Give testimony in court

Recently, I was asked to give an affadavit (i.e. a legal statement) on a dispute involving NTUC Income and other parties. The transaction occurred during the time that I was the chief executive. The lawyer said that I may have to attend court and asked me to set aside two days for this attendance.

I asked, "Will I be paid for the time that I have to spend?" The lawyer replied that I could indicate my cost and he will add it to the bill to be charged to the party that asked for my testimony.

Finally, the case was settled out of court. I did not have to attend court after all.

Lawyers are paid a very large fee for the time that they spend in handling a case. Witnesses should also be paid in a similar fashion. I hope that people are aware of their rights and are adequately compensated for their time. They will be more willing to attend court and be witness.

Get a witness

If you meet with a traffic accident, find an independent witness. Get the name and contact number of the witness. Ask the witness to record down a statement about the events leading to the accident. This may turn out to be useful.

Some people are worried about being a witness, in case they are called to testify in court. This is unlikely to be needed. An independent witness' statement is likely to carry a lot of weight in deciding on liability, outside of court.

If the witness has to attend court, the witness is entitled to get a generous allowance based on the time that is spent, incluidng waiting time. The amount of the allowance can be agreed with the party that calls the witness.

I hope that more civil minded people are willing to be a witness. This will help to resolve disputes between the parties. It will help to speed up settlements.

Tourists come to Singapore

I returned to Singapore from Jakarta last night.

I was surprised to find Terminal 1 packed. It was the first time that I cannot get a trolley for my bags. There were large groups of young people from Japan and Korea. It must be the school holidays. It is boom time for tourism in Singapore.

I also saw many Singaporean families leaving for their holidays abroad.

Investing in Unit Trusts

Dear Mr. Tan,

Why are the charges from the fund houses so high about 5% for the sales charge whereas fundsupermart only charges at about 2%.

REPLY:

Each fund distributor decides on their level of upfront charge. It depends on the service and time that they adviser has to spend. You have to decide on the channel that works best for you. Do try to seek a low cost channel, so that you do not spend too much in the charges.

Risky Business Venture

Dear Mr. Tan,

Thank you for your guidance and your "matter of fact way" of explaining things.

I stumbled upon oilpod.com recently. Basically you buy the rights to minerals in USA through oilpods.com. Your name gets registered as a mineral owner in the US. Your capital funds the hi tech exploration.They show geographical printouts of mines.

The company is Power Basin, listed in US. The payout is quite interesting:

* 0%: from 1 to 6 months
* 9% per annum: from month 6 to 12
* 30% per annum: year 1 to 3.5

Residue income from 3.5 years to end of economic life of mines abot year 12. This seems to be a great alternative for annuities.

REPLY
I am usually suspicious about investments of this type. I keep away from them, in case it is a scam. (Note: I do not make any judgement of this particular investment).

Pick the right stocks

Dear Mr Tan,

Thanks for your advice previously. The STI really corrected till 3300. I am keen to collect some stocks at this kind of cheap price now.

Can you pick some stocks for your readers to consider at the moment? The trouble is, everything has corrected so much that I cant even recognise most of them.

I know STI-etf will be a safer high-risk investment compared to stocks but I am more keen on bluechips as the returns will be higher.

REPLY:

I am not able to advise you on picking the stocks. You can ask your stockbroker. They have their research team.

Misled into a Dual Currency Investment

Dear Mr. Tan,

When my foreign currency matured recently, the bank consultant got me into dual currency investment. He sounded very logic that US dollars will further depreciate and that he believed that the Australian dollars will appreciate. This is a month tenor. He did not work out the exact loss I would face if the situation is not favourable to me.

After I read your article in you website, I felt terrible. What if I lost when it matures on 14th December. This is my savings for the past 18 years. I had put it in fixed deposits all these years and never thought I could be persuaded into this foolish act of mine.

What is your advice to me if I got the other currency and not the base currency. Should I just put the Australian dollors into a fixed deposit? I want to thank you for enlightening me in many of your articles.

REPLY:

If you do not wish to take any risk, you should keep the money in Singapore dollar fixed deposit and earn 2% interest. You can also invest in a money market fund or in Government bonds.

If you invest in foreign currency, you can take the risk and hope for the best. You will earn a higher interest rate, but this could be offset by the possible depreciation in the foreign currency.

The foreign curreny may appreciate and give you a double benefit. Read this FAQ: http://www.tankinlian.com/faq/foreign.html

I am not able to give specific advice on which currency to invest in.

Insurance for disabled child

Dear Mr. Tan,

My son suffers from an Autism Spectrun Disorder (ASD). My wife and I worry about his insurance needs. We have consulted a few insurance advisers but they are unable to tell us whether their companies are willing to insure our child.

Underwriters are generally unfamilar with ASD. Many have the misconception that ASD people are violent and would do harm to themselves or others.

My son is very mild on the ASD spectrum and he currently attends a mainstream primary school. I would really like to cover him under a Living Policy (for permanent disability or critical illness) and a medical and hospitalisation policy (e.g. Medishield or private Shield).

How do we go about getting him covered? My son has been diagnosed by a few highly qualified psychologists to be very mild on the ASD spectrum. What else would an underwriter require? Would the underwriter recommends their panel doctor to examine my son? Who would pay for the consultation?

I hope you could recommend an agent to help me find the insurance application.

REPLY

I suggest that you approach two insurance companies (e.g. NTUC Income and Aviva) and see if they are willing to insure your son.

If both are unwilling, you have this option:
1. Open an investment account (e.g. unit trust) for your son and make monthly savings into this account.
2. If your son needs medical attention, see if you can send him to a B2 or C ward, where a large part of the cost is subsidised by the government.
3. You can pay for the medical expenses out of the investment account.

Dr Money's articles in The New Paper

Larry Haverkamp (Dr Money) wrote many articles that were published in The New Paper over the past years. Here is a collection of his articles. They are written in a simple style, and quite fun to read.

SIMILAR INGREDIENTS, BUT 'TWIN SPOTS' BAKE UP
Company above board? CHECK HERE
GUARDING AGAINST BIG LOSSES
Investing v Gambling What's the difference?
Make credit cards work for you
How to make your CPF money work HARDER
What CPF changes mean for us
It comes down to cost and benefit
Health insurance and what you need to know
Know what you'll get from your investment
Are you on the 'suckers' list?
All you need is $250 a month
In the end, it's about reducing risk
Do you have a SAFE ANNUITY?
Are we headed for a CRISIS?
Living in risky times
Do you really understand structured products?
The more, the merrier? Not for these equity-linked notes
Use credit card to buy shares?
Don't get carried away by short-term gains
Do your own homework
Time to pull back from hot market?
Home loan tips you'll want to know
BEWARE THE RISKS
What you don't see may hurt you
Can you reap big gains?
Beware agents' glib sales lines
First, learn the rule of 72
Move your money to make more
Hidden expenses of unit trusts and ILPs
$marter to keep your investments $impler
What you SEE may not be what you GET
What's the worst that could happen?
Is it time for you to refinance?
12 tax tips to save you money
Five home loan tips to get you going
Five money myths debunked
Will US home-loan crisis explode?
4 tips to help you pick funds
Are these funds worth your CPF money?
Better to be your own adviser
Secret doors to special deals
It's cheaper to go group than individual
Should you play the game?
That 2% rise may not mean a pay hike
QUIT YOUR DAY JOB?
CPF changes mean your stock porfolio can go up
Think long-term
If you have $3,000, you're rich
5 tips for tax breaks
Take a pause, Santa Claus
Crack the Da Insurance Code
It's a tricky investment
Many happy RETURNS?
INSURANCE PART 3 - Insurance policies fail to give promised returns
INSURANCE PART 3 - Insurance policies fail to give promised returns
Are we paying too much for INSURANCE?
Buying life insurance? Don't wait till you're too old
Should you invest in gold? - Yes
Your money is same when you retire
What you need to know about your insurance policy
But my China shirt's still CHEAPER
Meetings over Woes just beginning
Money well spent
Sell your home, the smart way
Read up (and read this) before buying that home
Before you take that personal loan, read this
Considering an investment-linked plan? Read the fine print first
Where to get $ to start a business
All the gain without the pain
9 things to ask your financial adviser
Want to join these billionaires? Be your own boss
Are you caught in a debt dance?
Finding the best scheme for your idle cash
S'pore, there's still room for improvement
Will raising rates help or hurt?
Caveman economics
Should you pay down?
Trust the way to make money?
Bluff your way to higher rates
Who would get her insurance money?
Investing? Keep it simple
Kids, grow your money
Invest more in your home
Your home is your best investment
Cracking the home loan code
Beat those high home loan rates
Save $$$ on your taxes
Right mix, and dough will rise
A cash crunch is coming!
Watch CPF limits
Should I go with ORDINARY or $PECIAL?
Take closer look at figures
Let sleeping dogs lie
Beware this HOT investment
Beware of structured products
WHO GOT RICH IN 2005?
Presents that make $en$e
Want to buy life insurance?
Are they good investments?

Scope of advice

Dear Mr. Tan,

I came to know your blog from "mypaper". I find that some of the financial/insurance planning info and tips you shared with us been very useful and informative.

I would like to seek your advise on the following question: Does the financial adviser restrict their advice to only investment? Do they give advice on financial planning such as expenditure, restructuring of loans, when requested by their clients?

REPLY

Most of the financial advisers that I am aware of, will help you to buy a financial or investment product. They earn commission by selling the product to you.

As part of their service, they will help to prepare a financial plan for you. But, I am not aware if they are able to help in restructuring loans. I suggest that you ask them directly.

Making a Third Party Claim

Hi,

I met with an accident recently. My vehicle was damaged as I steered it to my right to avoid the collision with the other party. It was obviously the negligence from the other party. The other driver apologized to me. I told her i going to claim from her insurance company and she agreed. We exchanged our particulars and she drove off for her work. There was no written agreement was signed.

I sent my vehicle to Idac center for assessment. I wanted to make a third party claim, but was advised by my workshop to make a own damage claim first, as the other party might go back on her words.

The workshop will try to help me to do a third party claim against the other party for the Excess, NCD and the loss of use. Is this the proper way of claiming insurance?

REPLY

It is all right to let the workshop make the third party claim on your behalf. If they are successful, you can ask your insurance company to allow you to keep the No Claim Discount. I hope that you have contact with the other party and can ask her to keep to her word.

Land Banking

Dear Mr. Tan,

The focus of land banking is to purchase a plot of land in the UK, US or Canada. Returns are projected within 4-6 yrs an estimate of 40-60% return. Investment amount is at least min SGD 15000. Returns are realised at point of an exit where 60% of the investors agree to a sale. Said to be next safest to fixed deposits.

Landbankers claims intensive research has been carried out before making it available to investors. Heard several scams especially in the UK.

In Spore, landbanking seems relatively new. They are not under MAS supervision. The promoters paint land banking as a safe investment very low risk. Share your thoughts?

REPLY:

This type of investment lacks liquidity and transparency and is risky. You can be stuck with an illiquid investment for many years. This is best avoided.

Wealth of information

Dear Mr. Tan,

I recently came upon your website and found an amazing wealth of information. I'm sure I'm not the only one who is very thankful for your efforts: the information is clear and well-explained, and answers a lot of questions that I have at the back of my head.

Very often, it is difficult for me to find answers to these questions because (i) the people I know do not possess holistic knowledge of insurance, investments or (ii) the people who know have a vested interest in giving advice.

Thank you very much for sharing your knowledge!

STI Exchange Traded Fund

Hi Mr Tan,

I'm interest for the low cost fund for STI ETF. However I'm really not sure how to start or choose the fund.

1) Is the STI ETF a secure funds to invest for long term? I understand that the STI is just a "counter"?

Reply: The STI is invested in 30 counters that make part of the Straits Times Index. It is traded on the exchange as a "counter", but the value of this counter is based on the underlying counters.

Read this webpage:
http://www.straitstimes.com/FTSE+ST+Index+Series/FAQ/FAQ.html

2) Is there a website that explain more about STI ETF?

Reply: Read this website
http://www.sgx.com/PSV/securities/etf/ETF_Investing.shtml#Section_3

3) Is the STI ETF considered as one fund or are there many funds under STI ETF? Which of these funds is most profitable?

Reply: The STI is a fund. There are other ETF (exchange traded funds) that can be bought through the Singapore Exchange.

Premium rates for Term Insurance

Dear Mr. Tan,

My insurance agents are not keen to sell Term Insurance. They discourage me from buying term insurance. Their premium rates are not as attractive as those indicated in your FAQ.
Where can I get good term insurance rates?

REPLY

You have to call the insurance company directly.

According to a newspaper survey about a year ago, NTUC Income offers the most attractive premium rates. I am not sure if other insurance companies have since come forward with attractive rates. Perhaps you can try Aviva and AXA as well.

I have set out some indicative premium rates in the FAQ. They are not the actual rates that are being charged by any specific insurance company now. I have calculated them, based on the mortality experience in Singapore and with allowance for expenses.

If you find any insurance company that offers premium rates around the level indicated in my FAQ, you can accept them. Even if the premium rates are slightly higher, you will find that Term Insurance is quite affordable.

http://www.tankinlian.com/faq/term.html

Inflation and Financial Planning

Dear Mr. Tan,

How do I take account of inflation in financial planning? I am afraid that the money that I have saved and invested will be eaten up by inflation over the future years.

REPLY

I shall be posting a FAQ on this matter next week, after I return to Singapore (as I am now in Indonesia).

I will give some simple practical advice on how to deal with this matter.

Evaluate an insurance plan

It is easy for you to evaluate an insurance policy, if you look for a standard cover and ask a few questions.

The standard covers are:

* Term Insurance
* Decreasing Term Insurance
* Motor Insurance
* Home Insurance
* Medical Insurance

Most of the standard policies provide the standard cover. Some insurance companies offer some frills (which are usually unnecessary or unlikely to occur), in order to justify a higher cost. Do not fall into their trip.

Get a few insurance companies to quote their premium rates for the standard covers. Make a comparison and select the policy that gives you the best value. If the cost is within 10%, you should select the insurance company based on the quality of service and their trustworthiness.

Evaluate a loan

Which lender gives you the best terms for a loan? How do you evaluate it?

You can ask a few simple questions, and compare the terms on the same basis. Here is an example showing how to evaluate a study loan.

http://www.tankinlian.com/faq/study.html

Buying a Shield Plan

Are these questions relevant to you?

1. I am provided with medical benefit by my employer. Do I need to buy a Shield plan?
2. What type of plan should I buy? Medishield (from CPF) or a private Shield?
3. Should I buy the rider to cover the Deductible and Co-insurance?
4. Should I buy a “as charged” plan?
5. Should I buy a plan with a high lifetime limit of $5 million.
6. How do I convert from Medishield to a private Shield plan?
7. Can I cover my parent under a Shield plan?
8. Can I pay a level premium for my Shield plan?
9. How much of the hospital bill is paid by the Shield plan?
10. How can I avoid double insurance?
11. Should I use my Medisave or pay by cash?
12. Can the insurance company refuse to renew my medical insurance, if I make a few claims?

You can find the answers in this FAQ:
http://www.tankinlian.com/faq/shield.html

Flexi-Link is a better choice

I have been recommending the Ideal plan (ID7) from NTUC Income, as it allows 100% of the monthly savings to be invested. The policy fee is $4 a month. It is available from the Business Center.

Someone told me that the Flexi-Link (a single premium ILP plan) is actually better than ID7. It has the following features:

1> Inital deposit should be at least $5,000.
2> Allows recurring top up: $250 quarterly, $500 half-yearly and $1000 annually
3> Allows ad hoc top up: $1,000 per single premium top up
4> No policy fee after account cash value reached $15,000.

If you have an initial sum of $5,000 to invest, it is better to choose Flexi-Link instead of Ideal (ID7).