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

Buy Term Insurance Directly

You can buy Term Insurance directly from the life insurance companies.

A list of the companies, with their fax and telephone numbers is shown below. You can try NTUC Income, UOB Life, Asia Life and Aviva. They are likely to be interested to reply to you.

Send a fax to them, asking them to quote the premium for you. You have to specify the

1. Your age and gender
2. Sum assured
3. Term (level or reducing)

Some of them may send a quote to you. You can compare the quote with the benchmark premiums shown in my website:

If the quoted premium is within 20% of my benchmark rates, they will represent good value to you.

All the best in your search. Share your results in my blog.

American International, Tel 6291 8000 Fax 6298 6000,
Aviva, Tel 6827 7988 Fax 6827 7900,
AXA Life, Tel 6880 5500 Fax 6880 5501,
Friends Provident, Tel 6327 4019 Fax 6327 4020,
Great Eastern Life, Tel 6248 2000 Fax 6532 2214,
HSBC Insurance. Tel 6225 6111 Fax 6221 2188,
Manulife, Tel 6737 1221 Fax 6737 8488,
NTUC Income, Tel 6336 3322 Fax 6338 1500,
Overseas Assurance, Tel 6248 2000 Fax 6532 2214,
Prudential Assurance, Tel 6535 8988 Fax 6532 4043,
TM Asia Life, Tel 6224 3181 Fax 6223 9120,
Transamerica Life, Tel 6236 2366 Fax 6236 2123,
UOB Life, Tel 6227 8477 Fax 6224 3012,

Investment-linked plan with high distribution cost

Hi Mr. Tan

I just purchased an invesment linked plan from company X. It covers death, disability and crisis cover with terminal illness. The annual premuim is $3,000.

I want protection and saving for my retirement. I am Y yrs old and self employed with little CPF. The agent said this is the best plan out of all.

Can I take up this plan first as it is much cheaper in premium for my protection coverage and reduce it later to convert it into purely investment? The policy is now within the 14 days free look period.


Can you find out how much of your premium is invested in the fund for the first few years, and when will 100% be invested?

I understand that the disctribution cost (to pay commission to the agent) from company X can take away 16 months of your premium. That is a lot of your savings to be taken away. You can look at this webpage,

I suggest that you cancel this policy immediately, i.e. within the 14 day free look period, until this matter is cleared up.

NTUC Income's Money Market Fund

Hi Kin Lian,

My thanks for all your contributions to financial education for your readers. May I ask your opinion on whether the NTUC Money Market Fund is safe, in view of the subprime problems please?


I have checked the investments of this fund.

It is safe because the fund is invested in very short-term papers, average less than 6 months, mainly in interbank deposits with banks licensed to operate in Singapore. There is no exposure to subprime risk.

Personally, I have a significant investment in this fund.

Government Bonds


Hi Mr Tan,
Due to the low fixed deposit interest rate, I intend to buy bonds issued by Singapore Government.

1) How many different types of bond we can buy as an individual?
2) Is there a minimum amount to buy?
3) How to buy and what risks do we have to take?



You can approach your bank or stockbroker. You can also view from the MAS website. Government bonds have the lowest risk, ie they are more secure than bank deposits.

Search my blog

Someone sent an e-mail to ask my views about "Traded Endowment policies". I replied that I had written about it in my blog.

Here is how you can search my blog for a topic of your interest. Go to the top of my blog and look for the box called "Search Blog". Type in the keyword, such as "Traded Endowment" or "Land Banking". You will get postings in my blog on your selected subject.

Someone sent an e-mail to ask me, "Where to buy Government bonds". I searched my blog for "Government bonds" and found a posting in July 2007. I re-dated this posting to appear at the top.

Logic Quiz A-7

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

Question: Who drinks coffee?

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

Answer can be found at:

More quiz can be found at:

Logic Quizzes at my website

Here is a treat for enthusiasts of the Logic Quiz.

You can have more quizzes from my website:


Answers to 6J16, 6A19

Question: Who plays drum Answer: Alice

1 2 3 4
student Margaret John Peter Alice
eats banana papaya apple orange
plays trumpet violin piano drum
keeps dog cat parrot tortoise

Question: Who drives Mercedes Answer: scientist

1 2 3 4 5
house grey purple pink maroon brown
is a professor marketeer scientist engineer manager
drinks coffee tea water wine beer
plays tennis badminton golf basketball soccer
drives Volvo Nissan Mercedes Honda Totota

Sunday, December 16, 2007

Good chance to win the Sudoku Challenge

Someone sent an email to ask me if they have a good chance to win the competition by attending my workshop in Bishan.

The answer is "yes". After learning the four tips, you still have to practice hard with many puzzles (say 4 booklets with 500 puzzles). You will be able to do the puzzles very fast.

If you can solve the difficult puzzes within 10 minutes, your chance is quite good. Most of the participants take a longer time.

Bid and Offer prices of Unit Trust

Hi Mr Tan,

Not really about specific financial product, but I'm keen to know the difference between Bid-offer spread to Single pricing Unit Trusts. Is there a better model or do they work out the same?


Most unit trusts indicate the Offer price and Bid price separately. You buy at the Offer price and you sell at the Bid price. The difference is called the Spread. It may vary from 1% to 5%, depending on the fund.

For example, if the spread is 2% and the Bid price is $2,00, the Offer price will be $2.04.

Some unit trust, also called a "no load" fund, will use a single price. You buy or sell at the single price. In some cases, the fund manager may impose a separate charge when you sell the units, especially if the investment is for a short period.

Alternatively, a no-load fund may impose a higher annual charge. For example, if the typical fund charges charges an annual charge of 1.5%, a no load fund may charge 2% yearly.

Sudoku Challenge 6 and 13 January 2008

The Bishan Community Club is organizing a national Sudoku Challenge as follows:

Preliminary: 6 Jan 2008 at the Bishan Community Club multi purpose hall (to select 16 finalists)
Grand Finals: 13 Jan 2008 at Suntec City (in support of the "Silver Industry Conference & Exhibition 2008)

Eligibility: The competitions are open to all Singapore Citizens and Permanent Residents, who are 40 years old and above (as at 1 January 2008).

Prizes: Top and consolation prizes will be given to all Finalists.

Registration: $3 per person
Walk-in: Bishan Community Club or any Community Centres/Clubs

Bishan CC's Telephone: 6259 4720.
Closing Date: 31 December 2007

Tips on how to play Sudoku (Logic9): attend a workshop at Bishan CC


Champion : OTO PowerFoot worth $880
1st Runner-up : OTO Big Foot worth $698
2nd Runner-up : OTO Electro Reflexologist worth $438
3rd Runner-up : OTO Trimax worth $328
5th to 8th : 4 pcs OTO Spinex worth $108 (each)
9th to 16th : 8 pcs OTO Eye Motion worth $48 (each)

Sudoku (Logic9) workshop

I am giving a 1.5 hour workshop at Bishan Community Club on Tuesday 18 December at 8 pm. If you are interested to attend, call the Club at 6259 4720. The fee is $5 only. You can pay on attendance at the workshop.

Special: You can buy 4 sets of puzzle books at a discounted price of $10 (normal $20).

If you are 40 years or older, you can register at the workshop to take part in the national Sudoku Challenge. Attractive prizes can be won. If you practice using my tips, you have a good chance to win the competition.

How long does it take to solve a Logic Quiz?

Dear Mr. Tan,

How much time should a person take to solve the Logic Quiz? How did you manage to create so many quizzes? It must have take a lot of time!


When I first started to solve a 5X5 quiz (identified as type A), it took 30 minutes. After practicing many times, I am now able to solve it in 6 minutes. For the simple 4X4 quiz (identified as type J), I now take 3 minutes.

I wrote a computer program (using DOS BASIC language) to generate the quizzes. I am now able to produce 100 quizzes in 3 seconds. They follow different rule structures, and jumbles around the people and their characteristics. All the puzzles appear different.

If there is demand, I will print a book of puzzles. If not, I will publish in my website and let people exercise their minds.

You can try more quizzes at my website:

Lower the cost of insurance

1. Can the cost of insurance be reduced?
Yes. Insurers have to design and market low cost insurance to cover personal risks, such as death, accidents and medical expenses.

The product has to be kept simple. The cost of marketing should be reduced considerably.

2. What about customers who prefer to have a return on their premiums?
It is better for customers to separate their insurance from investments. They will get a higher return on their investments and greater flexibility.

3. Is there still a role for insurance agents?
Yes. The agent plays a useful role to help the customer to get a competitive rate and to handle the paperwork. The commission can be 10% of the low cost premium.

As the premium is small, the commission is small. The agent cannot spend time to visit the customer. The agent has to improve the productvity. Most of the transactions can be handled through the telephone. If the customer has to be seen by the agent, the customer should visit the agent's office.

This is similar to buying stocks through a stockbroker or consulting a doctor.

4. Why are endowment and whole life products still popular in the developed markets?

They are popular in the markets where the customer can reduce tax by buying these life insurance products. The marketing cost of these products can be covered by the tax savings and still give a net benefit to the customer. The insurance adviser has to find the right customer who can benefit from the tax savings.

This situation does not apply in Singapore, as there is negligble tax savings from life insurance products. The marketing expenses eats into the investment return. Hence, it is better for the investments to be separated from insurance.

Types of Liability

I am familiar with liability due to negligence, but not clear about strict liability or absolute liability. Here is the explanation from an insurance book.

Type Description Example
No liability Defendant cannot be held Charitable institution in
liable some cases
Negligence Defendant is liable if Liability for damages caused
found to be negligent by motor accidents
Strict Defendant is liable Liability for damages resulting
liability even if not negligent from defective products
Absolute Defendent is always Liability for damages caused by
liability liability, no defence use of dynamite or dangerous
available animal

Corporate governance and risk management

In recent years, there has been a lot of attention on corporate governance and risk management. The aim was to get businesses to act responsibily and to avoid taking large risks that are not authorised by the shareholders.

Management consultants made a lot of money providing advice to boards of directors to teach them on these exotic matters. Regulators asked the boards to spend a lot of time and money on these matters.

What happened?

We still have the problem with the Special Investment Vehicles (SIV) set up by the large, "well managed" banks. These SIVs borrowed money on short term (where the interest rate is low) and invest them in long term risky assets (to get a high return). In good times, they made profit on the spread, i.e. the difference between the cost of funds and the return on risky assets.

When the subprime problem arose, investors did not want to refinance the short term borrowings. This caused a "credit crunch" to the SIVs. They were not able to pay their borrowings.

If the SIVs had to sell their assets to repay the borrowings, it would cause a collapse in the asset markets. The large banks that set up the SIVs decided to provide several billions of dollars of funding to take over the SIVs, and to write off billions of dollars in losses.

Lesson: After spending a lot of time and money on corporate governance and risk management, these banks still commit a large blunder in taking the risk of the SIVs.

A "common sense" approach would have prevented this mess. Do not borrow short and invest long. It does not require a complicated process of corporate governance or risk management.

Answer to J17, A17

Question: Who enjoys reading Answer: Katherine
1 2 3 4
student Richard Alice Peter Katherine
eats pear orange pineapple apple
plays drum piano flute violin
enjoys swimming bicycling fishing reading
Question: Who plays drum Answer: engineer
1 2 3 4 5
is a technician manager specialist engineer scientist
drive Mercedes Nissan Toyota Honda BMW
plays bass violin trumpet drum flute
eats orange banana durian papaya apple
enjoys music cards karaoke reading movies

Use credit card to buy shares?

This facility is being advertised by a bank. It looks appealling in a hot market. However, it comes with risks.

Read the advice from Dr Money.,4136,136759,00.html?

Logic Quiz 6A-19

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

1. The professor lives to the left of the person who drinks tea.
2. The engineer drives Honda.
3. The scientist lives to the left of the engineer.
4. The person who drives Honda lives to the left of the manager.
5. The brown house is occupied by the person who drinks beer.
6. The person who drives Totota lives in the last house.
7. The person who plays tennis drives Volvo.
8. The engineer plays basketball.
9. The marketeer lives in the second house.
10. The purple house is the second house.
11. The person who drinks water lives to the left of the person who drinks wine.
12. The grey house is to the left of the person who drives Nissan.
13. The person who drinks coffee lives next to the person who plays badminton.
14. The maroon house is to the left of the person who plays soccer.
15. The pink house is occupied by the person who plays golf.

Question: Who drives Mercedes

Give your answer, time taken and name in my blog.

Logic Quiz 6J-17

There are four students sitting in a row. Each student eats a different fruit, plays a different instrument and keeps a different pet.

1. The student who eats papaya sits in the second desk.
2. The student who eats apple sits to the left of the student who eats orange.
3. Margaret sits next to the student who plays violin.
4. Peter sits to the left of Alice.
5. John eats papaya.
6. The student who eats banana keeps dog.
7. The student who eats papaya sits to the left of the student who plays piano.
8. The student who plays trumpet sits to the left of the student who keeps cat.
9. The student who keeps parrot sits to the left of the student who keeps tortoise.

Question: Who plays drum

Give your answer, time and name in my blog.

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