Saturday, December 29, 2012

Pay on instalment, with no interest

Here is a tip on how you can pay on installment, with no interest, and still enjoy the discounted cash price (offered on a sale).

Some credit cards also allow payment on instalment with no interest, but the price that you pay is usually not the discounted cash price (offered on a sale).

Medical fees for seniors in Hong Kong

Happy New Year

Pastor Niemoller

Installment purchase

A large retail store charges interest rate of 46% to 52% on installment purchase. The calculation of interest rate is shown here.

Danger of stopping premium payments

Ms Koh (not her real name) bought three life insurance policies in 2001. The agent told her that she can stop paying premium after 10 years and the policy will still carry on. After 10 years, she stopped paying the premiums.

When she enquired about the status of the policies two years later, she was shocked to learn that the premiums were actually being advanced as a loan charged to the policy and is accumulating interest at a high rate. The customer service staff told her that the policies will reach zero value after a few years, due to the mounting loans.

She was shocked that her premiums of more than two hundred thousand dollars could become zero. She cancelled all of her policies.

Ms. Koh might have been mis-informed by the customer service staff, but the service quality was bad, slow and unreliable.

When the agent sell the concept of stopping premium payment after the policy has acquired an adequate cash value, the agent did not explain clearly how it worked or that the "critical year" depends on many factors. They just wanted to close the sale with some vague promise, and let the customer and the office staff face the problem many years later.

Friday, December 28, 2012

The spirit of being helpful and positive

A man was cheated by a forex trainer of $5,000. He signed on his credit card to pay the fee for the training but decided not to attend the course. The trainer refused to refund the fee and mocked him. He was pressed by the bank for the monthly payment. Feeling distressed, he threatened to commit suicide.

After I posted his story in my blog and Facebook, there were several unhelpful comments from people who wants to judge others; why commit suicide for $5,000, why so stupid, you deserve it, and the like.

They reflect the character of many people; those who are negative, and have the courage to hit someone who is down. Few people came forward to speak on behalf of the distressed person.

One lady sent an e-mail to me. She asked, "How can I send $1,000 to help him tide over this problem? The $1,000 is money that I donate yearly to a charity anyway; it would be useful to help him." This kind person is aware that the money could be wasted for a lost cause; it does not matter to her; she does not want to judge; she only wanted to help.

I want to share this story about what is being helpful; what is being positive. I hope that it will encourage more people to be helpful and positive. Avoid being negative and judgmental.

For the people who are suspicious, I like to share this additional piece of information. I spoke to the young man. He had many personal problems; he had to take care of sick and disabled parent in a nursing home; he was cheated before; and the $5,000 is just the last straw.

One can be positive and kind, even if one does not have the full information. You have the choice to be like the majority of negative and judgmental people; or to be like the kind person.

Happy New Year.

Splitting of the votes

A few readers drew a parallel between the Punggol East bye-election and the Presidential Election. I want to take this opportunity to give some background.

In July 2011, a few people urged me to stand for the Presidential Election, so that there would be no more walkover. Tan Cheng Bock had expressed his interest to contest, but he was considered at that time to be a PAP person There was a strong chance that he would be disqualified, as he did not have a strong financial background, as Andrew Kuan was rejected at the previous election.

After some hesitation, I decided to collect the nomination form. Several of the non-PAP parties pledged their support for me at that time.

The situation changed when Tan Jee Say also expressed interest in the election. Based on his background, he should not have qualified, following the rejection of Andrew Kuan.

It was a surprise to my team that all four candidates were approved by the Committee. I had a meeting with Tan Jee Say to decide on one party to withdraw, but there was no agreement. The rest is history.

I want Singaporeans to know, especially those that are not so circumspective, that if I had not entered into the election, there is a high chance that it would be no election like in 2005, i.e. another walkover.

Through my involvement, I have made a contribution in insuring that  there will be a election at future Presidential elections, as the recent decision of the Presidential Election Committee had opened the field to many thousand possible candidates.

I do not have any intention to take part in a future election, but I hope that my small contribution to opening up the election process would be appreciated.

Rejection of Travel Insurance Claim

A school boy sustained a fracture on an overseas trip. He was covered under a group travel insurance policy. The insurance company rejected the claim submitted by the parent, for a reason that is not clear, and potentially wrong. The parent sought my views.

Shocking experience with Investment Linked Policy (ILP)

Many consumers bought investment linked policies (ILP). They were actively marketed by insurance agents as a good solution to provide insurance protection and to achieve the gains of long term investing in stocks. The benefit illustration project returns of 5% and 9% (which is rather optimistic).

Most insurance agents did not explain to the consumer that the high charges of the ILP take away a large part of the non-guaranteed return from the investments, leaving almost nothing to the consumer for the first 15 years.

Read the experience of "Ms. Koh" who was shocked to learn that her ILP gave her a large loss after 12 years, when the stock market actually performed well. Her shocking experience reflects what has been happening to tens of thousands of unsuspecting purchasers of many ILP policies.

In recent years, some insurance companies have been bold in increasing the charges to unconscionable levels. If you have bought an ILP policy, you should read this article carefully and look at your benefit illustration to see if you are in a similar situation to "Ms. Koh."

If you have been misled or badly advised by the insurance agent or financial adviser, you should also consider writing to the Monetary Authority of Singapore.

Investing in blue chip shares

Isabel attending my course on financial planning. She also attend the previews of other courses on financial planning, investing and trading conducted by other trainers, which were actively marketed. She sent this message to me recently.

"A Merry X’mas and a Happy New Year. After all the previews that I have gone through, I find the traditional way taught by you is still better as the backbone and peppered with some trading for cash flow. Isabel".

Thursday, December 27, 2012

Big cut in maturity benefit

Many consumers buy life insurance with a large amount of non-guaranteed bonus, especially the bonus that is supposed to be paid on maturity. In the benefit illustration, you will see that the non-guaranteed bonus is low during most of the duration and they escalate sharply during the last few years or the last year. You must be wary of this type of projection, as the bonus may not be taken away, for no justifiable reason. This is what has been experienced by this policyholder. At one time, this was not possible, i.e. the regulator will question the insurance company that cuts the bonus with justification, but today, nobody cares. Be careful and avoid this type of policy.

Here is an example of a policy with a stepped up non-guaranteed bonus during the last few years. Consumers should avoid them.

Tricked by a forex trainer

The consumer share his experience on how he was tricked into attending a forex training course and the distress that he suffered as a result of this incident. He wants other consumers to avoid falling into this trap.

Wednesday, December 26, 2012

Keeping the town clean

I prefer that the role of keeping the town clean revert back to the HDB, as it was in the old days. It does not make sense to waste the time of lawmakers, i.e. the MPs, to do the nitty gritty work of collecting the monthly charges and engaging the contractors.

In most other places, the town councils have much wider responsibilities in looking after the local services, such as buses, schools, libraries and the like. These councils are likely to be elected directly by the residents and are not the same people as the lawmakers.

The situation is quite convoluted in Singapore, due to the unnecessary petty politicking. If the lawmakers have to waste time in looking after trivial matters, they cannot spend the time to do their proper work, which is to represent the views of their voters in Parliament and to give meaningful debate to the laws that are to be passed. Our laws are quite outdated, and many key issues are not resolved.

It is time for our government leaders to realize that there are important issues that need to be addressed, and that the lawmakers should not waste their time on activities that can be better handled by other people.

Tuesday, December 25, 2012

Sale of Town Council software

I continue to be amazed with the happenings in our town councils. It seemed to have grown in to a monstrosity, with so many issues. It would have been better that the town councils were run independently of the elected lawmakers in the first place. We now have to face a complicated and convoluted arrangement arrangement, which makes life very complicated for every body.

Monday, December 24, 2012

Dangerous to give investment advice

An elderly lady, whom I shall refer to as "Nancy", made a loss of nearly $200,000 from her investments. She is not knowledgeable about investments, but was assured by the relationship manager of a local bank that he would recommend good investments to her, based on his expert knowledge.

Nancy trusted the young man, who gave the impression of being knowledgeable and called her to make many recommendations. Nancy accepted some of the recommendations and invested her money. She trusted that the young man would monitor her investments and contact her about the progress.

He only called her about the investments that made a profit and encouraged her to sell them and re-invest in other investments. Nancy asked about the other investments, but the young man assured her not to worry and he would call her when they made a profit.

As the months go by, some of the investments went really bad. In one case, the loss was nearly 50% on an investment of $200,000. It was a terrible blow to Nancy as she was not aware that such a large sum was being invested. Nancy held on to this investments but decided to sell some other investments at big loss.

This is my advice to the young people who think that they can advise other people about investments. Investing is not easy. If someone ask me for advice on specific shares and whether the shares would move up in value, my standard reply would be, "the current price of the share reflects the views of all the people in the market. The share price can move up or it can move down. Nobody knows for sure".

If, with my experience, I have no clue about which shares are good value for money and which shares would move up, how can a young person know better? It is dangerous for an ignorant and inexperienced person to pretend to be an "expert" and to mislead elderly people into making investments that can lose a lot of money. It is dangerous to allow them to give investment advice to elderly people under the banner of a trusted bank.

Ask Mr. Tan

You can search for many articles here:

Do not trust your bank to advice on investments.

Many banks are employing young people to be "Relationship Manager" or "Wealth Manager" to advice elderly people, with plenty of cash, in their investments. These RMs are not experienced in the world of investments and are giving bad advice to the elderly people, causing them to suffer large losses. The RMs main focus is to meet the sales targets. They are recommending questionable investments created overseas and are not suitable to be sold to unwary retail investors. 
Read this sad story about the experience of "Nancy"

Nancy said, "Why are people in Singapore so dishonest nowadays?"

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