeting card

My son-in-law Vital sent me this innovative, animated e-greeting for Christmas. It featured his family and included me and my wife in a snowball fight. You can also see my grand-daughter Vera.

Here is another of my family:

To all visitors to my blog: Merry Christmas and best wishes for 2008.

Living policy actively promoted in the past

Mr Tan,

When you were CEO of NTUC Income, you actively promoted the Living policy. It was the best selling policy for many years. Why did you promote this plan, when the charges are high (as you said now in your blog) ?


The Living policy was launched about 20 years ago (if I remember correctly). During that time and for many years after, it offered fairly good value to the customer, as the charges were much lower than similar plans offered by other insurance companies.

During those years, the alternative of investing in investment funds was not well developed.

Today, the market for investment funds is well developed. It is now better for customers to invest in the Combined Fund from NTUC Income and the STI Exchange Traded Fund. They have fairly low charges and the potential to give a higher long term return.

Read this FAQ:

ILP and Unit Trust

Dear Mr. Tan,

Why do I have to bear the upfront charge of 15 to 18 months on investing in ILP, when I could have invested in a regular saving unit trust without this charge?


Insurance agents are used to receive high commission on selling an endowment, whole life or critical illness policy.

When the insurance company introduced investment-linked plan (ILP), they have to pay similar commission to get their agents to sell these products. This requires 15 to 18 months of premium to be deducted to pay the commission and other charges.

Some insurance company such as NTUC Income have lower charges. See the comparison in this webpage:

If you invest in a unit trust, you do not have to bear this upfront cost. But, the unit trust may deduct a higher management fee, which is reflected in the higher expense ratio. Most people prefer to pay a higher annual fee, rather than suffer a large upfront deduction. The exception is the STI Exchange Traded Fund, where the annual fee is very low, at only 0.3% per annum.

If you invest in the Flexi-Link from NTUC Income, provided you have a minimum starting investment of $5,000, you do not have to pay incur the upfront charge for a regular saving plan. You still have to bear 3.5% spread for each investment.

The best options are:

1. Invest in the STI Exchange Traded Fund
2. Invest in the Combined Fund from NTUC Income through Flexi-Link.

Promoting Swan Lake

Mr. Tan,
Why are you promoting Swan Lake?

There are two reasons.

1. It is the most popular ballet. Many people enjoy it. I am sure that Singaporeans will also enjoy it. The music by Peter Tsaichovsky is enchanting. The dance will be spectacular. The ticket price is modest. Do not miss it.

2. I have been on the board of the Singapore Dance Theatre for more than 10 years. The SDT is putting up this performance. I want to help their ticket sales.

Visitors to my blog

During the past week, the day visitors to my blog increased significantly. But the night visitors have dropped. The total has increased to about 720. Are more people visiting during the day now?

I am still short of my target of 1,000 visitors!

Buy Term Insurance Directly

Mr. Tan

My insurance agent discourages me from buying Term insurance. But I like to buy Term insurance and invest the difference. Where can I get it?


Read this FAQ:

Pay less for your motor insurance

Read this FAQ:

Swan Lake - tell your friends

Please help me to tell your friends about Swan Lake. Do not miss it.

Critical Illness Policy for $250,000

Insurance agents like to their clients to insure $250,000 for a "whole life" critical illness policy. The tell the clients that you need $250,000 to provide loss of income for 10 years. Why?

The answer: About 18 months of premium goes to pay the commission to the agent and his managers, and the expenses and profit of the insurance company. To insure $250,000, the monthly premium is $500 for a person at age 30. About $9,000 is taken away from your savings to pay the various parties.

If the monthly premium of $500 is invested to earn 5% per annum, it will accumulate to $250,000 within 23 years. You can be 100% sure of getting this sum in 23 years (based on 5% investment return). Compared to this certainty, the proportion of people likely to suffer a critical illness within 23 years (and make a claim of $250,000) is between 5% to 10%.

If you buy the "whole life" critical illness policy, how much is the cash value at the end of 23 years? My estimate is $180,000 (but you can check it out). The cost to you over 23 years is a staggering $70,000.

If you wish to insure for critical illness, take a low cost insurance (like Term insurance but extend to include critical illness) to cover 25 years only. The premium is quite small.

Note: The charges under the Living policy from NTUC Income is lower than the market, so the cost is lower than the example shown above. But, it is still quite high, compared to the "Buy low cost insurance and invest the difference".

Sudoku Workshop at Bishan

The Sudoku (Logic9) workshop at Bishan was packed. There were almost 40 participants in the classroom. Some participants had to sit by the side. Most of them came from Bishan and Toa Payoh Community Club, due to active promotion by the managers.

One participant came to tell me that he reads my blog every morning. He enjoyed my blog because it contains the real life questions faced by many people. I did not ask the other participants if they came in response to the posting in my blog.

The participants thoroughly enjoyed the workshop. One participant said that it is "better than mahjong".

SuperSIV Bailout Fund

Dec. 18 (Bloomberg) -- The SuperSIV' fund, set up to provide cash to structured investment vehicles hurt by the collapse of the subprime-mortgage market, plans to start buying assets within weeks,' its sponsors said today.

The fund's size, originally envisioned at about $80 billion, will be based on SIVs' needs and evolving market circumstances, Citigroup Inc., Bank of America Corp., JPMorgan Chase & Co. and BlackRock Inc. said in an e-mailed statement. The banks are raising money for the fund while BlackRock will manage its assets.

The urgency that led to the SuperSIV's creation eased after separate SIV bailouts by banks including Citigroup and London- based HSBC Holdings Plc. New York-based Citigroup said last week it would take over seven SIVs with $58 billion of debt. Banks want to avoid forced assets sales to repay SIV borrowings because that would further roil credit markets and reduce the value of their own debt holdings.

The fund, also known as the Master Liquidity Enhancement Conduit, or M-LEC, can still provide ``an optional source of liquidity for eligible high-quality assets,'' the banks said in the statement.

SIVs, which sell short-term debt and invest the proceeds in higher-yielding securities, have cut their holdings by more than 25 percent since August to $298 billion, according to Moody's Investors Service in New York. That's when investors started shunning SIV commercial paper and medium-term notes amid increasing losses on subprime mortgages.

Question: Will this SuperSIV fund help to stabilise the markets?

Tuesday, December 18, 2007

Flexi Link and CPF policies

Dear Mr Tan,

I've been reading your blog for more than a year and have thoroughly enjoyed it. Can you help me with the following queries.

1) I bought a Living policy for my daughter 4 years ago. I have read your articles which encourage investment in large, low cost fund. I am thinking of terminating the living policy and using the surrender value to invest in NTUC Income's Flexi-Link plan. I guess the better, long term return should exceed the loss of about $1,000 loss on surrendering the living policy. Appreciate your advice.

Reply: I agree with you. It is probably better to make the switch and get a better long term return. However, the stockmarket is still quite volatile. Perhaps you can wait until it stabilises before you make this change?

2) My husband also bought two endowment policies some 10 years ago and he has been using his CPF fund to pay for the yearly premiums. With the new CPF changes, I read that members can continue to service their regular premium insurance policies but NOT recurring single premium insurance policies even if their CPF balance falls below $20,000. May I know whether the yearly premiums for my husband's policies are considered as regular or recurring single premiums?

Reply: An endowment policy is considered as regular premium. So, your husband should be able to continue to get the annual premium paid through CPF.

Logic Quiz A-8

There are five houses in a row. In each house lives a person with a different occupation, drinks a different beverage, plays a different sport and keeps a different pet.

1. The person who drinks beer lives to the left of the person who drinks milk.
2. The person who keeps fish lives to the left of the person who keeps cats.
3. John lives to the left of the person who drinks beer.
4. Robert lives next to the accountant.
5. Mary keeps birds.
6. The teacher drinks coffee.
7. Susan is the lawyer.
8. The person who plays golf lives next to the doctor.
9. The person who plays badminton lives to the left of Albert.
10. The person who drinks water plays bowling.
11. The person who keeps hamsters drinks tea.
12. The person who plays chess lives to the left of the person who keeps cats.
13. The person who drinks tea lives in the last house.
14. Mary lives next to the salesman.
15. The person who keeps dogs lives in the second house.

Question: Who plays tennis?

Post your answer, time taken and name in this blog.

Answer can be found at:

More quiz can be found at:

Taxi service in Singapore

I read that the taxi situation remained unsatsifactory, in spite of the recent increase in fares. Commuters have to wait for one hour to get a taxi. Many taxis refuse to pick up passengers at the taxi stand. They wait for a booking.

My friend made this observation. The taxi fares and surcharges in Singapore are confusing. The taxi driver knows how to take the best advantage of the situation. The passengers are helpless.

What is wrong with the taxi service in Singapore? How can the situation be improved? I shall give my suggestions in my website in one or two weeks' time.

Light buses in Hong Kong

My friend told me about the light bus system in Hong Kong. This is how it worked a few years ago. He is not sure if it has changed in recent years.

* The light bus runs on specific routes
* It provides a feeder service to the train
* It carries 14 to 16 passengers
* It can pick up and drop passengers anywhere on the route (i.e. no designated stops)
* The fare is between $1 to $2, converted to Singapore dollars.
* It is more expensive than a train ride, but cheaper than a taxi.

Many people find the public transport in Hong Kong to be more convenient than Singapore. It is among the best in the world.

CEO uses public transport

My friend, originally from Hong Kong, worked as CEO of a venture capital fund in Singapore for more than 10 years. He is used to taking public transport in Singapore. He finds it to be more convenient than driving a private car. When I asked him to take the train to a meeting, he said, "Of course!"

How much to insure for critical illness?

Dear Mr Tan,

You recommend that $50,000 is sufficient for critical illness cover. May I know how you derive this amount?

In my opinion, if I am diagnosed with a critical illness eg cancer, I would have to stop working. I would probably need $2,000 a month to support myself for 5 years, while waiting to see if the cancer would go into remission. Thus, the amount of my critical illness cover should be $2,000 x 5 years = $120,000.

Please advise if my scenario is realistic and reasonable?


Critical illness coverage is expensive. A significant portion of the premium goes for marketing and other expenses. If you spend too much on it, you have less money to save for your other needs.

If you spend less on critical illness insurance, you will have more money to save and invest. This will allow you to accumulate savings which can be drawn down for all kinds of emergency (including critical illness), and also for retirement.

I am not aware of many people who have to suffer a critical illness for 5 years. Have you come across many people in this situation?

If the illness is serious, they will pass away and the family can claim under the life insurance policy. If the critical illness is not serious, they can be cured within a shorter time.

However, if you feel that there is a need to insure for a larger sum, it is all right. It is a question of getting the right balance.

Money Market Fund

1. Is it safe to invest all my money in the money market fund. Is it risk free or not?

It has risk, like all investments, but extremely low. I have a fairly significant sum invested in the money market fund under NTUC Income.

2. After reading your postings, I have started doing some research on the money market fund. There are a few such products on the market, such as NTUC Income, Lion Capital, Philips Securities. Is there any particular reasons why you suggest NTUC instead of the rest ?

I am familiar with the money market fund under NTUC Income. It is invested in safe assets and have low annual charge.

I am not familiar with the investments and charges of the other funds. But, I think that they should be quite safe. Their annual charge is probably higher. However, you have to do your own research.

Invest the year-end bonus

Hi Mr Tan,

I've been following your blog for a while. I enjoy your articles and Irecommend it to my friends. Some of them who wanted to improve on their financials are reading your blog too.

This is the first time I'm writing to you. I've been reading a lotabout the USA recession that may be coming, hence I'm hesitant about investing my bonus on global equity funds or the STI ETF.

Is bonds a better option in a pending recession? Or should I continue investing in the STI ETF?

I also read that stocks of food and utitlities companies are more resistant to cyclical movements in a recession. Are these good options?

Or should I leave my money in the bank (unfortunately, annual interest is 0.125%) and wait until the recession sets in, then go about stock picking?


I suggest that you put your bonus in the Money Market Fund from NTUC Income for the next 6 to 12 months. You can earn 2% to 2.5% per annum. Wait until the global economic situation becomes clearer.

Monday, December 17, 2007

Swan Lake - the story

Synopsis: from Wikipedia

Act 1
Swan Lake begins at a royal court. Prince Siegfried, heir to the kingdom, must declare a wife at his birthday ball. Upset that he cannot marry for love, Siegfried escapes into the forest at night. As he sees a flock of swans flying overhead, he sets off in pursuit

Act 2
Sigfried aims his crossbow and readies himself for their landing by the lakeside. When one comes into view, however, he stops; before him is a beautiful creature dressed in white feathers, more woman than swan. Enamoured, the two dance and Siegfried learns that the swan maiden is the princess Odette. An evil sorcerer, Von Rothbart, captured her and used his magic to turn Odette into a swan by day and woman by night.

A retinue of other captured swan-maidens attend Odette in the environs of Swan Lake, which was formed by the tears of her parents when she was kidnapped by Von Rothbart. Once Siegfried knows her story, he takes great pity on her and falls in love. As he begins to swear his love to her - an act that will render the sorcerer's spell powerless - Von Rothbart appears. Siegfried threatens to kill him but Odette intercedes; if Von Rothbart dies before the spell is broken, it can never be undone.

Act 3
The Prince returns to the castle to attend the ball. Von Rothbart arrives in disguise with his own daughter Odile, making her seem identical to Odette in all respects except that she wears black while Odette wears white. The prince mistakes her for Odette, dances with her, and proclaims to the court that he intends to make her his wife. Only a moment too late, Siegfried sees the real Odette and realizes his mistake. The method in which Odette appears varies: in some versions she arrives at the castle, while in other versions Von Rothbart shows Siegfried a magical vision of her.

Act 4
In the fourth act, versions of the ballet diverge. In the original version, Odette and Siegfried, realizing that the spell can never be broken, drown themselves by leaping into the lake. This causes Von Rothbart to lose his power over them, and he dies as a result. But many different endings exist, ranging from romantic to tragic.

In a version danced by the Mariinsky Ballet in 2006, the true love between Siegfried and Odette defeats Von Rothbart, who dies after the prince breaks one of his wings. Odette is restored to human form to unite happily with the prince. This version has often been used by Russian and Chinese ballet companies.

In a version which has an ending very close to the original danced by American Ballet Theatre in 2005, Siegfried's mistaken pledge of fidelity to Odile consigns Odette to eternal swanhood.

Realizing that her last moment of humanity is at hand, Odette commits suicide by throwing herself into the lake. The Prince does so as well. This act of sacrifice and love breaks Von Rothbart's power, and he is destroyed. In the final tableau, the lovers are seen rising together to heaven in apotheosis.

In a version danced by New York City Ballet in 2006 (with choreography by Peter Martins after Lev Ivanov, Marius Petipa, and George Balanchine), the Prince's declaration that he wishes to marry Odile constitutes a betrayal that condemns Odette to remain a swan forever. Odette is called away into swan form, and Siegfried is left alone in grief as the curtain falls.

Investing in volatile market conditions

Mr, Tan,

I like to seek your advise on investing in SRS accounts. Under today's economic and voilatile stituation in the financial market that might drag on for a year or more, what kind of funds should I invest for SRS?

I am looking for a return of about 10% or more per annum if possible to beat the inflation aspect in Singapore.


I do not know any safe investment that can give a return of 10%. I keep my money in the money market fund to earn 2% to 2.5%.

Swan Lake, 20 - 23 December, Esplanade

The first classical music that I heard was Swan Lake by Peter Tsaikovsky. That was more than 50 years ago. I can still remember the magical tunes to this day.

You can now watch the performance of Swan Lake by the Singapore Dance Theatre during this week at the Esplanade. Swan Lake is considered to be the most well known ballet in the world. You must not miss it.

The story of Swan Lake revolves around a love story between a beautiful princess, Odette, and a prince, Siegfried. Odette is cursed to appear in the form of a swan in the day and can only revert to her human self at night. Siegfried, while fleeing his castle to escape an arranged marriage, chances upon Odette and falls in love with her.

Swan Lake relates the beautiful tale of their love and will mesmerize audiences with stunning sets and breath-taking choreography.

Tickets prices: $88, $68, $58, $48, and $38.

SPECIAL: Sweet Sixteen tickets at $16 per ticket (inclusive of $1 SISTIC fee) available to all full-time students and NSmen.

Renewal of motor insurance

Mr. Tan,

Can I wait for the insurance company to remind me about the renewal of the motor insurance, and then I can go and source for quotations?


Sometimes the insurance company sends the renewal notice to you rather late, or you may have overlook it, if you are busy. You may not have sufficient time to source for the best quote. It is better to have a reminder in your diary.

Forward Pricing of Unit Trust

Hi Mr Tan,

I'm really glad that I had the chance to come across your blog and gain so many valuable information from your posting. Your effort in your blog really inspired me and many others. I sincerely hope more people, include myself, can benefits from you and putting forward our gains, to build a better sociality.

As I am not well educated, there are lots of financial terms that I really hope to understand. What does "Forward Price" means and how it works?

I have searched the websites but none of them looks simple to me. I have been struggling with those terms and conditions, regulations and report statements given to me by the investment agent.


If you buy or sell shares through a stock exchange, you transact based on the price that the other party is willing to transact with you.

When you buy or sell units in a unit trust, there is no party that is transacting with you through an exchange. The price that you will transact will be based on the price of the units computed by the fund manager (usually based on the net asset value of the fund) at the end of the current or following day. This is called "forward pricing". It means that you are using a price at a future time. Usually, the unit trust will tell you how the forward price is computed.

Do not be shy that you are not familiar with this concept. I was not familiar with it, until recently.

Buy Motor Insurance Directly

Here are the tips to pay less for your motor insurance.

1. Put a reminder in your diary two months before the expiry date of your motor insurance policy.

2. Get the following particulars of your motor car:

Particulars of car (model, engine capacity*, year of registration, market value*)
Particulars of owner (age, years of driving experience, occcupation)
Type of cover (comprehensive, third party only, third party with fire and theft)
No-claim discount for past year
Any claims during the current year?
Previous year's premium

* these data are optional and may not be asked by some insurers (as they can figure them out using your car model).

Normally, you ask for Comprehensive cover. If your car is too old, the insurer may offer Third Party cover only.

3. Get the hotline number of the top motor insurers, e.g. NTUC Income, AIG, AXA

4. Give a call to the hotline and ask for a quote. Ask them if you give you a discount for calling them directly. If they charge a higher premium than for your previous year, ask them why they are charging more. (They may give you a discount to attract your business).

5. If you are not sure about the quality of the claim service, call the claim hotline now (i.e. do not wait until you have an accident) and see if it is easy to get through and if the staff is polite and friendly.

6. Make your decision two weeks before expiry.

Here are the contact numbers of the insurance companies that are active in motor insurance. You can send a fax to them or call their hotline to ask for a quote for your motor insurance.

American Home (AIG), Tel No. 6419 1000 Fax No. 6835 7401
AXA Insurance, Tel: 6338 7288 Fax: 6338 2522
China Insurance Tel: 6389 6111 Fax: 6222 1033
HSBC Insurance, Tel: 6225 6111Fax : 6732 0743
India International, Tel: 6347 6100 Fax: 6225 7743 6224 4174
Mitsui Sumitomo, Tel: 6220 9644 Fax: 6225 6371
NTUC Income, Tel No. 6336 3322 Fax No. 6338 1500
Tenet Insurance, Tel: 6221 2211 Fax: 6221 3302
Tokio Marine, Tel: 6221 6111 Fax: 6224 0895

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