Saturday, November 13, 2010

Wisdom on How to Live Life - Dr. Tommy Wong

Dr. Tommy Wong introduces his 3 books on "Wisdom on How to Live Life" in this video. You can order the 3 books here (enjoy a promotional price!).

Watch this video

Financial planning book - discount of 33.3%

Enjoy a 33.3% discount when you order 3 copies of the financial planning book for $24. Each book cost $12, so you are getting the 3rd copy free. You can join with your friends to buy the 3 copies and share the discount. You can also buy the 3 copies to be given away as a Gift.

Spend 3 hours to read the book and learn how you can save more than $100,000 by making the right investment (or avoiding the bad one). Invest in your financial literacy and be confident of making the right decision.

You can also place your order by sending an e-mail to with your mailing address and mobile phone number.

Recent events and financial literacy

If you wish to understand the exchange of letters in the Straits Times on SM Goh's suggestion for insurance agents to sell term insurance, and also the merits of investing in the DBS preference shares, you can register and attend the talk on financial planning conducted on 4 December 2010.

Be educated about insurance and financial planning and be confident about taking the right decision. You will be able to understand the advice given to you by an insurance agent and to distinguish between the good and bad advice, from the perspective of the consumer.

More details here.

Friday, November 12, 2010

Invest in preference shares

If you wish to invest in preference shares, you can read this FAQ which explains some of the terms of the preference shares. It is stored in (search for Preference Shares).

Youth gangs

There are some incidents involving youth games engaging in violence. Here are the views of readers.

Product Highlight Sheet for DBS Preference Shares

I was surprised to find that consumers have to read a 117 page prospectus on the DBS preference shares. I recall that, one or two years ago, MAS had a requirement for financial products to be described in a product highlight sheet. Is this requirement already implemented? Can someone working in MAS or the financial sector enlighten me?

I spoke to a MAS official. She told me that the requirement of a Product Highlight Sheet has been accepted by MAS but has not been implemented yet. Still, it would be nice for DBS to provide this PHS, rather than give a lengthy prospectus to the retail public.

Preference shares - perpetual and redeemable

Dear Mr. Tan,
The DBS preference shares are perpetual (i.e. have no expiry date), but are callable (redeemable) by the bank in 2020. Does it mean that DBS will return the capital investment to the investors in 2020?

The perpetual nature allows DBS to keep the money forever and to pay the dividend at the specified rate.If DBS is in trouble, they may not pay the dividend (you have to check on this point).If DBS goes bankrupt, you may lose all of the invested sum (but this risk is very small). A preference shareholder has a higher risk that a bond holder but lower risk than DBS sharehholders.

DBS has the option to redeem the preference shares in 2020 and pay back the shareholders. They will do so, if they find that the interest rate is low and they can refinance the preference shares at lower cost. However, if interest rate goes up high, they are likely to keep the preference shares beyond 2020.

The preference shareholder can sell the shares at any time through the stockmarket, at the prevailing market price. The price will increase above par, if the market interest rate has dropped. the price will decrease if the market interest rate increases.

I have asked a financial expert to make a brief analysis and post the details in the FISCA website ( It will be available to FISCA members after login.

Medishield for a pensioner

Dear Mr Tan
Can you advise if there is a need for a pensioner to purchase Medishield. As a pensioner, the medical scheme covers 85% of the medical charges. I am worried that it may come a time that I may not be able to pay the 15% medical charges if the amounts are very large.

Frankly, I don't see why the bill should be so large. If the cost of treatment is really expensive, you can opt for B2 ward where the cost is capped. The 15% can be paid from Medisave savings. In fact, if you have a Shield plan, it is complicated (with deductible and co-payment) that it may not cover your 15% co-payment. So, you may be paying money for nothing.

DBS Preference Shares

Hi Mr Tan,
I have seen a lot of ads recently on the issuance of DBS Preference Shares with a dividend rate of 4.7% (emphasised in huge fonts). I wanted to find out more and read up its prospectus on 

However the prospectus is a 117 page long document, and it is not easy to understand. Buried inside this huge document is a section on risks, but the language is extremely difficult to understand. If DBS is targeting retail customers, the risks associated with this investment should be clearly articulated. It seems that DBS has yet to learn its lesson from the Lehman saga.

I have ased a financial expert to make an analysis of this preference shares. The analysis will be available to posted in the members' section of the FISCA website and will be available only to members after login. Go to


But agents exert powerful sway over buyer's choice

Published in the Straits Times

SENIOR Minister Goh Chok Tong's observations about keeping life insurance coverage affordable
focused on the conventional practice of recommending whole life or savings plans instead of term insurance ('Keep insurance affordable: SM Goh'; Oct 23).

This practice is evident in a finding published by the Life Insurance Association of Singapore, which stated that Singaporeans are under-insured by 67 per cent, or by as much as $329,223 based on average household expenses; when term insurance is, by contrast, far more affordable.

One aspect of Mr Tan Kin Lian's comments on Wednesday ('Two key factors insurance buyers don't know') describes the inherent conflict of interest between a fatter commission and the consumer's immediate protection needs.

Usually, if a proper financial needs analysis is done prior to making the sale, a buyer's required insurance protection may well amount to hundreds of thousands of dollars. Instead, what usually happens in an insurance sale is that the recommended products, while meeting the buyer's budget constraints, do not satisfy his protection needs.

In fact, private bankers or insurance agents who sell savings plans with embedded insurance protection often use the savings elements to attract and keep consumers to a long-term commitment of their budget, thereby depriving them of a future budget for protection needs and giving them the impression that insurance protection is costly.

If responsible advisers recommend term insurance, consumers can easily meet coverage needs without resorting to high-premium, low-coverage products like whole-life or endowments.

Last Friday's reply by Mr Jeffrey Tan, president of the Insurance and Financial Practitioners Association of Singapore ('Choice of insurance plan hinges on affordability, buyer's needs'), omitted an agent's powerful influence on the client's choice.

There are three ways to better police recommendations:

* Agents should be trained to offer needs-based advice rather than just product advice.
* Conduct compliance checks on an agent's recommendations to meet protection needs; and
* Check whether a client who picks a savings plan over protection needs has been given a booklet which tells him about the benefits of term insurance within the free-look period, so he can reconsider his choice.

Brendan Yong

Gideon Lee: Buyers, not agents, decide the products they want...

Published in Straits Times

I AM curious about Mr Tan Kin Lian's ardent advocacy of term insurance
over whole-life and investment-linked plans
('Two key factors insurance buyers don't know'; Wednesday) in his reply
to Insurance and Financial Practitioners Association of Singapore president
Jeffrey Tan's letter
('Choice of insurance plan hinges on affordability, buyer's needs'; last Friday).

When Mr Tan Kin Lian was the chief executive officer of NTUC Income for 20 years,
he endorsed the sale of thousands of whole-life and endowment policies
and investment-linked plans (ILP).

He isn't quite right when he states that agents prefer selling whole-life plans
instead of term insurance because they can earn significantly more commission.
Policies are usually sold and bought based on a client's budget limit
rather than the sum assured.
An agent earns the same commission for a term plan
that charges a monthly premium of $200 a month
as he does for a whole-life policy or ILP with the same premium.
Most buyers also prefer whole-life and ILP over term insurance
because they do not believe they will ever need to claim on their policy,
especially for critical illnesses, and want to get their premiums back.
Almost every client of mine asks me how he can retrieve his premiums
if nothing happens to him.

Mr Tan Kin Lian inflates the commission an agent earns.
If agents earn as much as he thinks,
recruitment shouldn't be an insurance manager's biggest headache as it is now.

Mr Tan is also wrong
when he states that distribution costs are paid to agents for the advice they give.
Distribution cost, as the name suggests, is commission paid for selling the product
and is not an advisory fee.
An agent is paid according to the amount of money he brings in.
To offer an analogy, a doctor's charge for consultation
is separate from the income he earns through selling medicine in his clinic.
In the agent's case, the consultation is free.

It is not the agent's fault if a customer needs more cover.
Mr Tan Kin Lian's one-policy-fits-all-needs solution
does not help clarify the different insurance requirements of buyers.

Gideon Lee

My comments
I hope that some consumers will write to the Straits Times to show how they have been misled by insurance agents into buying the bad financial product. 
I will be writing a reply to the points raised by Gideon Lee.

Churning of Life Insurance Policies

Some life insurance agents 'churn' their client's policies to earn a fat commission again. Does this practice apply to unit trust, where the upfront commission is 3% of the invested amount? Here are my views. Consumers should be aware about this practice and avoid being churned by the agent.

Thursday, November 11, 2010

Financial Planning Talk - 4 Dec 2010

I am giving a talk on financial planning on Sat 4 Dec from 3 tp 6 pm. Details can be found at (Events). I encourage consumers to attend this talk and learn about the basics of financial planning. This is specially suitable for young people entering the workforce for the first time. By being educated, you will avoid being misled into buying the wrong life insurance policy that will take away a large proportion of your future lifetime savings. The book, Practical Guide on Financial Planning, will be given free to all participants.

Spend 3 hours and $36 ($10 for FISCA members) and avoid making a bad mistake. Parents should encourage their children (who are entering the workforce) to attend this talk.

Tan Kin Lian

Talk to NTU Risk Management Society

I gave a talk to 50 members of the risk management society of NTU. The seminar room was packed. I told the following stories which they found to be fascinating:

Invest in Gold Bars
Dual Currency Deposit
Land Banking

I hope that they remember the stories and learned about the risk of being cheated or exposed to high risk that they were not aware of. I also told them to share these stories with their parents, so that they will not be misled into bad investments.

I encourage my readers to attend the talk on financial planning, and to encourage your friends to attend the talk. Spend 3 hours and $30 and avoid losing $30,000 or more through a bad investment. Invest in your financial education. Encourage your friends to make this investment too!

Tan Kin Lian

Visit to Masdar City

I visited Masdar City, which is near the Abu Dhabi airport to view the development. It is one large construction site. The project has been delayed. I was not able to get an appointment for someone to show me around the site (as I did not make prior arrangement). So, it was quite disappointing. It may take a few more years before this development, which is billed as a city of the future, will be ready.

Political parties and general election

What are the political parties in Singapore doing to prepare for the general election? Go to General Election Portal and see a list of articles. They are quite active!

Choice of insurance plan and cost

Here is a letter from the President of the association representing insurance agents about the choice of insurance plan and a reply from Tan Kin Lian

Wednesday, November 10, 2010

Resource materials in TKL website

My website ( contain useful resource materials. They are kept in PDF documents under the Information tab.

I am personally the biggest user of the resource materials. I get questions from consumers and journalists on a variety of topics. I refer to the resource materials to get the information that is needed to reply to the questions.
I also use the resource materials to write my books, articles, letters to the newspapers and to prepare for the educational talks that I give on many topics.

I am able to access the resource materials when I am overseas. I just go to the website, type in the keyword and get the PDF that I need.

I encourage corporations to have an active website to contain information for their customers and employees. This will make the corporation more accessible and can help to build up the business of the corporation. It is a wonderful tool that should not be neglected.

Tan Kin Lian

Past general elections in Singapore

Go to SGEP, select "Resources" and view the various resource materials about the past general elections in Singapore.

Extract the key information from a webpage

I wish to write a script (i.e. computer program) that can go to a webpage, extract the HTML code, and remove all advertisements, graphics and supplementary information - leaving only the key content of that page. This script will need an understanding of the structure of the HTML page and also some artificial intelligence. I will send the URL of the webpage to this script and it should return the text contained in the webpage.

If any expert knows how to write this script or wish to give it a try, send an e-mail to

MacDonald's Monopoly Promotion

Dear Mr Tan,
Recently Mcdonalds is having Monopoly promotion. When we buy their value meal they will issue playing cards to us. One of the prize is a car Kia Soul 1.6L (auto) worth $50000. In order to win the car we have to collect 3 cards namely Holland Road M318, Orchard Road M319, Ardmore Park M320
I have collected two cards Holland Road M318 and Ardmore Park M320. I need the 3rd card Orchard Road M319 to win the car.  I will willing to share the money from the sale of the car equally between the holders of the three cards, after making a donation of $5000 to FISCA.
I know it will not be easy to win the car, but if we join together, we will have a much better chance to win together.

My comment
If anyone has the Orchard M319, please send an e-mail to But I guess that this may be the most rare card.

Financial Planning book at 40% discount

You can enjoy a 40% discount on the financial planning book and other puzzle books through the 5 book bundle promotion at

Two key factors insurance buyers don't know

Published in the Straits Times Forum Page
I REFER to the reply by Mr Jeffrey Tan,
president of the Insurance and Financial Practitioners Association of Singapore
('Choice of insurance plan hinges on affordability, buyer's needs'; last Friday).

In buying a product, the consumer should be aware of its price.
This is especially important for a life insurance policy,
which requires a large sum of money to be paid over many years.
For most people, this could be the next biggest financial commitment
after the mortgage on their home.

Consumers should learn to read the benefit illustration of the life insurance policy
and look for two key items: distribution cost and accumulated savings.

The distribution cost is
the amount that is subtracted from the consumer's savings
to pay for the advice given by the agent.

Typically, the distribution cost takes away one to two years of the premium.
So, if the premium is $500 a month, the distribution cost could amount to $12,000.
Is the insurance agent's advice worth that much to the consumer?

The deduction results in a portion of the accumulated savings
being taken away from the consumer.
This portion could be more than 50 per cent after 30 years.

If the accumulated savings is $300,000,
the consumer could be giving away more than $150,000.
The net yield earned on the savings is usually insufficient to cover inflation.

So, how can the agent claim to be giving good advice to a consumer
by selling this policy?

In his reply, Mr Tan stated that not all term insurance policies
pay a lower commission than traditional whole-life and investment-linked policies.
I disagree.

If a consumer buys a term insurance to cover $300,000,
the premium should be less than $400 a year.
The agent may be able to earn $400 in commission over a few years.
If the agent sells a whole-life or investment-linked policy,
the agent may be able to earn more than several thousand dollars in commission.
Unsurprisingly, most agents prefer to sell the policy
that pays a fatter commission.
They tell consumers to avoid a term insurance policy because it does not give any return.

However, consumers are not aware of how much they will be losing
in a whole-life or investment-linked policy.

Tan Kin Lian

What is "churning" ?

Dear Kin Lian
I hope you could consider publishing this in your Blog to clear the doubts as currently I personally feel that this definition is very vague.
What is the definition of 'CHURNING'
Currently it seems there is no industry standards to the definition of 'CHURNING'. 
Scenario 1, if a investor purchased a unit trust paid 3% upfront and made profit of 10% in less than 1-2 months and decided to sell and reinvest in another fund, and does not mind paying another 3% to the adviser, is this "Churning"?
Scenario 2, a investor purchased a unit trust paid 3% upfront, loss 1% and sell the investments, reinvest again and pay another 3% upfront, this is definitely 'CHURNING'.
In some firms, they take Scenario 1 as 'churning'.    Is this the industry practise?
Even currently in investment platforms there are 'WRAP' and 'NON WRAP' fees.  'WARP' are those which charges as invester x% annually and when they switch there is no up front whereas 'NON WRAP' there are up-front.  Again, for 'WRAP' fees it can vary from 0.5% to as much as 1.5% annually.  Some firms take 'NON WRAP' as CHURNING, so if this is true that why implement such facility.   Must as well remove it.
As a long term investor, why should I go for 'WRAP' fees if I decide to just remain in 1 good fund.   By paying 1.5% annually, it deplict my value and why should I let the adviser and firm earn it.
Banks in the past adopt 'NON WRAP' whilst FA Firms tend to discourage it and make it mandatory to go 'WRAP'.  Why?  Maybe they need the 'WRAP FEES' to maintain their business which is ridiculous. 
Mr Tan, it will be good if you could maybe rope in industry experts or the blog members to comment on this.  This issue has in the past and now, caused advisers to be forced to resign and terminated because of scenario 1.
Concerned Investor

My view
The investor has to pay an upfront fee of 3% to 5% or an annual wrap fee of 1.5% to invest in a unit trust. These charges are rather high and depletes the return to the investor. But, they are good fees shared by the adviser and the FA firm. There is now a dispute between the adviser and the FA firm in how to share the proceeds of the fees.  

Churning is a term used to describe the activity of an agent giving advice to the client to terminating one insurance policy and take up a different policy. It allows the agent to earn the high upfront commission (of 1 to 2 year's premium) again. It harms the interest of the consumer.

It can be used to describe the activity of switching from one fund to another. In this case, the cost to the consumer is 3% to 5% of the premium, and not a large percentage. However, if this activity is carried out several times in a year, the harm can be quite large. So, it should be treated as churning also.

Investing in a unit trust should be a long term investment. The investor should keep the investment for a few years, before making a switch for the purpose of asset allocation. It should not be done earlier.

If the consumer wishes to speculate in the stock market for short term gains, the consumer should select the liquid blue chip shares. The cost of trading is only 0.3% of the invested sum and has to be paid on the way in, and on the way out. The speculation should not be made through a fund, which is for long term investment.

Tuesday, November 09, 2010

Abu Dhabi and Masdar

I have visited Dubai a few times but have not yet visited Abu Dhabi, which is the capital of the United Arab Emirates and just 1 and 1/2  hour drive from Dubai. Someone told me that Abu Dhabi is rather conservative and is quite different from the open and cosmopolitan culture in Dubai.

Abu Dhabi has a bold project to develop a new city, called Masdar. It is being marketed as what a modern city should be. It uses renewable energy and has an underground system using automated, driver-less personal vehicles. This allows the pedestrians to walk at the street level free of vehicles.

I heard that the development of Masdar is behind schedule - still, I am interested to take a look.

Win-win approach

I found an interesting example of the win-win approach in Dubai.

During the global financial crisis, Dubai needed a few billion dollars to pay off the short term credit that was pulled out by the banks. They had to turn to Abu Dhabi for help. In return for the financial assistance, Dubai agreed to rename Burj Dubai (which is currently the tallest building in the world) to Burj Khalifa, i.e. after the name of the Ruler of Abu Dhabi.

Burj Dubai was supposed to be a landmark in Dubai, so the change of name cause the loss of this iconic name. They found an interesting solution. Burj Khalifa is next to Dubai Mall, which is a prominent shopping mall in Dubai. So, the Metro station that serve this location is now called Burj Khalifa Dubai Mall, which allow the name of Dubai to be retained for this icon.

Capital controls to stop asset bubbles

Asian economies may need to turn to capital controls as quantitative easing by the U.S. threatens to spur asset bubbles in the region’s stock, currency and property markets, the World Bank said.

Any curbs should be “targeted,” temporary and tailored to address specific problems, Sri Mulyani Indrawati, a World Bank managing director, said in an interview. This could include countries tying up funds for as long as a year to help limit hot-money, she said.

Interesting topics in SGEP

There are several interesting topics and letter posted in the Singapore General Election Portal by Gerald. You can choose those that interest you and read them.

Quantitative Easing - impact on Singapore

Someone asked for my views about the impact of quantitative easing on the Singapore economy. I must confess that I am not an economic expert but I believe that most economists are also unsure about the likely impact of these measures.

My own views are pessimistic, as expressed in this article about the Global Economic Turmoil. The low interest rate, stimulus package and quantitative easing adopted in America is causing asset bubbles around the world. In the short term, stock markets and property prices have shot up, but these are likely to cause a lot of problems in the months ahead.

America hopes to create more jobs with these measures. They expect the jobs to be created with the recovery of economic growth. I expect that these measures will fail to create the jobs, due to globalization, wide disparity of income, uncertainty of the future and other factors. If America goes into a double dip recession, it will reduce demand for the rest of the world and cause problems in the emerging countries that depend on consumer demand in America. It does not make sense to ask give money to a debtor to spend.

The long term solution is an economic system that can provide jobs for everyone who is willing to work. This will not come with the current economic structure, which is based on competition. It requires a new approach to distributing the work opportunities in a fair and regulated market, which will continue to be a free market in giving choice to workers and employers. My ideas are contained in this article on Creating Employment.

In the short term, the asset markets are booming, due to cheap money. You can join the party for the fun. But, like all bubbles, the pain has to come afterwards.

Tan Kin Lian

Dubai - hassle free for travellers

Dubai is the only place that I had visited, which does not require the traveler to complete an immigration or custom form. This archaic practice, first started more than a century ago, continued is continued mindlessly by government officials in many countries. I am thankful that the European countries have at least simplified their entry forms.

Singapore can learn a lesson from Dubai and get rid of the immigration form that visitors are required to complete in entering Singapore. The main purpose of the form is for tracking of tourist statistics. Are the statistics so important to add to the hassle for visitors?

If we are interested to know their country of origin, look at their passport. There is already a lot of information that is captured on the magnetic strip of the passport. If we want to know how many tourist stay in our hotels, we can get the information from the occupancy rates.If we want to know how many people are on group tours, ask the travel agencies. If we want to know how many people are first time visitors to Singapore, we can match the passport numbers against our huge database. We need to check anyway for the terrorists that are not allowed to enter our country.

It is time for the Singapore immigration to get rid of the dubious entry form. And perhaps, they can encourage the Asean countries to do the same, so as to make it hassle free for people to travel around Asean and promote tourism.

Tan Kin Lian
Now in Dubai on a business trip

Water, Water Everywhere

Singapore leads the world in developing water resources. However, it requires the use of energy, which is also costly. Read:

Monday, November 08, 2010

FISCA Talk - Consumer Guide to Insurance

I have received several requests from readers to conduct a talk on insurance. In response to this request, I have prepared the outline of the talk here. The fee for the talk will be $20 (for FISCA members) and $30 (for public).

I wish to carry out a survey to find out how many people are interested in this talk. Please reply to this survey. If there is sufficient interest, I will ask FISCA to organise this talk.

Different Types of ETFs

ETFs have evolved over the years, becoming more complex. Investors considering ETFs should evaluate each investment closely and not assume all ETFs are alike. In the last few years, a number of leveraged and inverse ETFs have been introduced to the market that are very different from the traditional variety of ETFs.

Is life insurance good or bad?

Life insurance can be good and can be bad. It is good if it is priced fairly and the consumer pays a premium rate that reflects the risk and a reasonable margin for the insurance company to pay its expenses and make a fair profit. It provides a mechanism to pool the risk and pay a compensation to those who suffer the insured event.

It is bad if the insurance is priced in a predatory manner, over-charges the consumer and is sold with inaccurate and misleading statements - so as to allow the insurance agent to earn a fat commission and the insurance company to make a fat profit.

Read this article.

General Election in Singapore - latest news from the Internet

Visit the General Election Portal to read about the latest views in the Internet on the coming general election in Singapore..

How to say "No" to an insurance agent

t is important for a consumer to be able to say "No" to a life insurance agent. Here are some tips on how to say "No". They are especially important for young people who are starting work for the first time. The ability to say "No" in a nice way can save you a lot of money and protect your financial well being.

Consumer finance portal launches here

A NEW consumer banking website goes live today,
that will allow users to compare personal finance products across banks here.

Its Singapore-based founder, Giora Kanner, said that is aimed at helping people sift through
the array of bank products here, such as credit cards and insurance policies. The site's search engine will compare products based on user criteria, and allows users to filter the results for finer results, he said.

He hopes the site will fill a gap in the market for a centralised portal listing the different bank products here. is open to users for free,
and is located at
REad the BT article for free after 6 pm:

Tangram and Shape Quiz

Here are some interesting shapes that can be formed from tangram (7 pieces) and shape quiz (4 pieces). They are interesting and challenges the mind. The book, with 100 shapes, can be bought from Suitable for children, adults and seniors and as a Gift! You enjoy a discount of 40% as part of the 5 book bundle.

Add caption

Creating employment

Many countries faced the challenge of creating employment for the large number of unemployed, under-employed and new entrants to the work force. This challenges will continue to be difficult under the current economic system. In this article, I have some suggestions of the changes that can be made to create more job opportunities and build a better and more sustainable environment for the future.

Tan Kin Lian

Bank interest rate - discriminatory practices

Some banks offer higher interest rate to attract new deposits and give a lower interest for existing deposit. A customer can earn the higher interest rate by taking the trouble to withdraw the deposit and re-deposit it with the same bank. If the customer expresses the intention to take this trouble, the bank will usually relent and offer the higher interest rate.

The bank is willing to pay a higher interest rate (compared to the miserably low interest rate that is offered to their existing customers). But they hope that some customers are not aware about the difference, or that they do not wish to take the trouble, or do not know how to take the action. The bank hope to extract the maximum profit from these customers.

I consider this practice to be discriminatory and unfair, and goes against the ethos of fair treatment of customers. Some people say that this type of practice is predatory and dishonest. I believe that it has some of these negative elements. Even if it is not illegal, it is quite wasteful to get customers to go through a lot of hassle to enjoy a more adequate interest rate and cause unproductive work for their own staff.

I hope that the Monetary Authority of Singapore will tell the banks that they (the regulators) frown on type of unproductive and discriminatory practices. I am sure that the banks will heed the message from the regulators.

Tan Kin Lian

Sunday, November 07, 2010

Managing personal risk - importance of savings

I wish to recommend this article to the lay person. It is about managing personal risk and the importance of having savings and getting an adequate yield on the savings. Many life insurance agents will give bad advice to consumers and get them to buy a life insurance policy that gives a poor yield or charges too much for the insurance cover. The agent has a conflict of interest. They can earn a higher commission by selling an expensive policy to the consumer.

Read the relevant FAQs in my website, Read my book, Practical Guide on Financial Planning (click on iShop at the right panel).

Cost of term insurance

Dear Mr. Tan,
I just talk to 4 different insurance companies asking for their term insurance. One company try to sell me life insurance when I asked for term and I have to pay 4.5K per year. Even for term insurance, the price quoted is not that cheap comparable to life insurance.

Is it true that Critical illness only can be bought with a Life Insurance with Death Coverage and not as a stand alone policy? This is what an agent told me. Xan I really get a term policy valued at 500K at around 1K plus per annum as reported in the papers?

You can buy a stand alone term and a stand alone critical illness cover under the SAF group insurance policy, if you are a reservists. Read this FAQ:

A term insurance for $500,000 cost about $768 a year. You can buy critical illness separately. But you do not need to insure a large sum. An insurance of $50,000 or $100,000 for critical illness is sufficient, as it is supplemented by term insurance.

Read my book, Practical Guide on Financial Planning and attend the educational talk conducted by FISCA. They are meant to educate consumers to make a better choice.

Read the FAQs in to find out why many agents are not giving the proper advice to consumers, due to their conflict of interest.

Online courses

Learning in Dorm, Because Class Is on the Web
Online education is finding its way into more colleges,
many of them public institutions facing tight budgets.

How to Pick Your Next Computer


Guiding a child to financial independence

Parents of adult children face all types of challenges, even in the best of times, but the tough labor market for young people can make it even more difficult.

Here are some tips:

Measure of economic progress

U.S., China and eating soup with a fork
Are economists the world over using an outdated tool to measure economic progress?
They are widely used to compare standards of living in one country with those in another
but critics say GDP is too narrow to be a realistic indicator.
Joseph Stiglitz, the Nobel-prize winning American economist, has complained that
world leaders make a fetish out of it and suffer from GDP-obsession.

Reply to Jeffrey Tan, President of IFPAS

I am looking for some consumers to come forward and send a reply to the letter from the President of the association representing the life insurance agents.

Jeffrey Tan said consumers to get the advice of the insurance agent who will help them to select the most suitable products to meet their needs. From the questions sent to me, it seemed that many consumers were confused about the product that has been sold to them, and when they learned at a later date about the poor yield on the life insurance policy, they regretted having made a bad decision.

If you have suffered this unfortunate situation, I ask you to come forward and write a letter in reply to Jeffrey Tan. This will help to clean up the bad practices where many insurance agents continue to take advantage of the ignorance of the consumers.

If you are willing to share your experience, you can write a draft to me at I will help you to polish up the letter.

Tan Kin Lian

Bread Talk and Bread Life

I saw two shops in a mall in Jakarta that have similar name. Bread Talk was probably the original company. Bread Life follows the same concept. The Bread Life shop has many customers, and the Bread Talk shop was almost empty.

Cheated on inferior products

A consumer bought a few boxes of local sweets in a store at 8 yuan. Later, she saw the same product sold at another store for 3 yuan. She bought a few boxes at the lower price to average down. She was told later that the cheaper product could have expired. Her immediate remark was - I have been cheated. She felt that it the product had passed the expiry date, the store should not have sold the product to her without telling her.

Cheating is to sell a product without disclosing relevant information or providing misleading information about the product to the consumer.

If a consumer can felt cheated of a few dollars in a consumable product that has expired, how would the consumer feel if he or she has been sold a financial product that locks out the savings for 30 years and takes away 50% of the savings, amounting to more than $200,000, without being told? Is this cheating or not cheating?

It is important also to look at the degree. There is no much harm of being cheated of a few dollars. But if one is being cheated of a large sum, one should pursue the matter rigorously.

Tan Kin Lian

Global Economic Turmoil

I expect a global economic turmoil within the next few years. My views are expressed here. I will be happy if I am wrong, but it is better to be prepared in case it materialises.


A consumer asked for my views about the Family3 policy. He was approached by an agent and was not sure if this is a good policy to buy.

I advised the consumer to read my FAQ on Family3 in my website, (Search for Family3). There are a few FAQs written on this policy.

I also advised the consumer to read my book, Practical Guide on Financial Planning, available at and to attend the educational talk on financial planning organised by FISCA (

I hope that consumers will spend some time and money to be educated, so that they do not buy the wrong insurance product from an insurance agent who is unable to explain the product to the consumer and cannot be trusted to give the right advice to the consumer, due to the conflict of interest.

Tan Kin Lian

How people vote

Contributed by DareToAct
In "Why empathy matters?", the author J D Trout pointed out that it is dangerous to think that people know what they want and can choose what they want. "When we choose poorly, these failures do not have a pure pedigree.  They are part individual irrationalism, part unconscious influence, and part lousy choices."

When we are unhappy with the behavior of our first choice, or that the logical "right" choice  disappoints, we might behave irrationally, especially under influence, and choose one of the lousy choices available.

Underestimating the potential of irrational voting can be detriment to any incumbent.    


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