Monday, January 14, 2008

Means Testing

Mr. Tan,

What are your views about means-testing?


It is a lot of work, all lot of uncertainty, for quite negligble savings. The Minister for Health said that the subsidy will be reduced from 80% to 65%. The savings to the government is only 15%.

Most people who uses the C wards are likely to be the older and poorer people. Those who are affluent are most likely using the A or B wards. Those covered by employers will use the higher class wards anyway.

I hope that the Minister will drop this idea. It is not worth the trouble.

Low cost funds

Dear Mr. Tan,

How can I buy low cost funds in Singapore?


You have the following options:

1. Buy the STI or other ETF (exchange traded funds) through a stockbroker
2. Buy the Combined Fund from NTUC Income, investing through the Flexi-link policy.

Science & Technology & Singapore

Much of what Singapore is today is due to our ability to apply Science & Technology to our lives.

Dr. Lee Kum Tatt, as founder chairmen of Singapore Science Council, Singapore Institute of Standards and Industrial Research (SISIR) and a Senior Member of Singapore Polytechnic Board of Governors etc. ( 1950’s – 1980’s) contributed much to building the science and technology infrastructure in Singapore in the early days.

For those who are interested in how some of Singapore policies on science and technology are formulated and implemented, including what not to do, read the articles in Lee Kum Tatt's blog to learn how he did what he did.

Direction signs at MRT stations

A commuter approached me outside Yio Chu Kang MRT station. She wanted to know where to get a bus to go to Techpoint. She asked if it was bus service 70 (as she had checked the street directory), and where is the bus stop?

I took out the Public Transport Guide which I usually carry with me. It was indeed service 70 and indicated the nearest stop to Techpoint.

However, the commuter had walked in the wrong direction and is quite far away from the bus stop. She was not able to get clear direction from the other people.

I find the direction signs in our MRT stations to be inadequate. It is also difficult for someone to get useful directions, if they are not familiar with the bus services.

Sunday, January 13, 2008

Be educated about financial matters

Dear Mr. Tan,

My daughter who has recently started work, was approached by an insurance agent from X at MacDonalds. The agent gave a long sales talk to my daughter. She was not clear about what the product was, and was coerced into buying the policy.

I told her to cancel the policy, as a large part of her hard earned money will be used to pay commission to the agent. I advised her to read your blog and understand insurance and investments better, before she make this type of financial decision.


Many young people have been approached in this manner. In many cases, the agent who sells them the policy was their friend or classmate.

It is true that they will waste their hard earned money buying the wrong, expensive product that gives a poor return.

It is better for them to buy Term insurance or personal accident insurance first. They can accumulate their savings in the bank account and decide later on how to invest it.

Motor insurance joke

Prosecutor to defendant accused of reckless driving, "Is it true that you knocked down five people this year?"

Defendent: "No. I only knocked down four people. One of them was the same person that I knocked down twice."

Lawyer's joke

A man was being sued for returning a borrowed lawn mower in a damaged condition.

His lawyer told the court, "I will prove my client's innocence in the following ways: Firstly, he never borrowed the lawn mower. Secondly, the lawn mower was already damaged when be borrowed it. Thirdly, the lawn mower was in perfect condition when he returned it. "

Joke: Some lawyer can argue any point in a convincing manner.

Index Fund or ETF?

Mr Tan,

Should I invest in an Exchange Traded Fund and an Index Fund? Both funds track an index.


If you are investing for the long term (and not trading for the short term), it is better to buy an indexed fund, as it is based on the net asset value of the fund at the end of the day. You do not have to worry about trading based on the actual price fluctuation during the day.

Post Hospital Expenses

Dear Mr. Tan,

I agreed with Ministry of Health that there is no Medi-crisis at the macro level. My family members have been treated in public hospitals, and the charges are affordable.

But we face a financial crisis at the micro level, in meeting the post-hospital expenses covering the following:

Taxi Fare/Ambulance
Consultation Fee
Laboratory Test Scan
Meal at Hospital Foodcourt
Food suppliment

The total cost for each medical appointment is more than $200 (not counting loss of productivity). This has to be multiplied by the number of visits over the years for two elderly persons.

Each retiree gets only $297 a month from the CPF savings.

Decreasing Term

Dear Mr . Tan,

I am 25 years old. Should I take a 40 year Decreasing Term or a 20 year policy and renew it at the end of 20 years?


You should take a Decreasing Term for 40 years. It should cover the duration of your expected working career.

If you take a Decreasing Term for 20 years and wish to renew it at the end of 20 years, the renewal is subject to your health condition at that time. The premium will be based on your age at that time, and will be much higher.

This arrangement is not suitable, as the sum insured under the Decreasing Term will reduce during each period of 20 years.

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