Saturday, January 26, 2008

Ask for a clear explanation

Dear Mr. Tan,

An insurance agent from X has been urging me to buy unit trusts using the fund from my Special Account. Should I take the risk to invest $10k now that the market is low.


I think it is the responsibility of the agent to give you the appropriate advice. Do not buy from the agent, if he is not able to give you a clear and convincing explanation.

Ask the agent for an explanation

Hi Mr Tan,

I received a quote from my agent for the following:

Hospital Surgical $305
Enhanced Incomeshield $67

Why does the Hospital Surgical cost so much more than Enhanced Incomeshield?


I suggest that you ask the agent to explain the reason for the difference in premium. It is the agent's job. Do not be shy to ask for a clear explanation.

Invest in ETF

Dear Mr. Tan,

I would like to invest in ETF over a period 10 years. Is it a good time to do it now?


I think that this is a good time, even though there is still some uncertainty. The market has corrected to a satisfactory level. If you wish to invest a large sum, break it into three portions to be invested over the next three months.

I observed that during the past few days, the spread in the STI ETF has narrowed down to less than 1%. It is a fair spread.

Safari Park near Puncak

Do we look alike? Posing with a wild animal. Next, a friendly parrot.

Riding the highs and the lows

Read Dr. Money's article in The New Paper:,4136,152156,00.html

Dr. Money advises you on how to invest for the long term, and how to make a budget so that you have some savings to invest.

More articles here:

$1 million or a car?

Someone told me that he has to spend about $1,500 a month towards the cost of his car. It comprises of the following:

Loan installment: $800
Petrol: $300
Insurance and repairs: $150
ERP and parking charges: $250

If he spends $150 a month on public transport (including the occasional use of taxi) and save the remaining $1,350 a month in an investment fund to earn 5% per annum over the next 30 years, how much will be get?

Be ready for a shock.

It is $1 million dollars!

Higher Motor Insurance Premiums

I met a union leader. He complained that the motor insurance premium charged by his current insurer is no longer competitive.

I advised him to call a few insurance companies and get the best quote. The numbers are shown in this FAQ:

Friday, January 25, 2008

Stay invested for the long term

Hi, Mr Tan,
Today (22 Jan) the stock market has dropped to 2776 index if it drop further should I sell away my shares. I am worry about it. please reply. Thanks.

Dear M
If you are investing for the long term (say 10 years or more), it is better to stay invested. The market will stabilise and recover, maybe in a few months time. If you sell now, you are likely to miss the next rebound of the stockmarket. Wish you all the best.

Hi, Mr. Tan,
Thank you for your advise on 22 Jan. Lucky I did not sell off my shares. I am still watching closely on it. Do you think will the market slide down again. I read from newspaper some investor said it might slide further again. What is your opinion?
By the way, thanks and regards.

Dear M,
I do not know the answer. But for my own shares, I will keep fully invested. It does not matter if it comes down, as I am investing for the long term. I believe that it will appreciate over time.

Higher cost products

Dear Mr. Tan,

I read several comments in your blog from other people, that the new products launched by NTUC Income pays higher commission and gives a poorer return to the policyholder. Is this true?


I believe that the new products incurs higher marketing expenses, including agent's commission.

Generally, most of the products in the market are high cost and give a poor return to the policyholder. Many products have "special features" that are really of not much use to the policyholder. It distracts the policyholder from the low return given by these products.

It is better to buy Term insurance and invest the difference. Read this FAQ:

Living Benefit

Hi Mr Tan,

I currently have the Living Policy and an IncomeShield policy. I am planning to cancel the living policy and get a pesonal accident insurance and i-term from NTUC Income. I understand that i-term does not provide coverage for critical illness. May I know if there is any affordable insurance for critical illness?


You can buy the Living Benefit under the Family Insurance plan. It is similar to Term insurance, but covers critical illness as well.

You can ask their business center to give you a quote, and compare it with the benchmark premium shown here:

Avoid these financial products

Dear Mr. Tan,

I read your FAQ on Investing Your Savings. You advice to avoid the following products:

a) Difficult to understand
b) Lacks transparency
c) Lock you for a long period
d) Imposes a penalty on termination
e) Lacks flexibility

It seems that most life insurance products fit into this description. Is it correct?


The financial products that fit into this description are:

a) Most life insurance products
b) Most structured products (which locks you for 3, 5 or more years).

Read this FAQ to find out about other options to invest your savings:

Whole life premium payable for 10 years

Dear Mr. Tan,

I have been offered the following product:

Plan: Whole life, premium payable for 10 years only
My age: 37
Sum insured: $25,000
Monthly premium: $100
Estimated cash value at end of 10 years: 9,800
Estimated cash value at age 65: $29,000

Is this good for me?


Here is another alternative, ie buy Term and invest the difference:

a) Buy 10 year Term insurance to cover $25,000: annual premium of $40.
b) Invest the balance ($100 X 12 - 40) over 10 years to earn 4% per annum: estimated $13,900.
c) Keep the $13,900 invested at 4% for another 18 years to age 65: estimated $28,100.

The projected cash value of the whole life policy after 10 years ($9800) is much lower than the alternative ($13,900).

The projected cash value at age 65 (i.e. $29,000) looks quite attractive, compared to the alternative ($28,100). However, you have to find out what portion is guaranteed and what portion is non-guaranteed.

If you compare the projected cash value after 10 years ($9,800) with the cash value after 28 years ($29,000), the insurance company is assuming a yield of 6.2% over the 18 years. I find this projection to be too optimistic.

I have used 4% to project the yield on the investment fund. This is not guaranteed, but is quite conservative. There is a good chance that you can earn a higher return, say 5% p.a. This will give much better projected values.

I prefer to buy Term and invest the difference in a low cost, diversified fund.

Read these FAQ:

All the best in your decision.

Personal accident by telemarketing

Hi Mr. Tan,

I received a call from my agent. She is offering this limited promotion personal accident policy to selected clients. Currently, I have a Prime Life policy with them. She is offering me a personal accident policy: $36/mth for $200k, $29/mth for $100k.

With additional benefits like cash rebate per year around 1 month of the premium. I am currently schooling and will only be entering the workforce 3 years down the road.What do you think?


The plan offered by the agent will cost about $319 (after rebate) for $100,000 cover. It is too expensive. A similar personal accident policy, available from NTUC Income and a few other insurers, will cost you only $72 a year (applicable to a student).

Read this FAQ:

Lesson: Avoid buying a product straight away from a commissioned agent. Always compare with similar products in the market before you buy.

Low cost Endowment and Whole Life policies

Dear Mr. Tan,

Is it possible to find an endowment or whole l ife policy with low cost? For example, some unit trusts have no upfront load and low expense ratios, but others have high loads and charges. Is there a similar situation for life insurance policies?


Technically, it is possible for an insurance company to design an endowment or whole life policy with no-load, i.e. no commission payable to the agent.

As there is no agent to sell the product, the insurance company will have to find a way to get people to buy the product directly from them. Alternatively, they have to incur advertising cost to make the product known to the potential customers.

To my knowledge, no insurance company has tried to design a product in this manner. But, it is technically possible.

At present, most endowment and whole life products in the market give a net return of about 2.5%. The investment return is about 5%, but 2.5% is deducted to pay agent's commission and other expenses.

If the customer is willing to buy the product directly, they should be able to get an average return of 3.5% on these products, as only 1.5% is needed to cover the other expenses, including advertising. The advantages of endowment and whole life policies is that there is a capital guarantee.

Investing through the ETF

Dear Mr. Tan,

I read your blog about investing in the STI ETF. Can I ask you the following questions?

1. What is the difference between investing in a unit trust and an ETF?

Reply: When you buy or sell a unit trust, the price is based on the Net Asset Value at the end of the day, plus a spread (if applicable). If buy buy or sell a ETF, the price is based on the actual price that has been traded. You need to offer an attractive price that the other party is willing to trade with you.

2. The liquidity for the ETF is low. The difference between the buy and sell price is high. What price should I buy? Will there be someone else willing to transact with me at my price?

Reply: You should offer a price between the buy and sell price quoted in the exchange. For example, if the prices are 3.00 and 3.08, you should offer a price at 3.04. If you keen to buy, you can offer 3.05. Similarly, if you are keen to sell, you can offer 3.03. You may be able to find another party willing to trade with you at that price. This will help to create the interest and liquidity in the market.

Common Sense Investing - John C Bogle (3)

Here are some more quotes:

Among intermediate-term taxable bond funds, the low-cost index fund is truly a superior performer.

Among long-term tax-exept bond funds, once again, indexing wins.

Among short-term Treasury funds, the lowest cost option wins again.

Among money market funds - surprise! - low cost wins again.

No one would have the temerity to promote a new strategy that has lagged in the past.

The greatest enemy of a good plan is the dream of a prfect plan. Stick to the good plan.

Typical ETF investors have absolutely no idea what relationship their investment return will have to the return earned by the stock market.

A "double whammy": betting on hot sectors (emotions) and paying heavy costs (expenses) are sure to be hazardous to your wealth.

ETFs are an entrepreneur's dream come true. But are they an investor's dream come true?

The majority of investors should be satisfied with the reaonsably good erturn obtainable from a defensive portfolio.

Unsoundly managed funds can product spectacular but largely illusionary profits for a while, followed inevitably by calamitous losses.

The real money in investment will be made not out of buying and selling but of owning and holding securities.

I see no reason why investors should be content with results inferior to those of an indexed fund.

To achieve satisfactory investment results is easier than most people realize.

The two sources of the superior returns of the indexed fund: (1) the broadest possible diversification; and (2) the tiniest possible costs.

No business can forever ignore the interest of its clients.

While an index-driven strategy may not be the best investment strategy ever devised, the number of investment strategies that are worse is infinite.

In your Serious Money Account, 50 to 95 percent in classic index funds. In your Funny Money Account, not one penny more than 5 percent.

For all the inevitable uncertainty amidst the externally dense fog surrounding the world of investing, there remains much that we do know.

Thursday, January 24, 2008

A taxi without a driver?

How do you like to use a taxi that is automatic, and does not have a driver?

This is possible under the PAT (personal automated transport). The vehicle appears on your call and takes you to your destination (entered into the control panel). It moves along elevated guideways and does not require a driver.

The PAT is similar to the unmanned LRT (light rail transport). The LRT operates on fixed routes and schedule, like a bus. The PAT is like a taxi.

The PAT is now being developed for London Heathrow Airport. It is called ULTra (urban light transport). If successful, we can expect it to be implemented in other cities.

It is costly to set up the infrastructure for a PAT system, but it is less costly than a LRT or MRT line. The operating cost of a PAT should be lower than a taxi, as it does not require a driver. The system can be operated efficiently, as it does not have to cope with taxi drivers trying trying to compete for business.

You pay for the use of the PAT using an electronic card, such as ez-Link. It is similar to paying for the fare for a LRT ride. The fare is paid at the vehicle.

Common Sense Investing - John C Bogle (2)

Here are some more quotes from the book:

Managed mutual funds are astonishing tax inefficient.

Fund returns are devastated by costs, taxes and inflation.

Common sense tells us that we are facing an era of subdued returns in the stock market.

If rational expectations suggest future annual returns of about 7 percent on stocks, what does this imply for returns on equity funds?

Unless the fund industry begins to change, the typical actively managed fund appears to be a singularly unfortunate investment choice.

Only three out of 355 equity funds that started the race in 1970 (i.e less than 1%) have survived and mounted a record of sustained excellence.

Before you rush out to invest in these three funds with such truly remakrable long-term records, think about the next 35 years.

Funds with long serving portfolion managers and records of consistent excellence are the exceptions rather than the rule in the mutual fund industry.

"The first shall be last." And they were.

The stars produced in the mutual fund field are rarely stars; all too often they are comets.

Average return of funds recommended by adviers: 2.9 percent per year. For equity funds purchased directly: 6.6 percent.

The New York Times contest: Funds chose by advisers earned 40 percent less than an index fund.

Index funds endure, while most advisers and funds do not.

Common sense tells us that performance comes and goes, but costs go on forever.

The index fund's risk adjusted return: 194 percent: average managed fund, 154 percent.

All indexed funds are not created equal. One xample: the difference between $122,700 and $99,100.

Your index fund should not be your manager's cash cow. It should be your own cash cow.

In inefficient markets, the most successful managers may achieve unusually large returns. But common sense tells us that for each big success, there must also be a big failure.

Common Sense Investing - John C Bogle

Here are some quotes from the book:

Over time, the aggregate gains made by shareholders must of necessity match the business gains of the company.

It is dangerious ... to apply to the future inductive arguments based on past experience.

Accurately forecasting swings in investor emotions is not possible. But forecasting the long-term economics of investing carries remarkably high odds of success.

The stock market is a giant distraction.

When there are multiple solutions to a problem, choose the simplest one.

The record of the first index mutual funds: $15,000 invested in 1976; value in 2006, $461,771.

It's amazing how difficult it is for a man to understand something if he's paid a small fortune not to understand it.

$10,000 grows to $469,000 ... or $145,400. Where did that $323,600 go?

The miracle of compounding returns is overwhelmedby the tyranny of compounding costs.

Inflamed by heady optimism and greed, and enticed by the wiles of mutual fund marketeers, investors poured their savings into equity fund as the bull market peaks.

When ever-counterproductive investor emotions are played on by ever-counterproductive fund industry promtions, little good is apt to result.

Logic Quiz B2

There are four houses with different colours in a row. Each occupant keeps a different pet and drives a different car.

1. The red house is to the left of the green house.
2. The person who keeps cat lives next to Francis.
3. The person who keeps cat lives to the left of the person who drives Rover.
4. The person who keeps parrot lives to the left of the purple house.
5. George drives Toyota.
6. The person who keeps bird lives to the left of Bobby.
7. The white house is occupied by the person who drives Volvo.
8. The person who keeps parrot lives in the second house.
9. Daniel lives next to the person who keeps hamster.

Question: Who drives Honda?

You can find the answer here

Here are more quizzes at three levels:

You can download the teaser to share with your friends:

Wednesday, January 23, 2008

Joke: Black Gowns

"Why do barristers wear black gowns?"

"They first started wearing them in mourning for the death of Queen Anne."

"Why do they still wear them?"

"Well, Queen Anne is still dead, isn't she?"

Behaviour of a Bear Market

We are now experiencing the behaviour of a bear market. The market falls by several percentage points every day. There is total loss of confidence.

Weak investors and margin traders are being squeezed out. Hedge funds are selling massively. There are virtually no buyers.

The market will rebound, after all of the selling has been done. Long term investors should just sit back and wait for the rebound. At the current level, the market is probably over-sold and is showing less than its fair value.

Availability of Low Cost Funds

Dear Mr. Tan,

I was reading a commentary somewhere that the state of fund investing in Singapore was reminiscent of a decade ago in the US, with consumers exposed to upfront loads of more than 3% and expense rations of more than 1%.

Why are no load or low expense ratio Index Funds have not gained popularity here? Is it a question of banks/companies not earning enough from such products? ( i.e. Fundsupermart does not sell Index Funds, DollarDex only sells the Lion Capital Infinity US500 Stock Index SGD (feeder fund in the Vanguard® U.S. 500 Stock Index Fund) with 1% commission.

I, for one, would be interested in low cost Index Funds (such as those from Vanguard) pegged to the STI. For some reason, the STI-ETF does not trade at NAV most times, possibly because of high demand?. Can I check if you have made progress towards arranging for such offerings in Singapore?


We need to educate the public about low cost Indexed funds, and be comfortable with investing in them. I will try my best to provide this educational service through my blog and website. If there is stronger demand, the banks and Internet portals will be willing to sell these products.

Help the Less Fortunate People

Singapore has gone through many difficult and trying times in its short history. The ones who are hardest hit are the poor, the elderly and the sick and there is only so much the authorities can do for these people.

Luckily we have many volunteers who stepped forward and help in many fields and they made the difference to the lives of these less fortunate folks. In our effluent society there is fear that the numbers of volunteers may shrink because of other priorities.

Dr. & Mrs. Lee Kum Tatt, who have experience working with hundreds of volunteers in their lives, give some insight on how some of the volunteers think and work. If more volunteers can be persuaded to step forward it will be a great help. Given the right environment they are confident that the number of volunteers will not dwindle.

Read their views in their Blog

Feeder Services

Dear Mr. Tan,

Earlier, I preferred to have direct bus services. After reading your arguments, I agree that it may be more efficient to have feeder services to bring passengers to the MRT station, provided that the waiting time is short.

However, I have to point out that some feeder services take a long detour before reaching my flat. This is unaccepable. I do not wish to spend time on a long journey.


I agree with you. Each feeder service should serve a section of the town and bring the commuters directly to the MRT station or town center. Each town should have two to four feeder services. We may have to use small buses, like the light buses in Hong Kong.

Relevant figures for a decision

Dear Mr. Tan,

I bought an Ideal Plan (ID2) six months ago, and have been make regular monthly payments.

After reading your blog about Flexi Link and Ideal policies, I am wondering if I should continue with my plan or if I can switch to the Flexi Link plan now? I hope you can advice me.


I suggest that you ask the insurance adviser (agent) or NTUC Income's business center to present the facts for the following two options:

1. Continue with the present ID2 plan
2. Stop the plan now, and move your money to Flexi Link.

Do not be shy about asking them to provide the figures to you, that you can make a decision.

Read this FAQ to understand the different charges:

Cost Plus for public services

The Straits Times has an article about the experience of other cities in awarding the operation of public bus services:

1. Tender system
2. Cost-plus system

The experience of the other cities has been quite clear. The tender system, where the bus services are awarded to the operator that provides the lower cost, leads to deterioration of services.

The cost-plus system leads to a more effiicient service, as the operator is required to meet performance standards which include cost and quality of service. They are not required to take care of factors that are beyond their control, such as fluctuating demand, competition and the cost of oil or wages.

I hope that the cost-plus system is adopted.

Revamp of Public Transport System

I like the key measures that have been decided for the revamp of the public transport system, which are:

1. The Land Transport Authority will take over the planning of the routes
2. A hub-and-spoke system will be adopted to reduce the number of bus routes
3. Competition will be introduced for the bus routes
4. The fare will depend on distance and not the number of transfers.
5. Priority will be given to bus lanes.

The current system, which has more direct bus services (with fewer transfers), has its weaknesses - as it is the cause of long waiting time, unreliable services, and overloading of certain services.

The hub-and-spoke system will lead to greater efficiency and better use of the resources and reduce the waiting time, travelling time and cost. I expect the feeder services to be frequent and comfortable.

I hope that the public will get use to more transfers under the hub-and-spoke system. As a user of public transport, I find the transfers to be acceptable.

Tuesday, January 22, 2008

Best premium rates

Dear Sir,

I have been reading your blog for sometime now. I was keen to check with you about how NTUC income policies fare as against other insurance companies for life and medical insurance. Does it make sense to invest in NTUC Income policies as against the MNC's?


I suggest that you call the insurance companies directly and ask for their quotes for Term insurance and Medical Insurance.

You can find their contact numbers in this FAQ:

Perhaps, you can share the results of your investigation with me?

Personal Savings for Your Retirement

The attached article was pubished in the Edge Magazine.

It contained eight tips:
Tip 1: Do not over-invest in a property using your CPF savings.
Tip 2: Set aside at least 10% of your earnings as personal savings for the future.
Tip 3: Get an attractive rate of return for your personal savings.
Tip 4: Buy a decreasing term insurance plan to cover you up to age 65 years.
Tip 5: Avoid duplicated medical insurance.
Tip 6: Have a budget for your monthly expenses.
Tip 7: Look for an honest adviser to help you to make the financial and insurance decisions.
Tip 8: Be educated about the fundamentals, so that you can make the right decision.

Personal Accident

Dear Mr. Tan,

I wish to insure for 5 years of my earnings, but I prefer to buy personal accident as it covers injury as well, and not just for death. Can you tell me more about this insurance coverage?


You can read this FAQ:

Difference between Flexi Link and Ideal plans

Hi Mr. Tan,

I am confused about the Combined funds. It can be invested through Ideal and Flex-link Policy. What's the different between the two?


The Flexi Link is a single premium policy. 100% of the premium is invested, but you suffer a spread of 3.5%.

The Ideal is a regular premium policy. 85% of the premium is invested during the first 3 years, i.e. you suffer a distribution charge of 15% for 3 years. The remaining premium is invested at the same spread of 3.5%.

It is better to invest in the Flexi Link as you avoid the additional 15% charge for 3 years. There are other charges that you have to consider.

You can read this FAQ:

Critical Illness Cover

Dear Mr Tan,

I would like to ask, why did you say $50,000 is enough for critical illness policy?
Let say if i am really hit by one of the illness which is insured by the policy, will $50,000 be really suffice for medical fee and hospitalisation?


I expect most people to have a Medishield plan that will cover most of the cost of medical care.

I advice people to avoid over-insuring and pay too much premium on high cost insurance products. They should have more savings for their retirement.

Read this FAQ:

If you have adequate savings, you can use part of your savings to meet the unexpected medical expenses (instead of relying on high cost insurance).

Monday, January 21, 2008

Safari Park near Puncak

I visited the Safari Park near Puncak, outside of Jakarta. I was surprised at the high quality of the park. The visitors drive through the safari park in their vehicles. The animals were allowed to roam freely. They are in good health and well taken care of. The visitors can feed the animals with carrots.

Structured Products invested in subprime CDOs

Hi Mr Tan,

I need your advice. Last year, I invested $50,000 in the Pinnacle Notes which will mature in 2012. Will the US subprime mortages affect this product? Can you advice on the risk involved in this product ?


I am not familiar with the actual investments of this product. I understand that some structured products were invested in Collaterialised Debt Obligations (CDOs) which comprise of these subprime mortgages.

I suggest that you ask this question to the issuing bank. I am interested to know their answer as well.

Bear Market

We are now in a severe bear market. The stockmarket around the world has dropped more than 20% from its recent peak. The drop can be 5% a day. It can drop a few days in a row.

This is the work of hedge funds. When the market is weak, they sell in large volumes, causing weak holders to panic and sell their holdings. There are no buyers, so the drop is severe. Later, the hedge funds will bear back their short positions at the depressed prices and make a profit. It has happened on many occasions in past years, during bear markets.

Long term investors should not worry. This short term massive selling last a few days and will stabilise or recover. In fact, this is a good opportunity to buy stocks at extremely depressed prices.

See a financial adviser

Some visitors to my blog sent detailed information about their personal financial matters and asked for my advice. I am not able to spend time to provide detailed personal advice on specific investments that suit their needs.

If you are in this situation, I suggest the following approach:

1. Read the FAQs in my blog and website and be educated about the financial matters
2. Find a financial adviser whom you can trust (i.e. someone you know or recommended to you)
3. Get the financial adviser to advise on your personal investments for a fee.
4. Ask the financial adviser to disclose the commission that they earn on the products that you buy.

Goal: to achieve $1.2 million in 25 years

Hi Mr. Tan,

I target to accumulate $1.2m in 25 years time. I now save $18,000 a year in insurance premiums. I wish to increase it to $24,000. My savings in CPF is capped at $17,000 a year. How can I make my savings grow faster?


If you save $24,000 a year and invest to earn an average of 5% per annum, you will get $1.14 million at the end of 25 years. Your savings of $17,000 in insurance policies probably earns for you a return of 3% per annum (just a guess). This will accumulate to only $0.65 million in 25 years time.

You can make your savings grow faster by earning a higher rate of return in a diversified, low cost, equity fund. You may wish to consider terminating some of your insurance policies, and investing the premium to earn a higher return.

Read this FAQ:

However, you have to bear in mind that $1.2 million in 25 years time is worth only $0.73 million in real terms, if you discount for inflation at 2% per annum.

Sunday, January 20, 2008

Logic Quiz B1

Can you solve this logic quiz?

There are four houses with different colours in a row. Each occupant keeps a different pet and drinks a different beverage.

1. The person who drinks beer lives to the left of the person who keeps cat.
2. The grey house is to the left of the blue house.
3. The purple house is occupied by the scientist.
4. The salesman keeps bird.
5. The green house is next to the person who drinks wine.
6. The scientist lives to the left of the person who drinks tea.
7. The accountant lives to the left of the manager.
8. The person who keeps hamster lives to the left of the person who keeps fish.
9. The purple house is the second house.

You can find the answer here

Here are more quizzes at three levels:

And you can download the teaser to share with your friends:

Secret of the Amazing Numbers

It is time for me to share the secret of the Amazing Numbers. After your friend has selected the cards (that contain the selected Number), you add the first number of the selected cards to get a total (which is the selected Number).

For example, if your friends chose the cards with the starting numbers of 1, 8 and 16, the selected Number is 1+8+16 = 25. The Number 25 appears in these three cards and not in any of the other cards.

The starting numbers of the 7 cards are in multiples of 2, i.e. 1, 2, 4, 8, 16, 32, 64. Any Number can be formed by adding from these starting numbers. The Number 25, is formed by adding 16 + 8 + 1. Hence, this Number appears only in these three cards.

You can take my Amazing Numbers and make the 7 cards to amaze your friends!

Puncak - hill resort near Jakarta

I stayed at a villa near Puncak, which is a popular holiday resort outside of Jakarta. According to Wikipedia, Puncak is only 390 m above sea level, but it is quite cool and pleasant.

I found the landscape from the villa to be magnificent. I could see three large mountains in the distance, with beautiful white clouds below the peaks. I gave a great feeling about the wonders of nature.

Lawyer's Joke: Contempt of court

The lawyer was quite fed up with the judge, who was constantly ruling against him. He collected his papers and was about to leave the court.

The judge asked the lawyer, "Are you trying to show your contempt for this court?"

The lawyer replied, "No, your Honour. I am trying to conceal it!"

Books on financial planning

Dear Mr. Tan,

I am new in investments. Can you recommend a good book or financial blogs?


There are many books on financial planning and investments available in the market. They are good in theory, but will probably have the following disadvantages:

a) They do not cover the situation in Singapore
b) They teach the theory and avoid the practical issues that are faced by real people.

I am not able to recommend any good books. Perhaps, the other readers of my blog can suggest some good ones?

I suggest that you read the following:

My blog:
My website, under the section Ask Mr Tan:
Dr Money's articles:

Continue existing policies

Dear Mr. Tan

I would like to thank you for your generousity in time and advice for everyone. Your blog has been an eye-opener for me.

I would like to seek your advice on my family's insurance needs. Finance has been tight for us. We have 3 regular premium ILPs that were bought 7 years ago. We are thinking of stopping the ILPs and buying a Term insurance.

My agent has suggested that we buy a life insurance policy. Do you think that this is a good idea?


For the three ILP policies, can you find out the following:

1. What percentage of the monthly premium is invested from now onwards (i.e. after the policy has passed 7 years).
2. What are the deductions from the monthly premium to cover the policy expenses and mortality charges?
3. What is the annual charge on the investment fund?
4. What is the spread on investing each premium into the fund?

Quite likely, you have passed the period of high upfront charges. If this is the case, it is better to keep the ILP policies as an investment for the future.

I do not recommend a new ILP policy, as it incurs high upfront charges. But, if you have already incurred it in past years, it is better to continue with the policy.

I suggest that you buy a decreasing Term insurance to cover 5 years of your earnings, reducing over a period of 20 years. Do not buy the whole life policy.

You can read the FAQs here:

Investing for the future

Hi Mr. Tan,

I am concerned that my savings for the future will be eroded away by inflation and that the yields in the CPFOA may not keep up with inflation.

I am considering putting some savings into UOB Growthpath 2040 fund and also the Combined Fund by NTUC Income. It seems that doing a regular ILP incurs high costs. I am thinking of putting some money in both funds over the next few months. What are your views?

Thanks for the advise on your website. It is sad that insurance agents put a lot of pressure on customers. I almost signed up an ILP with a friend only to realise of the high upfront costs, and also the relatively high annual charge of 1.5%. I was advised to put money in single country funds that are 'hot' economies. I decided to cancel the policy within the 14days grace period. I cannot afford to lose up to 18 months in upfront costs at this early stage of life.

I checked with another agent and was told that not all the information on DR Money's website is true about insurance.


You can read this FAQ about investments:

I am not able to give you specific views about the UOB fund. If you wish to invest in the Combined Fund from NTUC Income, you can invest through the Flexi Link policy, where the charges are much lower than a regular ILP.

You did right to cancel the high cost ILP policy. Your savings should be for your future, and not for the earnings of the insurance agent.

Dr Money's advice on insurance is sound. It may not be 100% accurate. My advice is not 100% accurate either. But, they are useful for consumers.

Low risk investment

Dear Mr. Tan,

I learnt from your website from reading mypaper. I'm a nerd when it comes to financial management. Apart from savings account, I know nothing much about investments. I'm not a high risk taker, but would like to know how to go about low-risk investments.

Are there any articles, websites or books to recommend for beginners? I heard that T-bill is a low-risk investment but I've no idea how to go about doing that.

Recently, I've also heard that an insurer is offering a sort of Fixed Deposit, which offers higher interest than banks. Is it trust worthy?

I'm in my mid-30s and wish to invest $50,000 for my retirement or my son's education fund. What is your advice?


I suggest that you read this FAQ. It should contain the answers that you need.

Amazing Numbers

A few people have written to ask for my permission to use my amazing numbers to play with their friends. They are most welcomed. I asked them to make 7 cards using the amazing numbers.

I have just visited an insurance company in Indonesia. Their managers are amazed at the numbers and wish to print the amazing numbers cards to give to their clients.

What are the amazing numbers? Try it:

Migrating to Term insurance

Dear Mr. Tan,

I bought the NTUC I-young policies for my two sons at $100 annual premium for a coverage of $50,000. The policies will lapse upon the age of 29. Should I switch to a Term insurance policy, as mentioned in your blog, for an annual premium of $100 to $300 for a coverage of about $150,000 or stick to I-young? Your learned advice is much appreciated.


Both options are suitable. When your sons are ready to buy their own Term insurance, they can buy a Term insurance for about 5 years of their income, and discontinue the iYoung policy. In the meantime, the iYoung will serve them well.

How to get started in investing

Dear Mr. Tan,

Thank you for providing this wonderful resource and for making investment and insurance products so much easier to understand.

Now I am very keen to get my money to work harder. The question is, can you please teach me how to get started? How do I buy a unit trust or an indexed fund?


You can read the FAQ in my website,

Financial Blogs

Dear Mr. Tan,

Hope all is well with you. Your last update on your blog was 14th. Jan today is 18th. I am sure many readers like me who visit your blog everyday must be missing your posts (like I am).

By the way, I like reading Doc money's writings but they come out just once or twice in a while. Can you suggest any Singapore specific useful financial websites or blogs (apart from those already listed on your right panel) where real good, sound info is given like you and Doc money give.


I have been in Jakarta for the past few days, and have some difficulty in getting Internet connection. You can read my blog and Dr Money's articles. I am not aware of other good blogs on financial matters.

Investing in the Singapore market

Dear Mr. Tan,

A few weeks ago, you suggested that a good time to invest in the Singapore market is at the level of 3,000 to 3,300.

The Singapore index is now about 3,100, but there is the risk of a recession in America. Is it safe to invest at the current level?


If you are investing for the long term, it is all right to invest at the current level (in my view). The market has dropped by more than 20% from its peak at 3,850. You may not be able to catch the bottom, so it is better to start investing. If you are unsure, you can invest in three tranches over the next there months.

If you are investing a monthly sum, it is all right to invest now. You can invest in the STI tracker fund, or the Combined Fund from NTUC Income (through the Flexi Link policy).

Updating my blog

A few visitors have observed that I was not updating my blog for the past few days.

I was away in Jakarta from Tuesday to Saturday. It was difficult for me to get access to the Internet. The Internet connection from the hotel was slow and expensive. I have just returned.

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