Saturday, December 04, 2010

Expensive technology that did not work

The bus stop outside SMU showed the expected time of arrival of each bus service. It showed my bus to be arriving in 7 minutes. It actually arrived after 1 minute. The expensive technology, using GPS and transmitting to the bus stop, was out by 6 minutes.

Bus or MRT

I took a bus from SMU to my home. It is a direct bus. I was able to get a seat. The journey took 30 minutes. The alternative is to take the MRT and change to a bus, which will take the same time and require more walking.
Many people take the MRT out of habit, but if they learn how to take a bus, it can be more convenient.

Housing loans - SIBOR or SOR rates

Read this explanation on the difference between SIBOR and SOR (swap rates).

US employment report - a source of concern

The US employment report for November showed only 39,000 new jobs created, when economists were hoping for 140,000 jobs. The unemployment rate jumped to 9.8 percent.

This is a matter of serious concern. In spite of stimulus and quantitative easing, the US economy is not able to create the jobs needed to keep their people employed. The problem faced by the US will cascade around the world. We can expect tough times ahead, possibly a double dip recession, maybe even a global depression.

The problem faced by the US can only be solved through protectionism in some form. I expect the US to adopt some protectionist measures, although it does not have to be large scale. This will be a watershed, as the US had been promoting globalization for two decades. The boomerang had swung back to hit them.

I believe that some form of protectionism will be good for most countries. It allows each country to have its domestic economy and develop its own identity and culture. It will allow the income gap to narrow in the country and hopefully, keep the cost of living down.

Globalization has benefited only a small proportion of people, at the expense of the well being and financial security of large numbers of people. It has caused damage to the environment and other negative social impacts, including a declining birth rate. In my view, the benefits of globalization is outweighed by the harmful effects.

Singapore has benefited from globalization, including luring the super rich to avoid taxation by moving their profits here. We will lose this source of revenue, but we can cope. After all, Singaporeans are an educated and hard working people. Let me make a honest living, and not enrich ourselves at the expense of other countries. Maybe, we will see the property prices come down to more affordable levels!

Tan Kin Lian

Living on accumulated savings - DIY

This article explains how a retiree on live on the accumulated savings on a DIY basis, without buying a life annuity.

Wikileaks and Singapore

LKY's private conversation and candid views with US officials have been leaked out in WikiLeaks and is causing some red faces. Read SGEP.

Social insurance and quality of life

The lives of Singaporeans would have been much better if the Government had introduced some social insurance schemes, e.g. old age pension and unemployment relief, instead of relying on "self reliance". The weaker and less educated cannot cope with their current needs, let alone save for the future.  Read this article on Social Insurance.

FAQs in TKL website

Some of my readers find it a hassle to go to the "Ask Mr. Tan" page of my website and search for the article using the keyword. They ask me to give them the direct link.

My purpose is to educate the readers on how to search for the relevant articles and FAQs in my website. It may take a little trouble, but will give them the reward. When they learn how to search the FAQs, they can look for other topics. They may also find some of the recently posted topics (under the Latest tab) to be useful and relevant to them.

Try these links and bookmark them:

Ask Mr. Tan:

Tan Kin Lian

Health care and Medishield

 Many consumers continue to send questions to me about whether they should choose Medishield or private Shield. I am not able to answer their questions individually. I refer them to my website, and ask them to search for the articles with the keyworld "Medishield:" or "health care".

They should also buy my book, Practical Guide on Financial Planning, and attend the educational talks organised by FISCA. They must spend some time and a little money to be educated and save many thousand dollars by avoiding the wrong decisions. They should not ask advice from the wrong person or give incomplete information that lead to the wrong advice, as explained in this FAQ.

Tan Kin Lian

Doing stupid things

Do you know why government and corporate bureaucracy continue to do stupid things that inconvenient the public and their customers, and achieve no useful purpose? Read this story. The trouble is that these bureaucrats are not paid peanuts (unlike monkeys), but draw fat salaries!

SGEP Portal

This portal contains a selection of articles from blogs, local media, international media and party websites, touching on issues affecting the lives of Singaporeans. They are relevant for Singaporeans to make the right decision in voting at the next general election. Visit SGEP daily (it takes only 10 minutes daily) to get the gist of these issues and a wider coverage (apart from the local newspapers).


CPF Life Annuity - good or bad?

Many people ask me for guidance on whether they should take up the CPF Life Annuity. How does it compare with the Retirement Account and a life annuity from an insurance company?

Here are the key facts:

1. The CPF Life pays the annuity for life and gives a small bequest to the beneficiary on death prior during the initial period (which varies according to the annuity option. The Retirement Account pays a higher payment and runs out after 20 years. The balance of the account is payable to the beneficiary on death during the 20 years.

2. The difference between CPF Life and Retirement Account depends on how long you live. As you do not know, there is no point in trying to do the calculation of "which is better". The actuary for CPF will do the calculation based on the average lifespan. You cannot be smarter than the actuary.

3. As the actuarial calculation is based on the average life expectancy of people in good health, you should avoid the CPF Life annuity if you know that you are in poor health.

4. There is a bonus payable to most people who take up the CPF Life annuity, so if you are given a bonus, it is better to opt for the CPF Life. If you find the bonus to be too small, say less than 5% of the invested sum, it may be better for you to stay with the Retirement Account.

5. The underlying yield for CPF Life and the Retirement Account is the same, i.e. 4% per annum. This is higher than the underlying yield payable by a life annuity from an insurance company. So, it is better to keep your money with CPF, either in CPF Life or the Retirement Account.

The CPF Life is an example of many complicated schemes that have been introduced by our Government. The general public is confused. This is made worse by the nature of Singaporeans, who are generally quite naive financially, but they like to seek advice from the wrong people on "which is better". As the calculation involve many possible scenarios, it is not possible to get the "right answer".

I hope that the Government will sort out this mess and make things simpler for the citizens, rather than leave the mess  to cause a lot of confusion.

Tan Kin Lian

Friday, December 03, 2010

Zeitgeist movie and Tommy Wong’s book

Read about “Guru Dick” and the concept “We are all one” in Tommy Wong’s book “Wisdom on How to Live Life (Book 1)” and watch them in the movie “Zeitgeist: Addendum”.

The book can be ordered here.

Private shield and Liver Transplant

Insurance agents tell the consumers that the cost of a liver transplant is $100,000 and that it would be covered under a private shield plan.

Before you take the advice of the agent, you should consider the following:
a) What is the chance of needing a liver transplant?
b) Where are you going to find a liver when you need it?
c) What is the total premium that you have to pay for the private shield plan?

Some of the risks, such as the need for a liver transplant, is quite remote. You should not be spending too much money to protect against these risk. The cost of a private shield plan may take away $40,000 over a lifetime. Why pay so much (a certainty) to insure a risk ($100,000) that is quite remote?

Social insurance

There is a role for social insurance to deliver the basic needs for the population in an efficient way, compared to private insurance. Our government leaders should understand its strengths and weaknesses and find the right balance between social and private insurance.

There is a mistaken belief that private insurance is more efficient. It is actually more costly to use private insurance to deliver the basic needs that are required by most people.

Not insured under Medishield

Some people are worried that their parents are not insured under Medishield. They try to apply for Medishield now, but the application is rejected as their parent has some medical condition. They need not worry. Here are some tips on how to cope without insurance.

Ask Mr. Tan

Do you hate Singapore - a response

Read the response by C H Yak in SGEP.

The article has many interesting photos of Nanjing, showing the remarkable progress made in the city. He compares life in Nanjing with Singapore and raises several issues that should be considered at the forthcoming general election in Singapore.

Minimum wage - a successful government policy

Many countries have implemented the minimum wage. It has been voted as the most successful government policy in the UK according to a survey by BBC. Read SGEP.

A big sacrifice - Goh Meng Seng

Goh Meng Seng has to make a big sacrifice in going into politics. He believes in giving a choice to the people of Singapore. Read SGEP.

Thursday, December 02, 2010

The monk, the clown and the minister

Who are these people and how do they affect our politics? Read SGEP.

House of Commons debate on Alan Shadrake

Read the debate in SGEP

Potential danger of joining an insurance company

The wife of an ex-insurance agent shares the unhappy experience faced by her and her husband who quit his job to join an insurance company. She explains some of the unethical practices that the husband had to practice to meet the sales quota. She is glad that he has given up the insurance job  and had returned to an ordinary job.

Ask Mr. Tan

CPF Life annuity - case study

Here is a case study of a person aged 58 who has to decide on whether to stay with the Minimum Sum scheme or to convert into a CPF Life Annuity.

Ask Mr. Tan

High cost of operating a business in Singapore

Sent to Forum Page, Straits Times
I recently looked at the cost of renovating a small office of 1,300 sq ft and was shocked to receive several quotations exceeding $70,000, in spite of my modest requirements. This shows how costly it is to operate a business in Singapore.
Included in the cost is a sum of $3,500 to obtain the approval of the authority for fire safety. I learned later that this is the fee payable to professionals to certify the safety of the renovation. This same fee is charged for a small premise as well as a large premise of 10,000 sq ft.
It does not make sense to impose such a costly requirement for a small premise. I suggest that renovation of small premises should be exempted from the need to get the certification of a professional. Perhaps this certification should only be required in exceptional cases where the premises have activities that could impose a danger to fire safety.
Over the years, I have heard many complaints from small enterprises about the high cost of operating a business in Singapore. Several initiatives were taken to address these complaints. I am surprised to learn now that these initiatives did not seem to address this regulation, which seemed to be unnecessarily costly.

Tan Kin Lian

Belgian court fines Citibank over Lehman sales

BRUSSELS — A Belgian court fined Citibank 165,000 euros (216,000 dollars) on Wednesday after determining it used "false advertising" to sell Lehman Brothers investment products without warning clients of risks. The court found that Citibank breached laws on commercial practices, having "minimised the risks" and having "led inexperienced investors to put money into the American bank." The tribunal said Citibank did not stop selling the products even though Lehman's credit rating had been downgraded.

Citibank sold 128 million euros worth of Lehman Brothers bonds to some 4,100 clients in Belgium. These bonds became worthless after the collapse of Lehman, the trigger for the world's deepest downturn since the 1930s Depression, in September 2008.

In February, Citibank said more than 97 percent of these clients had accepted a settlement, some of whom took a 65 percent redemption on the spot rather than wait for a potentially a higher figure later. For the remaining 120 or so clients who pursued the action, the court ordered Citibank to match the on-the-spot offer. A spokesman for the bank told Belga news agency it would appeal.

Belgium's Federal Economy Minister Vincent Van Quickenborne said the verdict was an "unequivocal condemnation."

Declaring medical condition

This consumer is not sure if his medical condition needs to be declared and if it affects the underwriting of his application.  What is the correct approach? What should he do, if the terms imposed are too harsh?

Ask Mr. Tan

10 Tips on Financial Planning

Here are 10t ips on financial planning. Hope you find it useful.

Ask Mr.Tan

Wednesday, December 01, 2010

Victor Foo and SCCCI

I know Victor Foo personally and wish to endorse his effort to get elected into the SCCCI council.Victor is positive and reliable and will meet his promise more activities and representation for small businesses.  I encourage my blog readers, who are members of SCCCI, to vote for Victor Foo. 

Dear Members of SCCCI

Financial advisers willing to sell term and ETF

Hi Mr. Tan,
I am currently recruiting advisers especially tied agents who felt that their agencies have not been providing good support to them. I am aware that a number of agencies/firms taught their agents to sell based on the highest commissions rather than needs of their clients with very few training provided. 

Under my team, advisers will not be judged based on how much revenue they can bring in but on how clients are being helped. I imposed no sales quota. I’ll hand-hold these new advisers on how to do recommendations based on needs of their clients. I am product neutral as long as recommendations are suitable for their clients. This is unlike other agency managers who may be unhappy with low cost recommendations such as term and ETFs. Moreover, training provided easily exceeds 90 hours per year. This is way above the regulatory requirement of 30 hours.

My advisers will not charge an advisory fee unless they have significant relevant experience and academy qualifications. I do not consider advisers from tied agencies to have the relevant experience unless they can show evidence of selling products based on needs. In the meantime, how these new advisers are going to earn a decent living selling suitable products is going to be an issue. One of my ideas is to get clients to come to our business center for consultation during office hours. Clients indirectly pay for the advisory fee by incurring their own travel expenses and the inconvenience of taking time off from work. Even if these advisers do not charge a fee for the consultation, the reduction in travel and marketing expenses for these advisers will be significant because the profit margin for selling low cost products is higher when expenses are lowered. 

My recruitment page can be found here:

Thank you for posting this on your blog. Appreciate it.

Wilfred Ling

FA Associate Director
Promiseland Independent Pte Ltd

10 tips on buying insurance

Here are 10 tips on buying insurance. It is written for consumers.
Ask Mr. Tan

Median income grew by 4.2%

Read this story:
Although the median income has increased, it barely covers inflation. Furthermore, the lower income workers hardly earned any increase and have to cope with higher cost of living.

Talk by Jacques Attali - Is the Global Economy still in crisis?

I recommend my blog followers to attend this public talk - which I have registered to attend. Please read the details below and register for the talk. Personally, I like the socialist approach taken by France, rather than the free market capitalist approach followed of America (that has caused the global crisis). I like to hear what Dr. Attali has to say, and will also give my views at the seminar.

If you register for this talk, please send an e-mail to I want to talk to you about the issues that you are interested in or know that you are attending.

Tan Kin Lian

ASEF( is the only permanent institution of the Asia-Europe Meeting (ASEM) based in Singapore.
We organise various intellectual, cultural and people-to-people exchange programmes that promote mutual understanding between the people of Asia and Europe. So far we have conducted over 500 projects, reached out to over 15,000 participants in Asia and Europe.

On the 13th of January 2011 we are organising a ‘Public Talk’ by the French economist and writer Jacques Attali, one of the top 100 public intellectuals of the world. This event is co-organised with the Institute of Southeast Asian Studies (ISEAS). Singapore Foreign Minister Mr George Yeo will be present in this event to introduce Dr Attali.

This will be an open session where people from different walks of life living in Singapore would get an opportunity to interact with Dr Attali. The topic for discussion: “Is The Global Economy Still In Crisis?”
The venue of the event is the Ballroom, Raffles Hotel (13th January, Thursday, 10.00 am to 12.00 noon)

BEST - Business Game

Go to this website:

Watch the video to learn how to play this game.

There will be 7 games every hour. So, you can join the game at any time of the day or night! You can even join a game after it has started.

If you are not sure about playing the game, you can "View" any game and watch how the other players are doing. If you join the game and do not wish to submit any input, the software is intelligent enough to simulate the input for you.

If you are the only real player in the game, you will be competing against 9 other simulated players. You should be able to perform better than them, after you learn the technique. But, at the initial stage, you may perform worse.

Wish you all the best!

Making reparations

Hi Mr. Tan,

After studying for some financial planning examination modules as well as reading up widely about financial planning, insurance and investments, I have come to realise that I have sold many products of poor value to my clients during the last almost two years I spent at an agency of a large insurance company.

Being naive and new to the industry back then, I readily accepted products such as anticipated endowment plans and regular-premium ILP life insurance as good and beneficial for my clients and myself. Like many of my colleagues, I trusted my manager and company to teach us the right thing.

It is only now that I realised that many of these products were taught to us based on half-truths, and in turn we recommended such products to our clients based on such half-truths. When I raised such issues to my colleagues and manager, they persisted in rhetoric that we were truly benefitting our clients with such products, and even that the half-truths were necessary for them to take up the beneficial plans. Later, possibly knowing that I know better, I was persuaded to leave which I was more than happy to do so as I could not continue to do things against my conscience. My colleagues are still spell-bound by their managers and perhaps the money and incentives they got from the sales of such products. I know them to be good-natured and well-meaning people, but alas I feel hurt to realise that many of them think that I'm just trying to create trouble when I tell them about the serious downsides of the products we were selling.

I feel very bad and guilty that many of my clients will be shortchanged as a result of such plans which neither insure them adequately nor prepare them for retirement. Insurance agents face a lot of rejection, and I feel that I have betrayed the trust of these people who were kind enough to give me a chance to handle their finances.

I am moving on to an ethical independent financial advisory firm where I feel I will be most able to give ethical and competent advice (low cost funds and term policies), but I still feel bad for the financial damage I have potentially caused to my clients. I feel that I should tell them the truth I have realised about the products they have taken up, but I worry about the potential repercussions I might face. While I feel that it is good for them to know as their policies are still young and still manageable, I think that many will misunderstand and think I am just trying to sell other products to them even though I can receive a good income by just remaining mum and collecting the trailing commissions.

I even feel inclined to refund them the full cost of the premiums they have paid, but I realised that while the remuneration for such products were good, I cannot possibly do this as a bulk of the premiums also go to other entities aside from the adviser, and I have to consider my own survival.

I sincerely wish to make up for the wrongs I have done. I hope you and your blog readers can give some suggestions and advice on how I can make reparations to my clients.

Many thanks.

Monday, November 29, 2010

Great book on spirituality - one of the best!

Review of Wisdom on How to Live Life (Book 2) By Smudger "Spirituality"
Every decade or so comes a spiritual book which stands out from the rest. Don't get me wrong, I liked the Conversations With God series and still do, also Eckhart Tolle's The Power of Now increased our knowledge of spiritualty enormously, but Dr. Tommy Wong's Wisdom and How to Live Life (BK2) is, in my opinion, at least on a par with any of those. His BK1 with the same title blew me away with the shear depth of reasoning in the dicussions between Guru Dick and Harry and the student Tom. This sequel centres on a discussion between Guru Harry and student Tom only. It covers such vitally important topics such as 'how to find our interest and mission in life', 'why it is important to believe that God and we are one','the real problems in having attachments'and so on. I have only owned BK2 for one week, but read it through twice, such is the impact this book has had on me and will do so again until its teachings permeates through me. I can truly recommend both books and honestly believe you will not regret doing so.

The books can be ordered here.

Asking for advice from TKL

If you wish to ask for my advice, please take note of the points stating in this FAQ:

Some people expect to take up a lot of my time for free. They do not read the FAQs  or do their own homework before approaching me. When I told them that I do not have the time, they asked me to recommend someone who can advise them. I know of a financial planner who charges $200 per hour.

If you do wish to ask for time, be prepared to spend this money. Do not expect to take other people's time for free.

Sub-prime crisis in the USA

Many people saw the sub-prime crisis coming, except the people who are in charge. Will this also apply to Singapore? Although we do not have sub-prime loans, the low interest rate in Singapore is also inflating property prices.

Read SGEP.

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