Financial Adviser in Australia

The financial adviser in Australia play a useful role in helping the client to save money on:

* income tax
* superannuation (ie to save for retirement)

The tax system in Australia is complicated. The adviser help the client to arrange the financial affairs to get the best tax saving. The client his happy to pay for the advice, as it is more than covered by the tax saving.

In Singapore, there is little tax saving for most people. Hence, the financial adviser cannot give this value to Singapore clients.

The adviser can help the client to choose the right product. Unfortunately, the adviser gets a commission that is built into the product. This adds to the cost paid by the client. The value added by the adviser is doubtful, as it is impossible for any expert to advise on the fund or product will perform better in the future.

Lesson: Invest in a low cost fund (where you pay less charges to the fund manager and adviser). Invest for the long term.

Read in this FAQ.

Look after the interest of ordinary people

I watched an interview with a US Senator on television.

He argued the case for a change in some tax code, so that "the tax can be applied fairly to all". He said that it is his duty to reflect the wishes of his constitutents in the legislation that is being passed in Congress.

In the globalised economy, it is important that there should be voices to look after the interest of the ordinary people. The US system of democracy appears to handle this matter quite well. The issues that affect the ordinary people are brought up and aired in the Congress.

Importance of savings - a view from an elderly person

I met an elderly person. He told me about his approach towards financial matters, when he was young. I wish to share his thoughts:

* I realise the importance of savings when I was young
* When my friends spend their money on holidays, I keep them as my savings
* I bought property at that time, when it was cheap
* I own a few properties over the years, which appreciated in value
* The savings give me the confidence to do things on my own
* Many young people over-spend and had debts on their credit cards. It is stressful to be pressed to pay these debts.

Improve the call center of the Telcos

Dear Mr Tan

NTUC Income has a good call center. The customer does not need to push any button to speak to a staff. Why don't you get the call center of Starhub and SingTel to follow this customer friendly approach?

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REPLY:

I will be happy to give some suggestions to them, if they are willing to listen.

I know that they have already invested a large sum of money to install their telephone system. But, I have an idea to help them to make a change, with minimal expense.

I believe that the cost of handling a customer enquiry will still be the same under my new approach, and the customer satisfaction level can be improved considerably.

Perhaps, the customers should tell these companies to improve their services.

Improve the public transport now (not later)

There is a letter published in the Straits Times. The writer argued that we should improve the public transport now, rather than later.

I agree. I suggest the following approach:

* get more trains to run on the MRT lines
* provide feeder services to bring people to the MRT stations and bus terminus
* run express bus services (with few stops) between the major towns
* build a second level to the Central Expressway and the Pan Island Expressway
* allow more operators to run the feeder services, using light buses (like Hong Kong)

My basic approach is:

* do the easy things (like what has been suggested)
* do it now

The government decided to improve the road network by building the Kallang Paya Lebar Expressway. But it is taking too long, more than 10 years. It is still not ready.

I guess that it will take 3 to 5 years to build a second level to an existing expressway.

Does Land Transport Authority listen to the public?

COMMENT POSTED IN MY BLOG:

Mr Tan,

Any idea what is stopping LTA from implementing those simple ideas you have mentioned. These proven ideas had been urged and discussed by the public 15 years ago, - the efficient light feeder buses in Hk s one of them, the faster MTR in HK is another efficient service. But it seems our LTA always seems ignore pulbic advise. They turn left when you tell them to turn right. They went their own way, and now 15 years later, the transport is not economical anymore, and even worse, not efficient at all.

Like everyone said,- they should Listen to your customers first. They dont have to think so hard as customers feedbacks are enough of solutions to solving the transport woes.

They should not waste anymore time wasting taxpayers money that goes against the feedback of customers.

They should overhaul their internal problems. They should be overhaul to listen and be more responsive to the needs of customers, the commuters.

It is not worth employing high-paying expert who does not live in Singapore nor take a bus at all.

Invest in a unit trust

SOMEONE POSTED THIS COMMENT IN MY BLOG

The Ideal plan from NTUC Income is a regular-premium ILP. These kinds of products (including the ones from NTUC Income) have extremely high expense ratios compared to Unit Trusts and ETFs.

Before you decide to invest, remember to ask Income to quote you the expense ratio and compare it to a regular-saving Unit Trust.

You can check the FAQ of the Ideal plan. The plan charges 15% of the savings for the first 3 years and that's not including the loads and management expenses.

This is definitely a bad deal compared to a Unit Trust.

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REPLY:

If you can find a unit trust that accept regular savings that can be invested in a fund with low initial and annual charge, you can send them to me.

I understand that most unit trust have high annual charges and expense ratios (which include a trailer fee payable to the financial adviser).

But, if there is really a low cost unit trust, it will be great for consumers. And I shall be happy to recommend it.

Invest in an index fund

Hi Mr Tan,

I am 30 years old and I have been searching for investment which suits my risk appetite. I finally found your blog and I am quite impressed with index fund. Could you tell me more about it and how to invest in this fund?

My ideal index fund is
1. Global equity which is well diversified.
2. Low sale and annual charge.
3. Modest dividend

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REPLY:

The closest to an index fund that you can invest now is the ST Tracker Fund that you can buy from the stockmarket. The only problem is that the Singapore stockmarket is at a high level now.

You can read my views in this FAQ.

If you are investing your monthly savings for the next 30 years, you can consider the Ideal plan from NTUC Income. You can invest in the Balanced or the Growth fund. Although it is not an index fund, the charges are among the lowest available in Singapore.

I will ask X to advise you.

Difference between Logic9 and Sudoku

Dear Mr Tan

I find that a difficult puzzle in Logic9 is easier to solve, compared to Sudoku, even though the number of initial blanks are about the same. I find Logic9 more enjoyable. Can you explain the difference between Logic9 and Sudoku?

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REPLY:

Logic9 follows the same rules as Sudoku. You have to fill in the blanks with the numbers 1 to 9 so that it does not repeat in every row, column or box (3X3 squares). This puzzle is printed daily in Today (as Sudoku Plus) and MyPaper (as Logic9).

When I generate a difficult puzzle, I make sure that it has a unique, logical solution. If you follow the right steps, you will be able to solve any difficult puzzle. This is why my puzzles are quite enjoyable to solve for people who like to think logically.

You can find out more about Logic9 here.

If you buy the Logic9 book, you will get 4 tips on how to solve the puzzles, including the difficult level. The booklets are available from many bookstores listed in the website.

Learn Logic9 (Sudoku) at Prime of Life Exhibition

I shall be demonstrating Logic0 (Sudoku) at the Prime of Life Exhibition to be held at 13 to 15 July at Millenia Walk.

The demonstration will be held in the afternoon of 13 and 14 July and the morning of 15 July.

At the demonstration, I shall be teaching three tips on how to solve the difficult puzzles. This will take 20 minutes. After that, the participants have the chance to take part in a contest to win prizes.

Here are the advantages of learning Logic9:

* it is fun, especially when you know how to solve the puzzle!
* keeps your mind alert (and keep alzheimer away)
* attendees at my past talks enjoyed my tips!

The exibition is targeted at the older people, aged 45 and older. More details will be announced by the organiser in due course. Watch out for the newspaper advertisements.

Travel Insurance Claims

1) Does the insurance company factor in the inflated claims in calculating the premium rate?

Reply: The insurance company uses the claim experience to determine the premium rate. This usually includes a certain proportion of fraudalent claim. If there are more fraudulent claims, the insurance company makes a loss. They will increase the premium rate to cover the loss.

2) Can the insurance company mark a "ceiling" on the claim amount in case of loss of bag during travel, rather than approve the amount submitted by the claimant?

Reply: For some type of loss, there is a limit specified in the policy. Usually this limit is quite high, and there is room for fraudulent claims up to this limit. It can still be quite costly, if many people make fraudlent claims.

Inflated Claims on Travel Insurance

A friend told me that it is now quite common for Singaporeans to make inflated claims on their travel insurance policy. They lose a bag for (say) $200 and they make a claim for $800 on a false invoice.

These claimants do not realise that they are committing a crime of cheating, and can lead to quite severe punishment. It is not worth making such a false claim.

The inflated claims will also cause insurance companies to raise their premium rates for travel insurance. This will not be fair to the honest policyholders who do not make inflated claims.

Target savings at retirement

How much savings do you need at the time of retirement?

Here is my rule of thumb:

* calculate the annual sum that you need to cover your living expenses
* multiply it by 25 times

Assume:

* you retire today
* you have a fully paid home
* your children are all grown up
* you need $1,000 a month for your living expense
* you will need a capital sum of 25 X 12 X $1,000 = $300,000

You can invest 80% of the capital sum (say $240,000) to buy a life annuity (which is likely to give you $1,000 a month, but it depends on your age) and keep the remaining 20% ($60,000) as a contingency fund.

If you retire in 10 years time, you need to add inflation to the target sum at the rate of (say) 2% per year. If your target sum is $300,000 today, it will have to be $366.000 in 10 year's time.

Read this FAQ on Life Annuity.

Retirement

Source: Wikipedia

Retirement is the point where a person stops employment completely.

A person may also semi-retire and keep some sort of job, although usually out of choice rather than necessity. This usually happens upon reaching a determined age, when physical conditions don't allow the person to work any more (by illness or accident), or even for personal choice (usually in the presence of an adequate pension or personal savings).

The retirement with a pension is considered a right of the worker in many societies, and hard ideological, social, cultural and political battles have been fought over whether this is a right or not. In many western countries this right is mentioned in national constitutions.

Buy Insurance For A Discount

Dear Mr Tan,

I went to NTUC Income to purchase Enhanced Incomeshield with cash rider for my whole family.

I wanted to purchase the policy directly, instead of going through an agent, and to get a discount. But since you left the organisation, it seem to withdraw this benefit.

After discussion with my wife, we decided to leave the place without purchasing the policy as we find no benefit of purchasing without any discount.

We might as well ask for an agent in case we need service in the future to make a claim. Do you have any good agent to recommend for me who will look after our long term benefit?

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REPLY:

I will get X to assist you.

Financial Planning for Teachers

I have been invited to give a talk on financial planning for teachers. For those who are not able to attend my talk, you can read about my tips here

Financial Planning for the Young
Financial Planning for Senior

Hong Kong's public transport system

COMMENT POSTED IN MY BLOG

Hong Kong’s public transport network seems more well-connected and three-dimensional, consisting of railway, MTR, tram cars, bus, minibuses, taxi, ferries, etc; all these are viewed as convenient transportation means for residents. Hong Kong and Beijing' MRT interval seems to be 2 or 3 minutes only. Actually buses carry largest volume of passages in many large cities. "Public transit first" and public bus ways is also common in Hong Kong, Paris and Beijing, etc.

An interesting thing is, Hong Kong people seems more to enjoy the walking, I often see lots of people walking along lanes or walking-skyway in HK island, while Singaporeans seem less willing to walk, with walking-way system everywhere.

What is Research?

This is a hot subject for all those who are involved or want to be involved in Research as their occupation, profession or career. Research is getting very important in our increasingly competitive world.

Dr. Lee Kum Tatt has vast experience in these activities in his life. He is going to share with us his thoughts on this subject using special cases as his illustrations. Read some of the interesting stories of how research has helped him and others.

Difficult life of a taxi driver in Singapore

I RECEIVED THIS E-MAIL

Hi,

I refer to the post of your blog regarding grouses of taxi drivers in Singapore.

One thing I understand is that KL taxi drivers actually own the taxi after repaying off the whole amount. And more so happy when they costs the same as a Singapore taxi but in RM$. They do not have to answer to anyone.

In Singapore, a normal taxi costs about $60K+. The hirer has to pay rental of $90 on average everyday. After 2 full years, the costs of the taxi can be recovered back but the poor hirer still continue to pay rental to the company. He does not own the taxi. He is still working for the company. Worse still, there are no benefits like MC, CPF, leave, bonus,etc. & has to work like a slave to earn more than $90 per day so as to make an earning. There is no freedom. If the driver wants to rest by taking offday, he still has to pay rental.

Thus how can the Singaporean taxi driver be happy?

I personally feel taxi drivers in Singapore are a bunch of pitiful people.

Make my blog more interesting

Someone complained that I have censored his comments in my blog. In his case, the statement is not correct. I posted his comment into the main page of my blog and separated a paragraph into two (to make it easier to read). His original comment remained in my blog.

I do have the ability to censor a comment in my blog. I will do it under the following situations:

* where the comment is offensive to another person
* where it is defamatory
* where it has a mischievous intent

So far, I have not found the need to use this censorship power (except for a rare occasion long ago).

I respect the views of other people, even if they differ from my views. I only ask that they express the view in a respectful manner.

When I copy someone's comment into the main page of my blog, I observe the following principles:

* I may edit the comment to be briefer and clearer (only if necessary)
* The original message is kept intact
* I do not quote that person's name (unless I have his or her permission)
* I may change some details to avoid that person being identified by his friends

I hope to receive views and comments from readers for posting into my blog. It becomes more interesting, if it is contributed by several people (and not just my views).

Strange simple English

Someone described my writing as "strange simple English". A few other people told me that they find my views to be easy to understand.

I observe the following:

* use short sentences
* use simple language
* write like I speak
* write in a positive manner

For example, I do not say "not bad". I say "good".

Universal ID - now known as OpenID

I posted a suggestion to create a universal ID. Someone said that this idea is now being worked on, as "OpenID".

Here is the description from Wikipedia:

OpenID is a decentralized single sign-on system. Using OpenID-enabled sites, web users do not need to remember traditional authentication tokens such as username and password. Instead, they only need to be previously registered on a website with an OpenID "identity provider", sometimes called an i-broker. Since OpenID is decentralized, any website can employ OpenID software as a way for users to sign in; OpenID solves the problem without relying on any centralized website to confirm digital identity.

OpenID is increasingly gaining adoption among large sites, with organizations like AOL acting as a provider. In addition, integrated OpenID support has been made a high priority in Firefox 3[1] and Microsoft is working on implementing OpenID 2.0 in Windows Vista

Photos of my grand-daughter

You can see more photos of my grand-daughter, Vera. Her mother is my eldest daughter, Su Ling. Her father is Vitali Zagorodnov from Russia.

A piece of inspiration

Do you know who is the winner of the "Britain Got Talent" singing contest? He name is Paul Potts. He is a mobilephone salesman.

You can hear about his inspiring story and his good singing in Su Ling's blog.

Is the stockmarket too highly valued?

Is the stockmarket too highly valued? Is it safe to enter into the stockmarket now?

Some experts look at the price earning ratio of the stocks. This is the current market price divided by the earnings per share. Historically, a ratio of 15 times looks at a fair level. If the P/E ratio is 25 times, it is considered as expensive. If it is less than 10 times, it is cheap.

At the current level of the ST Index of 3,600 for the Singapore market, the P/E ratio is likely to be about 18 times. Some experts argued that it is not too high. So, it is safe (according to this view).

I remember in 2003, the ST Index was at 1,200. If the current P/E ratio is 18 times (ST of 3,600), surely, it must be only 6 times in 2003 (ST of 1,200)?

This was not the case. In 2003, the profits of the companies were about 25% of today. So, the P/E ratio in 2003 was around 24 times. Many experts argued, on the P/E ratio, that you should sell the stocks.

What is the flaw?

It is wrong to calculate the P/E ratio based on the latest year's profit. It is better to use an average of 3 to 5 years to calcuate the P/E ratio, so that the fluctuation in the earnings can be smoothed. Unfortunately, I am not aware of any P/E ratio that is calculated on this smoothing method.

Lesson: Be careful about interpreting the P/E ratio. Try to take the average profit for a few years, so that you are not distored by by extreme results in one year.

Talk on Financial Planning

I received a request from the recreational club of a government department to give a lunch time talk on financial planning to their members.

I asked the participants to read the FAQs here.

Visitors to my blog

I was surprised to see an increase in visitors to my blog during the past two days. It exceeded 600 visits a day. Perhaps my regular visitors are doing me a favour in passing the word around to visit my blog. To my promoters, THANK YOU.

Grouses of taxi drivers

Singapore is well known for our complaining taxi drivers. It seems that they are an unhappy lot and have a lot of things to compaint about.

Do taxi drivers in other parts of the world behave like this? Is this an occupational trait?

Not so! I visited Kuala Lumpur on a few occasions during the past two years and spoke to the taxi drivers. They are generally quite happy with their situation. They like their freedom (as taxi drivers) and are happy with their earnings.

Perhaps, our taxi drivers in Singapore find the life to be too stressful?

Overcrowded Singapore - a comment

COMMENT POSTED IN MY BLOG

The overcrowding will only get worse as our govt is targeting 6.5 million population! I take the MRT daily and I can't see how it can take on additional commuters.

Perhaps our highly paid policy-makers are living in posh neighbourhoods, thus having no clue clue how life is like in the heartland.

I can't help but laugh when our transport minister claimed to check bus-stops and public transports to gauge the situation....although he does NOT take public transport at all.

I would like to tell him that there is a whole world of difference between merely checking as a bystander and actually suffering from overcrowded public transport day-in day-out!!

Bad customer service from Telcos

COMMENT POSTED IN MY BLOG

I really hate all the telcos' customer service. Its one of the worst in Singapore. Once you are subscribed, you are finished.

Its one way all through out. I'm subscribed to Singtel Mobile for the last 7 years, and never in these 7 years I can reach the customer service easily. Its a shame on Singtel.

I like NTUC's call centre and I always recommend it to my friends. Why not telcos listen and use NTUC's model.

Govt promotes service, but what these giants doing are something opposite to customer service. Once we are a customer, its like we have to service them.

I lost hope with them.

Singapore is getting over-crowded

Many of us may not realise it. But the population of Singapore had increased by 60% during the past 16 years. The population in 1990 was 2.7 million. It is now 4.3 million.

This large increase in population is affecting our daily lives in the following ways:

* demand for more hospital beds and doctors
* delayed buses and cramped trains
* congested roads, insufficient parking spaces, too many cars

It looks like the infrastructure has to be expanded considerably to cope with the larger population.

Best Public Service in the World

Here is the rating of the customer service of various governments, as conducted by Accenture.

Singapore 89%
Canada 88%
USA 79%
Denmark 75%
Sweden 74%
.....
Japan 55% (10th)
Malaysia 44% (14th)

Singapore came out top in the survey.

An important contribution for our high ranking is the work of the Infocomm Development Authority in encouraging the use of e-government services.

Congratulations to IDA.

Universal ID for website

I hope, one day, that there is a universal ID and password that can be used for all websites.

At present, we have to provide an ID and password for each website. Here are the problems:

* each website imposes its own non-standard constraints on the ID and password
* some ID cannot be accepted, as it has already been used
* we have to keep a record of all the different IDs and passwords used in the websites.

A few years ago, Microsoft wanted to introduce a "passport" that can solve this problem. This idea did not take off. I hope that Microsoft, Google or Yahoo will try again. Maybe, it will be accepted now.

Feedback on the Telcos

COMMENT BY ROGER IN MY BLOG:

Many organisations have used this press button select options system for many years now. NTUC Income under your leadership was the very few organisations left to use real people to answer calls. Kudos to you.

Starhub's hotline is actually more user friendly and you can get to a courteous operator faster than Singtel.

The designers of these centres are usually technical people who are not able to put themselves into the shoes of the laymen. Also many staff nowadays use the automated system to ward off customers calls and put it into an endless loop where a sweet recorded voice kept telling you how important you are to the company and that you will be attended to shortly and it is actually a real test of patience as your phone bill goes up without any real purpose. So the phone companies get to benefit from these too.

There have been recently the hue and cry over Starhub's increase in fees and the contract that prevents people from cancelling their subscriptions.

Singtel also practices these unfair methods by a three year contract which does not reduce in price when a similar broadband service by the same company is now 20 dollars cheaper. Subscribers cannot cancel unless having to pay a hefty penalty fee but has to continue to pay the old higher subscription fees. How is it that when prices are raised then the contract is not binding in price but when prices are reduced it is binding?

We are now living in a society that cares only for more money, whether in cash or in kind, like all these automated answering services in the name of higher productivity but in actual fact just wants to save money by cutting down on the number of real people manning the phones to give real service.

Call centers of our Telcos

I wanted to apply for a fixed line. I called the call center of SingTel and Starhub. It was a frustrating experience.

They asked me to listen to pass a button select an option, and to go through it many times. The trouble is that I do not understand the various services and options.

I hope that the designers of call center system are considerate. They should understand that the ordinary customer does not understand the complications of your business. Why not get the customer to talk to a person on your careline early?

Yield on Money Market Fund

The unit price of the Money Market Fund of NTUC Income increased by 0.2 cents (0.18%) for the past 28 days. This works out to an annualised yield of 2.4%. The yield was 3% previously. It has dropped during the past month.

Dude

Someone described me as a "dude". I searched the internet for a definition. I obtained the following from Wikipedia:

The term "dude" is best known as a widely-used English slang word commonly used to informally address or refer to a person of the male sex. The word may also be used in the same manner when speaking to (or about) a person of the female sex.

In informal social situations, it is not uncommon for young men to use the word "dude" to address one another, for example, "Mike Smith is one cool dude", or "Who did that?", "[The] dude with the red shirt did that". (sis).

Visit the financial adviser

When you are sick, you visit a doctor at his clinic. The doctor treat you and charge you for the consultation.

As the doctor sees many patients in a day, the cost of the consultation is relatively low. The doctor makes a good income from the large number of cases treated. This is high productivity.

I hope that insurance can be handled in this manner in the future. If the customer is willing to visit the financial adviser and to pay a fee for the consultation, it will benefit all parties:

* the cost to the consumer will come down, as pay a net price (after removing the commission)
* the adviser can earn a good income by handling many cases each day
* productivity is increased
* the adviser can recommend the right product to serve the best interest of the customer.

Some insurance companies now allow customers to call them directly on the telephone or transact through the internet, and to give a lower cost to the consumer. I hope that this channel will be more popular in the future.

Singapore is 14th most expensive city in the world

Singapore is now the 14th most expensive city to live in the world, according to a report by Mercer Human Resource Consultancy. It has moved 3 rungs from 17th position has year.

This has many disadvantages:

* foreigners will find it unattractive to work in Singapore
* Singaporeans are stuck with higher cost of living, and do not have much choice

According to the same report, Singapore is now more expensive than New York. Considering that wages in Singapore (for most people) are lower than New York, this matter is quite serious.

We need to look for ways to keep our cost of living down. Here are some suggestions:

* Wait for the property prices to come down to a more reasonable level, before you buy it. It will come down. Be patient.

* Take public transport, such as MRT or bus. They are more cheaper, faster and more enjoyable (compared to driving)

* Pay your credit card on time (ie avoid paying interest on credit cards).

* Invest in simple products that gives you a fair rate of return, and low charges. Invest in the money market fund, bond fund or equity fund that have low upfront and annual fees. Avoid complicated financial products.

* Read the FAQs on financial planning.

Tan Kin Lian Has A Blog

COMMENT POSTED IN ANOTHER BLOG:

Tan Kin Lian has a blog. The dude is the ex-CEO of NTUC Income, which obviously didn’t exactly endear him to me. I knew he had been blogging for quite awhile, but I simply dismissed it as NTUC propaganda. However I had another look today and realized that there were many unbiased financial planning gems written in his strange simple english style. Very highly recommended.

Comments on Dr Lee Kum Tatt's blog

Dr. Lee Kum Tatt has received comments to some of his articles in his blog on “research and its management” and “overcoming the fear factor”. Read his blog for the comments and his candid replies.

Save for an early retirement

Dear Mr Tan,

I wish to save now for an early retirement. I am in my late twenties. How much should I save each month? Should I buy a life insurance policy? What is your advice?

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REPLY:

Most life insurance policies has a high upfront charge, that is used to pay commission to the insurance agent. After deducing the charges, the policy will give a negative return for 10 years or longer. After that, you may get a modest return, but it is quite low.

Due to the high upfront cost, you are locked into the policy for many years, even if you are unhappy with the low return. You can only get out of the policy by taking a loss.

It is better for you to save and invest in a fund that has the following features:

* low upfront cost (less than 1.5%)
* low annual fees (less than 1.5%)
* flexibility to change your regular savings
* flexibility to change your fund

You can buy your insurance protection separately through a low cost term insurance.

You can read more about it in the FAQ on this webpage.

Help a friend

Hi Mr Tan

I have just started work. My classmate and a good friend joined a life insurance company. She asked me to take a life insurance policy from her, to help her to meet her sales target. I like to help her, but will this be disadvantageous to me?

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REPLY:

You should take care of your own financial future and make sure that you are buying the right product, as you will be committed for many years into the future.

You can read the FAQ on Financial Planning for the Young.

Many young people joined the insurance field for a few years, and moved to another job. Their clients are then passed to another agent. You may not be serviced by your friend a few years later.

Save adequately for your child

Dear Mr Tan,

I have been advised by an agent to save $200,000 for the tertiary education of my child. I find the premium to be too costly. What is your advice?

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REPLY:

You can read my FAQ. It explains the amount that is needed. It should fit into your own financial capacity

Sponsored article

Sometimes, a financial or insurance product is covered in a newspaper. It purports to explain the product, and usually highlights its benefits. Most readers may think that the article is written independently by the journalist.

I learned that in some cases, the space for the article is sponsored by the seller of the product. It is really an advertisement (as the seller is paying for the space).

As the sponsor has some say in the way that the article is written, it will usually play down the negative aspects of the product. The consumers may not get a balanced analysis of the product.

In recent years, the frequency of these sponsored articles has increased. The reader should be careful.

Rating of assets backing financial products

I saw an advertisement that a specific financial product is backed by CDO (collaterialised debt obligations) with at least a rating of AA.

Normally, a AA rating is considered to be strong, in the case of a rated bond or a corporte entity.

I learned that AA rating for a CDO follows a different set of criteria. The AA rating for a CDO is weaker than for a bond. It does not have the same level of financial strength.

If you read a financial product that is backed by AA rated CDO, you have to be aware that it is of lower quality than a AA rated bond.

Government bonds

Dear Mr Tan

You have recommended to invest in government bonds. It now earns less than 3% p.a. and you have to lock it for 5 years or more. I do not find it to be attractive. Is there a better return from other safe investments?

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REPLY:

If you wish to have a safe investment, it is better to buy government bonds to earn 3% p.a. for 5 years, or a total of 15%, instead of investing in a financial product that requires you to bet on the outcome of certain stocks.

Many people invested in the financial products during the past years, and obtained a poor return of less than 1% p.a. For example, the Swing fund gave a return of 2% for 5 years, or just 0.4% p.a.

If you do not wish to lock up your money to earn 3% for 5 years, you can invest in a money market fund and earn about 2% p.a. at the current rate. If interest rate goes up, your return will increase, and it changes with the money market.

Fund earned 20% during past 8 months

There is an advertisement showing that a unit trust earned 20% since its launch 8 months ago.

Before you invest in this fund, you have to consider the following:

* many other funds also earned a similar or better return
* the upfront cost of investment is 5% (which is high)
* the stockmarket is now at a high level and is risky

If you invest in the stockmarket now, you should be prepared to suffer a correction (ie drop in prices), if it happens.

Do you want to take the risk?

Cost of betting on a financial product

Dear Mr Tan,

If I invest in a financial product that guarantees a return of my principal, I know that I will not lose out. At least, I will get back my investment. If the stocks meet the target, I will get a good return. What are your views?

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REPLY:

You should look at the opportunity cost. For example, instead of investing your money for 5 years in a financial product, you could have bought government bonds to earn 3% p.a. for 5 years, or 15% in total.

If you invest $20,000 in a financial product, you are actually spending $3,000 on the bet, ie 15% for 5 years.

In thecase of the Swing fund, you got back only 2% after 5 years, or $400. This is a poor bet, compared to the cost of $3,000. Your payback is less than 15% of what you betted (ie $3,000). This is a poor return, considering that the stockmarket performed extremely well during the past 5 years.

Lesson: Do not bet on a financial product, as the odds are designed to your disadvantage.

Look for Solutions Not Scapegoats

Dr. Lee Kum Tatt is a chemist. Looking at and for solutions has been his profession all his life. Read the article in his blog on how his own quote has given him peace of mind in his life.

Use the call center or e-mail

Dear Mr Tan,

I have an agent. However, can I choose to buy direct from NTUC call centre for travel insurance? Can I get a direct discount without going through her?

I am not happy with the agent (million dollar roundtable member) as she is away often on seminars. I can't contact her sometimes.

But unfortunately, this is the experience I have with previous NTUC agent, so I live with it.

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REPLY

For simple matters, such as travel insurance, it is more convenient for you to go through the call center or handle it directly through the internet. NTUC Income offers a very low premium for travel insurance. Most people arrange it directly.

It is best to use the agent for the more complicated product, where you need advice. If the agent is travelling, you can send an e-mail to the agent.

If the agent does not respond to you, you can find another agent who is able to spend more time to take care of your needs.

Buy a Dell PC through the Dell shop

I bought a Dell Dimension PC through the Dell shop. It got an attractive price (same as buying direct through the internet) and the service of a Dell representative from the shop in Funan Center.

As the Dell representative is familiar with the product and options, it was a great help to me.

The Dell representative uses the information from the Dell website (which is available to customers). As he handles many orders a day, he knows where to go on the site, and what to do.

This is a great business model. It is good for customers. It is efficient and brings down the cost.

I am happy with the Dell PC and the service.

Financial planning tips

Dear Mr Tan,

I enjoy reading your blog. Do you have any advice for my father, who is reaching age 60. I am now 33 years old, with a child. How should I invest my savings?

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REPLY:

You can click on the link "Financial Planning Tips" that appears on the right panel, below my photograph. It will bring you to my website, where there are tips for people at various ages.

You can also click here.

Learn about insurance

Dear Mr Tan

I like to learn about insurance. Can you advise me on a suitable website?

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REPLY:

You can try the following:

www.tankinlian.com
know your insurance

Invest in Bonds

Hi Mr. Tan,

I'm interested in buying bond but have no knowledge of which bond to buy. Could you recommend same save and low risk bond.

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REPLY:

I suggest that you consider the following:

* Global Bond or Singapore Bond fund from NTUC Income

* Singapore Government Securities (buy through a stockbroker or from Fundsupermarket or DollarDex.

Four Clever Financial Tools

Larry Haverkamp posted a article entitled "4 clever financial tools" in his blog. It is easy to understand and is useful for the lay investor.

Social and private Insurance

What is social insurance?

It is an compulsory insurance scheme provided by the state and covers a defined group of people (eg citizens or permanent residents). The cost of the scheme can be fully paid by compulsory contributions or partly funded by general taxation.

What are the risks that can be covered by social insurance?

Here are some examples:

* unemployment
* sickness
* health care
* injuries
* old age pension

In the past, the governments in many countries were active in providing fairly generous benefits under the umbrella of the welfare state. Due to abuse, the governments scaled back these welfare benefits. They prefered to let the citizens take care of these matters on their own, through private insurance.

The disadvantage of private insurance are:

* it is costly
* some groups of people cannot be covered (due to their existing condition)

We should strike a right balance. Some types of benefits should be covered by social insurance, eg catastropic payments for accidents and costly medical treatment, or for living too long. The other payments can be covered by private insurance.

Invest your CPF ordinary account in BIGe

Dear Mr Tan,

I read your blog everyday without fail. It is so informative and covered a large variety of topics which are very relevant to ordinary retirees like us.

I would like to seek your advice on a product being marketed by Aviva Pte Ltd.

3.5% pa guaranteed for 3 months on your CPF savings. The BIG e is a single endowment plan that offers :

(a) Interest that's always higher than CPF's existing rate of 2.5% pa.
(b) 100% capital sum guaranteed.
(c) No lock-in period.
(d) No sales charges and withdrawal fees.

I have some CPF left and would like to invest in this endowment plan. Would appreciate your advice and comments.

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REPLY:

This is a good plan for a CPF member. If I have money in the CPF ordinary account earning 2.5%, I would probably have opted for the BIGe myself.

To my knowledge, there is nothing adverse about it.

BIGe

Hi Mr Tan,

I've just placed $X of my CPF ordinary account into Aviva's BIGe single premium endowment. It gives a guaranteed interest rate of 3.5% p.a. for 3 months. In your view, how does Aviva's BIGe compares to Income's Flexi-Cash?

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REPLY

Aviva's Big-e gives a guaranteed return of 3.5%. This is higher than Flexi-Cash in NTUC Income, which earns between 3% and 3.5% (not guaranteed).

If Aviva keeps the interest at 3.5% beyond 3 months, it is attractive. If it drops below 2.5%, then it is not attractive. Between 2.5% and 3.5%, it is marginal.

Avoid betting on financial products

Many new financial products are advertised in the daily newspapers. Most of them involve an element of betting. Your return depends on the performance of various shares over the next few years.

You should avoid "investing" in these products. Often, the bet is to the consumer's disadvantage. The regulator does not vet that the risk and reward has been designed fairly for the consumer.

You can read my views of these structured products in my website.

If you wish to take a bet, it is better to go to the casino or to Singapore Pools. You will probably get better odds for the bet.

Lesson: To get a better return on your investments, you should choose an equity fund, bond fund or money market fund. You will get the actual returns from the fund, less the charges. You should find out what the charges are. Make sure that it is not more than 1.5% per annum. Better still, go for charges that are less than 1%.

Choice of Workshop

Dear Mr Tan,

NTUC Income advertises a motor insurance plan that gives the choice of workshop to repair the car. Is this a better plan?

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REPLY:

You have to pay a higher premium when you select the plan that offers you a choice of workshop. The difference could be 10% to 20% higher.

Most customers prefer the normal plan that charges a lower premium. In most cases, they do not make any claim. If they have an accident, it is better to let NTUC Income handle the repair at their quality workshop. The customer feedback on service and quality of repair has been good.

My suggestion: Go for the normal plan. Enjoy a lower premium (10% to 20% lower). Let NTUC Income handle the repair for you. You can save the hassle.

Exception: If you own a new car (1 or 2 years old) and you are fussy about the repair, then pay 20% more and take the "choice of workshop" plan.

Business simulation game

Dear Mr Tan,

I read that you are involved in developing a business simulation game. What does it do? What can I learn from this game?

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REPLY:

The simulation games teaches the participants on how to run a business. Each team (comprising of up to 4 members) will run a company and decide on the price of its products, its marketing expenditure and the production capacity for the following year.

The game comprises of 5 to 7 virtual years and can be completed within 2 hours. The game is more interesteding when there are several teams competing against each other in a market environment.

You can find out more from this game from this webpage.

The game can be organised for students in a class, or colleagues in a workplace. You can choose from a range of scenarios and business sectors, eg insurance, banking, hotel, airline and retail.

How to invest $40,000 now

Dear Mr Tan,

My wife and I have about $40K (in fixed deposit). We are less than 30 years old.

We are keen to put this money into good investment, as the payout from fixed deposit is really too low. We are not well versed with shares. We like to invest in the financial products from NTUC Income.

Can you advise how best we can invest this 40K?

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REPLY:

I will ask an insurance adviser to give you some information on how you can invest in the combined fund (growth or balanced) of NTUC Income. I suggest that you invest the lump sum in installments over the next 5 months, to get the effect of averaging of the cost of your investment.

If you are investing for the next 10 to 20 years, it is all right to invest in the combined fund.

Flexi-cash from NTUC Income

Dear Mr Tan,

You have mentioned that you keep 50% of your investments in the money market. I would be grateful if you can tell me more about the money market. Is fixed deposit part of the money market? What else?

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REPLY:

My investment is in the money market fund of NTUC Income. It is called Flexi Cash. You can read about it in www.income.com.sg/faq

10 year bond yields

Here are the yields on 10 year government securities in various currencies:

Japan      JYP    2%
Singapore  SGD    3%
Germany    DM     4.6%
Hong Kong  HKD    5%
US         USD    5.25
UK         GBP    5.5%
Australia  AUD    6.3%

Generally, we are in a low interest rate environment across the world (except for Australia and New Zealand).

For every 1% increase in the yield, the bond prices may fall about 8%.

As inflation is expected to increase in many cuntries, it is better to invest in the money market.

Investing in Foreign Currency Deposits

Dear Mr Tan,

What are your views about investing in foreign currency deposits, such as New Zealand dollar?

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REPLY:

Earlier this year, I wanted to invest in New Zealand deposit, as it offered an attractive interest rate. I spoke to a banker from that part of the world. He told me to be careful, as the NZD had already appreciated a lot.

I decided not to make that investment. Since then, the NZD had appreciated by another 5%. I missed that boat!

Many of the currencies, such as AUD and NZD, are at a historical high level. I have decided to keep my savings in SGD to earn 2.5% to 3%.

Imbalance in Global Trade

I saw an interesting remark:

* China has a huge trade surplus
* They invest the surplus in US Government bonds
* If US forces China to revalue the yuan, China may sell the US Government bonds
* But, who will buy these bonds from China?

This remark reflect the state of the imbalance in global trade. It is not good for the global economy.

Subprime mortgages in America

Subprime mortgages are mortgages given to borrowers of lower credit standings during the boom days of the property market in America. Due to the downturn in property values, many of these borrowers have defaulted. They also have to suffer large financial losses.

There is a debate in America about the role of the regulator (ie the FED or Federal Reserve Board).

Some of the issues being debated are: should the FED have stepped in earlier to ban these mortgages as the borrowers were not aware about the implications of a rise in interest rate? Were there adequate consumer protection?

I find the debate to be important as it has to balance between:

* the need for free markets
* the need for consumer protection

I hope that these issues will lead to a proper balance between these two requirements. It will be relevant to Singapore.

American Presidential Election, 2008

I am watching the developments on the 2008 election with great interest. It shows the American system of democracy.

I am fascinated by their system of choosing the best candidates to represent the Republican Party and the Democratic Party.

Many candidates come forward to participate in the "primaries" for their party. To win the primaries, the candidates have to give their views on many major issues over the media, especially television. There is great debate on these issues.

The voters express their choice in the primary elections, which are held at all the states.

This helps to pick the best candidate to represent their party in the national election. The final votes will be decided in November 2008.

Leadership - by Rudy Guiliani

Rudy Guiliana was the mayor of New York City for many years. He was credited for turning New York City into a safe and attractive city, by overcoming the crime situation in past years.

He is now a leading candidate for the American Presidential election.

I watched an interview with him on Bloomberg TV. He said (something along these lines), "Leadership is doing the right thing, and educating the public about what is right. Too many politicians (in America) are watching the public opinion polls, instead of providing the leadership".

I agree with his views.

Personal note: I like Rudy Guiliana because his family name is GuiLIANi. It includes my name! Ha Ha!

Asset allocation of Absolute Return Fund (Pimco)

I heard a news item on Bloomberg TV. It reported the asset allocation of an absolute return fund managed by Pimco, a well known fund manager. The cash component is about 50%.

Under an absolute return fund, the manager is free to move the investments among the various asset classes, ie equity, bond and cash, to achieve the optimum return, considering risk and reward.

This item caught my attention, because about 50% of my personal investments is in the money market fund (ie similar to cash).

What Chemistry Can Do For You

Dr. Lee Kum Tatt and his former Chemistry colleagues have organiserd the First National Chemistry Week from 16-24 June 2007.

For more information read the article in his blog.

Overcoming the Fear Factor

Everyone of us have some fears of our own. The fear can be traced to threats to our physical, financial or emotional wellbeing.

Dr. Lee Kum Tatt feels that this has something to do with our mind. If we can control our minds we can get rid of these fears.

Read his article on an experience he had on this subject.

Sufficient savings for retirement

Hi,

I would also like your thoughts on the CPF Minimum Sum changes, as listed on the website: http://mycpf.cpf.gov.sg/CPF/News/News-Release/N_07Jun2007.htm

quote
This increase is in line with the announcements made in August 03 that the CPF MS will be raised gradually to reach $120,000 (in 2003 dollars) in 2013. The increase in MS, which includes an adjustment for inflation, is to ensure that Singaporeans set aside sufficient savings for their retirement.
unquote

Do you think that 120,000 would be sufficient for retirement in 2013? I assume this amount will increase after 2013 too.

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REPLY:

The amount of $120,000 is intended to be the minimum sum that is applicable to every CPF member. It is calculated to be sufficient to meet the basic needs of the retiree.

The retiree can have additional savings to top up the minimum sum. You can read about my views in my FAQ on "financial planning for seniors" and "life annuity, which are posted in my website.

Risk of inflation

Global assets (ie stocks and properties) are now at historically high level. They are fueled by low interest rate. The global economies are booming.

I read a news report that the booming global economies will lead to higher wages. Wage increases of 5% to 10% are projected in several countries.

High wages will lead to inflation. This will be followed by higher interest rate. When this happen, global assets will fall in price quite quickly.

I now keep about 50% of my personal investments in the money market. It earns about 2.5% p.a now. I still have the remainder of my investments in stocks, funds and properties - but most were bought at low prices more than 5 or 10 years ago.

A new way to bet

When you invest in the stockmarket, you are taking a bet (unless you are willing to invest for the long term). You bet that you can sell the stock at a higher price and make a profit. If you are forced to sell out at a lower price, you make a loss.

Here is a new way to take a bet:

* you are given 4 stocks
* you are given 4 observation dates which are 3 months apart
* if, on the observation date, any of the stocks fall below 88% of the launch price,
you may suffer partial or total loss of your investment.
* if, all of the stocks are above 95% of the launch price, you are "knocked out" and you get back your investment with a return
* you have the potential to earn a return of 20%, if all of the stocks stay between 88% and 95% of the launch price for the year

To learn about how much you can earn or loss in this "investment", you have to apply and read the prospectus.

Why is similar to a bet? You are betting on the outcome of the prices of the 4 stocks. You have the chance of losing part or all of your investments, and the potential of earning a return of 20%.

What is the chance of each possible outcome? What is the risk and the reward? I do not know. But I suspect that the designer of this bet can fix the odds in the favour of the issuer. As the investor, you will probably lose out, and pay high charges as well (to cover the cost of marketing and other fees).

Lesson: Do not take this bet. It is better to invest directly in stocks, bonds or the money market.

Why Study Science?

This was a common question that many asked Dr. Lee Kum Tatt when he was chairman of the Singapore Science Council and SISIR after Singapore’s independence. Today this same question is still being asked by many.

Read Dr. Lee’s article on this in his blog and the references he gives as to where to get the answers.

Capital protected products

Dear Mr Tan,

I like the financial products that guarantee no loss of capital and the chance to earn a good rate of return, better than deposit rate.

How do I calculate the chance of getting a better return, and the amount of that return?

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REPLY:

If you wish to have a safe investment, you should buy government bonds and earn 3% per annum, or 15% in 5 years.

If you buy a specially structure product, you are taking a gamble. If the gamble is 5% up or down, you stand the chance of earning between 10% to 20% for 5 years - before deducting expenses.

The charges for designing and marketing this product can take away 10% for the 5 years. So you may get an average return of 5% for 5 years. The actual return could be between 0% to 10%.

To make it more attrative, the financial engineers, working for the issuer of the product, can give you a 75% chance of earning close to 0% and a 25% of earning a better return, that can go up to (say) 20% for 5 years (or just 4% per year). They advertise the potential return of 20%, but does no tell you that the chance of achieving it is quite small.

Many investors in these financial products have earned a poor return, close to 0% for the past years.

Lesson: If you want a safe return, buy government bonds and earn 15% for 5 years. Do not spend money to buy other product that eats into the return.

Changes to ST Index

Hi Mr Tan,

I enjoyed reading your blog and your advice, please continue! What is your opinion about the STI changes at the end of the year:

1) The number of constituent stocks will be reduced from 50 to 30. This will make the STI a blue chip index. The reduction in constituent stocks will not significantly alter the representativeness of the index, given that it is value-weighted. In fact, the smallest 20 stocks of the current STI represent only about 10 per cent of the index by market capitalisation.

(2) The STI will be calculated by FTSE according to its internationally recognised methodology for liquidity criteria and free-float adjustment. The index's constituents will also be reviewed by the three parties at regular intervals.

The FTSE ST Indices

The STI will be complemented by a new family of FTSE ST indices that will consist of 5 benchmark and 13 industry indices, including a new theme index to represent China stocks listed in Singapore.

I am looking forward to the new indices and subsequently the ETFs that may come out

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REPLY:

Thank you for alerting me about the proposed changes. I find the changes to be more meaningful, especially as the STI will be weighted by market capitalisation. I got the impression that this was not the case in the past (but I was not sure if it had been changed already).

I am also looking forward to the change, which is to keep up to date with the latest methodology.

Design Blog by Laissezfaire

My daughter Su Ling created a blog to catalog interesting design ideas.

She finds the information by searching Google and her favourite design websites. She extracts interesting designs and posts them on her blog, with suitable acknowledgement and links to the source.

She hopes to share her passion for design with others through this blog and hopes that this will inspire others to appreciate the value of good design.

This is a new way to learn from what is best in the world. The internet is an interesting place, and a useful source of reference.

Design Blog

Find out about the new plan first

Dear Mr Tan,

I bought Hi-Saver Investment-link Product in 1999 with a maturity date of 2014. It's fully paid up.

It covers $10,000 for death and permanent disability with a top up on death of $55,000. The money are invested in two funds. The funds have shown a good gain.

Every year, some administration fee and charges are deducted. It looks like quite a lot when added together. I don't like them to deduct all those fees and charges.

I am thinking of terminating this plan, but the life insurance cover will also terminate. What do you think?

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REPLY:

Before you terminate the current plan, you should see what is offered by another insurance company, e.g. NTUC Income. You should find out the following:

* premium payable under the level or decreasing term plan that gives similar coverage
* charges under the new investment fund

You should check if the new plan is better, before you decide to terminate the current plan.

Complaints about the Swing Fund

My friend told me that the Chinese newspaper publised complaints from several investors about the poor return from the Swing Fund. They earned a miserable return of about 2% after investing for 5 years, or 0.4% per year.

They were promised a product that guaranteed no loss of capital. They were told to expect a better return if the stockmarket did well. In fact, the formula is based on the return from 15 selected stocks.

During the past 5 years, the global stockmarket must have increased by at least 50%. The Singapore stockmarket increased by more than 100%.

In spite of this unusually favourable climate, the investors of the Swing Fund get a poor return of 2%. No wonder, they are very unhappy.

Lesson: Do not invest in complicated financial products that are based on a formula that gives you the worst of a number of selected stocks. One of them will perform badly, and the investor will lose out.

Lesson: Do not trust these products, even if they are marketing by respected banks.

Expensive to stay in Daydream Island

Dear Mr Tan

I checked the internet and found that it cost AUD 400 to book a hotel room at Daydream Island, Australia. You must be quite rich to be able to afford a holiday there.

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REPLY:

You should be able to get a lower rate or good discount, if you book through a travel agent or go as part of a larger group. The conference organiser was able to get a special rate of AUD 220 per room.

In my case, the air fare and accommodation are paid by the organiser, who invited me to speak at the conference. Otherwise, it can be quite costly, even for me.

I normally prefer to have a holiday in the nearby countries, i.e. Malaysia, Indonesia, Thailand or China. It is more affordable and the food is good. The weather is also warmer.

Taxi from Airport

I arrived at 6 am this morning and took a taxi to my home.

The taxi driver told me that he waited 1 1/2 hours at the airport before getting a passenger (me).

My wife remarked that the taxi queue at the airport could stretch for a long distance. If the taxi driver had to wait for more than 1 hour and get a passenger who travels a short distance, the taxi driver can be quite angry.

In my case, I had to travel quite far, so the taxi driver was happy.

It seems to be quite wasteful for a taxi driver to wait so long for a passenger at the airport. We need to make our taxi service more efficient and less wasteful.

Lower return from Money Market fund

Hi Mr Tan,

The price of the money market fund of NTUC Income has been stagnant at $1.065 for the past 13 days. It seems this is the longest period of being stagnant since the past few months. Will this be the start of trend for the future and hence reduced return?

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REPLY FROM NTUC INCOME:

The inter-bank interest rate has come down during the past week. The current rate is around 2.2% p.a.

The unit price of the money market fund has stayed at $1.065 price stayed for 13 days. It has since moved to $1.066 on 5 June 07.

Based on the price movement, the fund provides a reasonable good return without any locked-in period.

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REPLY FROM TAN KIN LIAN

I am still keeping my personal savings in the money market fund. Although the return has fallen to about 2.2%, it is still better than fixed deposit rate (which has fallen as well).

Poor return on Whole Life policy

Dear Mr Tan,

I am currently 28yrs old. I have a wholelife policy which I believe give me a poor return.

Sum assured $40,000
Annual premium $694 /yr
Policy inception: Dec 1993, paid 13 yrs of premium already
Surrender value now: $7,500

Should I surrender the policy and invest in stocks, ETFs when the stock market corrects?

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REPLY:

The cash value now is less than the total premiums paid for 13 years. The return has been unsatisfactory. Most policies should have provided a positive return after 10 years.

I suggest that you should ask the company to give you a projection of the cash value in 10 years time. This will help you to decide if you should keep the policy for the next 10 years, or to move to another investment.

Poor connection to Singapore

I flew by Jetstar from Hamilton Island to Brisbane, arriving at 2 pm. My connecting flight was by Singapore Airlines at midnight.

Originally, I wanted to check my bags through to Singapore, so that I could spend the afternoon visiting Brisbane downtown.

Jetstar was not able to check my bags through to Singapore. I had to retrieve by bags from the domestic airport and take a train to the international airport in Brisbane.

The check-in counter for Singapore Airlines opened at 9 pm. Brisbane Airport does not have any facility to store my two big bags. I had to bring them down to Brisbane downtown to store my bags.

It was a big hassle. I cancelled my trip to the Brisbane downtown.

If I had flown Virgin Blue, instead of Jetstar, I would have been able to check my bags through to Singapore. They have a connecting arrangement with Singapore Airlines.

Lesson: Buy your tickets from the airlines that have a connecting arrangement. Do not buy them independently.

Bringng up Vera

My daughter Su Ling shares her joy and experience in bringing up Vera in her blog. Her tips and insights are valuable to mothers and fathers of new born babies.

Vera has a happy and sweet smile. Everyone likes her.

Advice on compensation for injuries

I saw an advertisement in the Australian newspaper. It offers advice to people who are injured in a workplace or traffic accident, and helps them to make a claim.

In Singapore, the advice is usually given by the lawyer, but the claimant has to bear the legal fees.

It is useful for this advice to be offered through an independent source, to be used as a second opinion to the advice of the lawyer.

Dr Lee Kum Tatt

Dr Lee Kum Tatt is a creative person, full of energy and enthusiasm. He has many interesting stories to tell about research, innovation, creativity and his past experience.

I have known him for nearly twenty years. I continue to marvel at his experience and insights. If you have the time, do read the stories in his blog.

High interest rate in Australia Dollar

I saw many advertisements in the newspapers offering interest rate of more than 6% per annum for flexible savings accounts. This is quite attractive.

During the past two years, the Australia dollar has appreciated significantly. Apart from the high interest rate, an external investor also benefitted from the exchange rate.

However, an expert told me that the Australia dollar is now too high. I am undecided, if I should invest some of my short term funds in this currency.

Research and Continuous Education.

Continuous Education is necessary in building our knowledge based society. Our system must encourage people to do research to acquire more knowledge in building this society.

The genuine researchers encounter many obstacles in their work. Many have to go through a lot and have to make personal sacrifices to do what they like to do for the good of others.

How can we help to attract and create a bigger pool of researchers who can contribute to the good of our society? Dr. Lee Kum Tatt is sharing some of his experiences with us on this topic in his blog.

Financial products

Dear Mr Tan,

I find your analysis of the Pinnacle Notes to be quite useful. Do you have analysis of other financial products that are sold in the past?

----------------------------

REPLY:

I suggest that you read the following:

FAQ
Structured Products
Dr Money's website
How they work

Designs by Laissezfaire

My daughter Su Ling likes design. She has stopped working temporary to take care of her daughter Vera. She has created a blog to show her passion for design. It is quite interesting.

Property in Hamilton Island

The property in Hamilton Island is expensive.

Several houses are being advertised for sale at more than AUD 3 million. They appear to be quite modest in size.

1 bedroom apartments are being sold at AUD 400,000. A 2 bedroom apartment will cost nearly AUD 700,000.

They are more expensive than in Singapore.

Swimming in the sea

I learned the following matters about swimming in the sea in Hamilton Island:

* if the water is cold, you have to wear a wet suit to keep warm
* you need to wear a sting suit to avoid being stung by the jellyfish.

Tavern in Hamilton Island

I visited a tavern last night for dinner. I wanted to see what a tavern in Australia is like.

It was full, with people drinking beer and having a dinner. It is like a pub in England. There were a few television screens with sports and racing.

I saw that the upper floor was the gaming room. I went up to see what it was like. It was like a casino. There were jackpot machines. There were several television screens showing a dog race, a motor cycle race and sports. People were betting on the races, like in a turf club.

It is a good place to bring friends and socialise.

Bad storm in Sydney

I read a news report that there was bad storm in Sydney during the last few days. I felt it in Hamilton Island as it was unusually cold.

I suspect that the bad weather is caused by global warming. However, someone said that you can expect bad weather in some parts of the world each year, so it cannot be blamed on global warming. It is just nature.

Cruise to the Great Barrier Reef

I took the cruise to the Great Barrier Reef. It was a great experience, somewhat beyond my expectation.

The catamaran took two hours for the journey from Hamilton Island the the Reef. The oeprator had a floating platform, called ReefWorld, which is located next the Hardy Reef.

The activities on ReefWorld include the following:

* two trips on a submersible vessel to view the reef, through a viewing panel
* snorkelling
* viewing panel at the platform
* lunch and refreshments
* scuba diving (for the more adventurous)

I was given clear instructions on the use of the snorkelling equipment, including a wet suit to keep warm.

I was able to see the reef fishes through the submersible vessel (like a submarien) and the viewing panel. The fishes also came near the platform to be fed.

It was a whole day journey and most memorable.

Shuttle service in Hamilton Island

Hamilton Island Resort operate a free shuttle service. There are three routes which are coded Orange, Purple and Green. They operate through the Resort Center and Marina and travel to the north and south of the island. The route and schedule is printed clearly at each bus stop. It is convenient and easy for the visitors to travel around the island.

Suggestion: I hope that the bus service in Singapore can be organised in a similar way. Each town can have a few shuttle services to serve the different parts of the town and bring the commuters to the MRT station or bus terminus (for the long distrance or express buses). It will be easy for the residents and visitors to take the shuttle service (or feeder service).