Lost & Found

The Land Transport Authority not operate a "lost and found" service for items that are lost in public transport vehicles.

According to a newspaper report, the Authority has recently decided to ask the major bus and taxi companies to operate their own "lost and found" service. The Authority will continue to provide this service for the small independent operators.

In my opinion, there is advantage for a centralised service. It can be operated more efficiently and achieve a more consistent standard of customer service. It is more convenient for the public.

If the Authority does not wish to handle this matter, they can call a tender for it to be operated by a private operator.

Long German word

Note: Edited with assistance from Peer Mitze.

The German language has a way of joining many words together to form a long word. Here is an example of how long it can be. There is no actual word that appears in this way, but it is theoretically possible

DONAUDAMPFSCHIFFFAHRTSGESELLSCHAFTSAKTIONAERSVERSAMMLUNG

Individual words: DONAU DAMPFSCHIFFFAHRTS GESELLSCHAFTS AKTIONAERS VERSAMMLUNG

Translation: Donau steamship company shareholder general meeting

EISENBAHNGLEISZWISCHENRAUMREINIGUNGSBEAMTER

Individual words: EISENBAHN GLEIS ZWISCHENRAUM REINIGUNGS BEAMTER

Translation: Railway track gap cleaning officer

KOMMUNIKATIONSTECHNOLOGIEZENTRUM

Individual words: KOMMUNIKATIONS TECHNOLOGIE ZENTRUM

Communication Technology Center

Enjoy.

Join a car pool

NTUC Income is operating a service to help people to car pool. It is found in the Big Trumpet website, Big Trumpet

This will benefit two groups of people:

* the commuters can enjoy a more comfortable ride in a car
* the car owner can receive a contribution towards the cost of maintaining the car

It will also benefit the public transport system. When more people car pool, there is less rush in the MRT and bus.

Article in Lianhe Wanbao

Translated from Lianhe Wanbao, December 2007

NTUC Income's CEO Mr Tan Kin Lian
Had Secondary 4 education, did self-study for Actuarial qualification

40 years ago, when NTUC Income's CEO Mr Tan Kin Lian was fresh out of school, he had only a secondary four certification. While he worked, he did some self-study. After 9 years, at the age of 27, he received his Actuarial professional qualification.

During that time only 2 people who self-studied received the actuarial certification, and Mr Tan is one of them. After that, those who want to get this professional certificate had to go to the university as no one was allowed to do self-study.

During those 9 years, Mr Tan worked in an insurance company and did various positions for instance as a programmer, an actuarial consultant and worked in management level. “Because of my work experience, I’m a more practical actuarial compare to a fresh graduate,” he said.

As an Actuary, his duty is based on economics theory and had to analyse, evaluate and manage future unknown risk. “I’m good in mathematics, statistics and finance. I need to about 2 months to prepare for an exam. This is enough. I don't have much time for a social life but I don't mind,” mentioned Mr Tan.

Mr Tan is stepping down from NTUC Income on 1st April 2007, after 30 years of service. He is the third local CEO to step down since June this year, after SingTel's and NOL’s CEOs.

Mr Tan, aged 58, said that he would continue working up to 70 years old. He plans to set up an insurance company that offers high quality and low-cost insurance, using high technology and commercial strategy, to increase an organisation's performance.

Mr Tan Kin Lian writes daily in his blog. The information in his blog is transparent and has an open approach.

On one occasion he was approached by an union official who addressed him as “smiling tiger”. He said this may sound embarrassing but he can felt that the party did not mean anything negative.

Mr Tan also shared a light moment he had. On the day the newspapers published the news of his resignation along with his photos, Mr Tan was flying. The steward asked," Excuse me, sir. Are you the person on the front page of the papers?"

After the announcement was made about him stepping down, his personal blog had hits up to 1,100. This is a four-fold increase. His personal blog is www.tankinlian.blogspot.com.

His most satisfied investment is a $300,000 investment in a computer system

For the past 30 years, Mr Tan had to make a lot of decisions. His decision to invest $300,000 for a computer system proof that he makes the right decision. The computer system's efficiency reduced operating expenses, improved the service quality and helped insurance agents to sell new products. “Because I was a programmer, it helped me to follow through this strategy. For the next 10 years, NTUC Income will enjoy speedy growth because of this system.”

What types of insurance does Mr Tan invests in?

As a CEO of an insurance cooperative, what are the types of insurance does he invests in?

Mr Tan mentioned that, when his children were young he took up term and life insurance. The sum assured is 5 times his annual salary. He took up a living policy for his wife, and also for his 3 children. He has comprehensive coverage for accident, medical and education.

Mr Tan also invests in ILP products for his retirement. His investments are all large, well-diversified and in low-cost plans. His returns for the past few years, is more than 10 per cent.

“For the next 10 to 20 years, I projected the returns to be around 5 to 6 per cent. I think it is a suitable investment for everyone,” said Mr Tan.

Mr Tan has two daughters and one son. His elder daughter is married to a Russian.

Advice on Land Banking?

Dear Mr Tan,

I noted that you have diversify your investments and wonder if you have the opportunity to look at "Land Banking" offerings from overseas institutions (registered in Singapore) like Walton International Group ?

My understanding is that the returns will double in five years time.

Can you advise ?

PL

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

Dear PL

I tend to be sceptical of these types of schemes. Do you have any positive experience with this product?

Tan Kin Lian

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

Mr Tan,

So far, I have started on this investment for about a year and have not realised
any returns as yet. Only assurance is that the title deed for the land purchased registered with the local government.

Am I buying the right financial product?

Mr. Tan,

Although I've working in the public sector for the past 13 years, is still a lay person who knows very little when it comes to investment.

Recently was introduced to a wealth consultant from X by a very close friend and have invested our (wife & I) OA & SA from CPF in equities, bonds & trusts. We are still quite blur on their performance since then.

I would like to seek your expert advise on:

a) Are we investing in the right products?
b) How can we monitor the performances of these products?

On top of these, we have been both holding whole life policies from NTUC & ManuLife and also a term rider (NTUC) to cover my housing plan and our only child has yet to have any plan at her age of 8.

a) How much coverage is sufficient at my age of 36 & my wife (33)?
b) After hearing from my adviser from X that there isn't any priority to purchase any educational plan for our daughter, what's your advise? &
c) Last but not least, how to improve my level of understanding with regards to the funds, equities, bonds and otyher instruments of investment in our local context?

Your blog is definitely one of them....!

TYG

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

Dear TYG

You should ask the wealth consultant from X to give you an update of your investment. It is his or her responsibility.

You can ask the following questions:

- what is the returned earned by the fund that you have invested in, compared to benchmark
- how much does the fund charge as initial and annual fees?

You can read the FAQ in our website on our Flexi-link plan and Combined Fund an our Ideal plan for a child. It can be easily accessed from www.income.coop/faq.

http://www.income.coop/insurance/flexilink/faq-FlexiLink.asp
http://www.income.coop/insurance/combinedfunds/faq.asp
http://www.income.coop/insurance/ideal/faq-4child.asp

You can also call my salaried consultant at our business center, 6788 1111. They do not earn any commission.

You can switch your investment to our combined fund. My consultant will advise you on whether it is better for you stay with your current investment or make a switch, considering charges and other relevant matters.

I usually recommend a person to have life insurance for 5 to 10 years of the earnings. You can buy an i-Term to provide the cover. The premium is quite low.

http://www.income.coop/insurance/term/faq.asp

You can learn more about insurance and financial matters from this website:

www.knowyourinsurance.com.sg

Best wishes for 2007.

Tan Kin Lian

How should CEO's pay be determined?

BUSINESS TIMES

Question:

Mr Tan,

Sometimes, directors' fee/ management compensation stir up debates /draw criticisms from investing public. Some may hold the view that, CEO / senior management's compensation package should be calculated based on the success/ failure of the strategy implemented by the management . However, most of the time, company strategy has long term implications and thus it is hard to measure the success of such strategy in the short term.

In your view, how should a CEO's pay be determined? "

Journalist

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

My reply:

The leader of any organisation, whether it is a business, social organisation or the government, should be prepared to place the interest of other people, including the customers and colleagues, above their personal interest. This gives them the moral authority to lead the organisation.

Any great organisation will take many years to build up. It is not a short term effort The success of the organisation is not the work of the leader alone. He or she needs the whole-hearted support of other people who share the same visision, including the colleagues, customers and external partners.

The leader should be adequately compensated, but it should not be done in a disportionate way. It is wrong to emphasise on short term rewards, based on stock options and shareholder value as determined by the stock market. This has led to many corporate scandals, including the use of accounting tricks to boost up short term profits.

I wish to see a return back to fundamental business ethics. Business leaders should make the effort to build a strong business that creates value to all stakehhlders over the long run. Everybody should be fairly and adequately rewarded.

Consider issuing one security device for online banking

Editor
TODAY

I refer to the letters "Bank on safety and convenience" (Dec 27).

I use Internet banking. My bank recently sent me a security device. I had a lot of trouble registering it.

Those troubles are over, but now I have another problem: As I do not use it often, the device tends to be misplaced.

I imagine that, later, other banks and financial firms will also send me their security devices. It must be very inconvenient to carry them around, or to keep so many of them in my home or office.

I suggest that the Monetary Authority of Singapore encourage the financial firms to use a common security device, so that each customer need only keep one. This device should be registered with an independent party, and can be used by all financial firms.

If the customer is required to keep only one device, which can be used for multiple purposes, it is likely to be more convenient and practical.

Tan Kin Lian

Financial planning for a young person

Dear Mr Tan

I wish to seek your advice as to how to help my son with his financial planning. He has just started work.

At the moment, he has 2 NTUC policies (endowment and Living). One of them is paid by him and an IL Insurance Policy with Prudential he bought a few months ago (from his classmate) before I stumbled on your website .

What other areas can he put his money to create wealth. He does not know anything about stocks and shares.

LC

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

Dear LC

I suggest that your son should invest in our Ideal plan (instead of the Prudential IL policy). I think that their charges amount to 16 months of premium, compared to 7 months under our Ideal plan.

You can read about our Ideal plan here:
Ideal

And the comparison of charges can be found at:
Charges

If your son wish to make a switch, I will ask my business center manager to offer a reduced front end charge, to compensate what what he has already incurred with the Prudential plan.

.NET Programming

I wish to look for free lance programmers who are able to do developing on .NET. If you are interested, send a reply to me at kinlian@gmail.com.

Use Skype Out

I registered for a Skype Out account. It allows me to call anyone (on their mobilephone or fixed line) from my PC.

I only pay the local call charges to Skype.

The quality of the call is good. As I am making the call, it is quite easy for me to go to the PC to do it. The other party receives the call on their mobilephone or telephone, in the usual way.

I encourage people to learn how to use Skype Out. It can save a lot of money on overseas calls.

Know Your Insurance

If you know about the insurance products, you can make the right choice and save a lot of money.

You can learn about the product in a fun way at this website: Know Your Insurance

You can do a simple test to check your understanding. It is interesting and fun.

The most popular products viewed by more than 1,500 visitors are:

Investment Linked Plan
Medical Insurance
Motor Insurance
i-Young
Manage Your Money
Life Annuity
Saving for Education
Invest Your CPF

STI Tracker Fund

I just read the report of the STI Tracker Fund, managed by StateStreets. I am quite impressed with their results.

The fund started in April 2002. During the past 50 months, it earned an average annual return of 11.6%, compared to a benchmark return of 7.9%.

During the latest 12 months to 30 June 2006, it earned 13.4%, compared to the benchmark of 10.1%. I have since checked with StateStreet. They confirmed that the ST Index does not include dividend.

So, the better performance of the fund is largely due to the dividend, which is close to 3% per annum. After taking this into account, the return from the ST Tracker Fund is almost the same as the market. The annual cost of this fund is only 0.3%.

I had invested in the STI Tracker Fund previously. It earned a magnificent return. I realised my investment, as the market is too high. I shall wait for another time to re-invest in this fund.

Is it time to move out of the stock market?

Dear Mr Tan,

My family and I have invested $130,000 in Growth and Balanced fund managed by Income for the past two years. The average returns is about 20%. In view of the record high of stock market achieved in the world, there is potential correction in the near future.

To preserve our investment, we intend to continue the investment with Income instead of surrender the policy. Please advice me should I switch to conservative fund or any recommendation from you.

EE

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

Dear EE

In my case, I have decided to stay largely invested in the Growth Fund. It has 30% invested in bonds, so it is not so risky.

In the case of the Balanced Fund, it is 50% invested in bonds, which is less risky.

If you feel uncomfortable about the level of the stockmarket, you can switch to the Conservative Fund (which has 70% invested in bonds). You can switch back to the Growth Fund at a later date.

Two months ago, I sold by ST Tracker Fund and re-invested in the Money Money Fund. This fund earns an interest rate of between 3% to 3.5% per annum. Since then, the ST Tracker has moved up further. So, one can never find the right time.

Tan Kin Lian

Secure Banking

I used internet banking. My bank recently sent a security device to me. I had a lot of trouble with the registration of the device. This is now over.

Now, I have problem in keeping this device. As I do not use it often, it tends to be misplaced.

Later, I imagine that other banks and financial firms will send their security device to me. It must be very troublesome to keep so many devices in my home, and my office.

I suggest that the Monetary Authority of Singapore encourage the financial firms to use a common device, so that each customer need only to keep one security device (like one NRIC). This device should be registered with an independent party, and can be used by all financial firms.

If the customer is required to keep only one device, which can be used for multiple purpose, it is likely to be more convenient and practical.

Customer is convinced with Enhanced Incomeshield

Dear Mr Tan,

What is your view on the following comments on one of H&S plan, which seems likely to be NTUC product.

One particular famous hospital & surgical plan requires the insured to call the insurer 4 days prior to admission for non-emergency cases.

Reason? To seek the insurer permission in admission. This means the insurer can dispute the reason for admission. In the policy contract itself, it is clearly stated that any dispute will be referred to a 3rd party for mediation. Come on, a sick person cannot go for mediation and family members main priority is to get the person's condition treated. I feel that this is a joke.

Unfortunately, this is no laughing matter. Can anyone imagine the implication of a potential dispute? What happens if the insured's health deteriorates as the result of the dispute? What happens if he dies? Will the insurer be held liable? Will the adviser be liable because he was the party who had help transacted the purchase of the policy? To me this is a useless insurance. A good insurance is one that gives you the peace of mind.

On the day when you need it, it helps you. A useless insurance is one that give you no peace of mind. On the day when you need it, it can bite you and tell you to go for mediation to settle the dispute.

AP

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

Dear AP

The plan that you described is our Enhanced Incomeshield plan. You can find the details of this plan, including the 4 day advanced notice, covered in this FAQ. This requirement will be exercised fairly and in the interest of the policyholder. The main aim is to prevent over charging by the doctor, with the collaboration of the policyholder.

More details are in:
http://www.income.coop/insurance/enhancedshield/faq.asp

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

Hi Mr Tan,

Thanks for the info and your patience. Just signed up Preferred Incomeshield plan and riders for my wife and myself. Also bought a i-gift plan for my SRS.

Merry Xmas and Happy New Year.

AP

Mental exercise is useful for seniors

Extracted from www.channelnewasia.com

Mental exercises help keep seniors agile: study

CHICAGO - Scientists have been preaching the benefits of mental exercise to seniors for years, but a new study may be the clincher that people in their golden years have been waiting for.

The study found that a little mental workout goes a long way, and that a sharper mind can make it easier to cope with everyday tasks such as driving, bookkeeping, shopping and cooking that get more challenging with age.

"Our findings clearly suggest that people who engage in an active program of mental training in late life can experience long-lasting gains from that training," said Michael Marsiske of the University of Florida.

The volunteers in the study did a modest amount of problem-solving and memory enhancing training, no more than 18 hours in any given case. But the pay-off was dramatic in the short-term.

Follow-up testing showed that the mental improvements were sufficient to counteract the cognitive declines seen over a seven-to-14-year period in older adults without dementia.

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

Suggestion: Practice Logic9 (Sudoku) for mental exercise. Keep your mind alert.
Logic9

What is the cost of term assurance?

Customer: Mr Tan, I read your posting about low cost term insurance. How much does it cost to insure $100,000?

For Male, Non-smoker

          
Monthly Premium to insure $100,000 over 20 years
   
Entry        Level      Decreasing
Age          
25           $10.70     $4.40
30           $13.40     $5.50
35           $18.90     $7.80

If you are aged 25, you can insure for $100,000 on a decreasing term assureance for 20 years for only $4.40 per month. It is quite painless to provide a sum sum for the security of your dependents.

For a female, the cost is much lower. Maybe, up to 50% lower!

Under a decreasing term, the coverage reduces by $5,000 a year. Under the level term, the coverage remains at $100,000 throughout the period.

New product: No load saving plan?

As a consultant, I will be advising new clients (insurance companies) to introduce a "no load" insurance savings plan.

What are the features of this plan?

- can be an endowment or investment-linked plan
- 100% of the premium will be invested
- customers can buy this product directly
- advisers will be paid a salary plus a modest incentive
- a policy fee will be levied to cover the expenses

This product can offers a better return compared to bank deposits or unit trusts. Over a 20 year period, it should provide 10% to 30% more than similar products in the market.

How is this possible? The savings come from:

- higher productivity
- lower expenses
- less effort taken to market the product
- most customers will want to buy the product for their future financial planning
- existing customers will introduce their friends
- insurance advisers will be happy to earn a fixed salary plus incentives, i.e. the income is more predictable.

Consider an alternative to terminating your life insurance policy

If you terminate your life insurance policy, you get a cash value. This is usually quite low, and is less than the premiums that you have paid during the first 10 years.
The insurance company makes a profit on your terminated policy.

If you keep the policy for another 5 or 10 years, you may find that the cash value at the later date represents a good investment. In this case, it is better for you to take a loan and continue the policy (if the interest rate on the loan is low).

You have another option. You can sell your life insurance policy to a third party, who can offer you a higher value. The third party owns the policy and keeps it for another 5 or 10 years (or until the maturity date). They may find the return to be quite attractive.

You can study this arrangement, by asking your insurance company to quote:

- the cash value now
- the cash value in 5 or 10 years time
- the premium that you now pay
- you can calculate the yield for the next 5 to 10 years on this approach.

If the yield is 4% or better, it may be better to sell your insurance policy, rather than surrender it.

Video recordings of the family

Over the past 20 years, I have kept video recordings of some family and events, e.g. visits to places of interest or overseas visits.

Recently, I transferred these video recordings into DVD. My adult children appreciated the recordings which showed what they were like when they were young. My mother, who is now in her early 80s also liked the recordings. There were also recordings of my father (who passed away about 10 years ago).

Invitations to Wedding

I have a friend who used to keep the invitations to wedding in a separate box. Many years later, he can recall, from the invitation cards, the weddings that he attended, the venues, the couples, dates, etc. It is also a good record of the parents.

I wanted to follow this good practice, but I never got round to do it. 25 years have since passed.

Do not pay more than 6% on your loan

Are you paying too much interest on the loan taken under your life insurance policy? Some insurance companies charge as much as 8 percent per annum. More details at:
Policy loan

There is a bank willing to refinance your loan and to charge you only 6% per annum. If you are paying 8%, you can save 2% a year through this refinancing. If your loan is $10,000, you save $200 a year.

New way to buy insurance

In 2007, I will be helping two insurance companies (in Algeria and Indonesia) to allow their customers to buy insurance through new channels.

The customer can get information on low cost, good value products from the FAQ posted in the website. These products will also be actively promoted through the traditional channels, i.e. advertisements, point of sale promotions, promoters.

The potential customer can buy the products as follows:

- directly through the internet
- call the call center
- through an insurance adviser

The insurance adviser and call center will transact through the internet on behalf of the customer.

These products will be available at 5% to 15% lower than similar products in the market. The lower cost is possible, due to greater efficiency.

The customer service will also be greatly improved, i.e. convenient, transparent, prompt. Most transactions will be confirmed by SMS.

Find out more from:
IC21

Should employer pay more CPF?

There is some discussion in the newspaper on the need for the employer to increase the contribution rate to the Central Provident Fund.

The final outcome is not significant in financial planning. It is clear that the CPF is no longer the sole source of funds for retirement.

Each person must have personal savings to ensure an adequate retirement. The CPF contribution can make an important portion of the total savings, but it has to be supplemented by personal savings.

I recommend that each person should have personal savings in a flexible investment account, such as the Flexi-Link that is offered by NTUC Income. We will make it easy for our policyholders to top up their savings in the Flexi-Link and enjoy bonus units of 2% (to reduce the upfront cost).

We will also make it easy for topping up. Just call our hotline, and make your payment within 14 days. If you invest with CPF, we will arrange for deduction from CPF.

167,000 tax payers claim tax relief on life insurance premiums

167,000 tax-payers claimed relief on their life insurance premiums. If their CPF contribution is less than $5,000, they can claim life insurance premium for the difference up to $5,000.

The total amount of relief claimed is $313 million. The average is $1,900.

Groups who might be claiming this relief are:

1) Foreigners working in Singapore. They don't have CPF contributions so they can claim up to $5,000 in insurance premiums paid (subject to a cap of 7% of sum assured).

2) Self-employed persons.

3) Older (retired or semi-retired) persons who have low or no CPF contributions.

4) Permanent residents in their 1st and 2nd year, when they pay less than the normal rate of contribution.

Faster settlement of Incomeshield claims

In July, the Ministry of Health published statistics about the speed of settlement of our Incomeshield claims. Only 1% was settled within 7 days. It took an average of 28 days to settle the claims.

This was at a difficult time. We were overwhelmed with the large volume. We were in the midst of migrating a system.

The situation has improved considerably. For the latest month, i.e. November, we settle 73% of the claims within 1 week. The average time taken to settle all claims is 4 days. This makes us better than the industry average.

We were able to settle the claims promptly, as most of them are processed automatically. We only need to examine the large claims in more detail.

Sales of i-Gift trebled during the latest week

i-Gift is our annuity plan that offers a fixed income for a specific term (10 to 15 years). The yield is about 3.5% or higher, and is guaranteed.

During the previous weeks, the average sales is 100 policies for $6 million. For the latest week, ending 16 December, the sales increased by 3 times. A total of 350 policies were sold for $18 million.

Why? The current tranche of i-Gift will be withdrawn soon. The next tranche will have a slightly lower return, due to the recent decline in interest rate.

Our astute policyholders are rushing to catch this great offer before its withdrawal.

Special incentive for family members

Some policyholders have asked me to give special incentives for their family members to take insurance from NTUC Income.

In principle, this is possible. The special incentive depends on the type of insurance plan that is being purchased.

If you are a policyholder for many years, and now wish to introduce your adult children to insure with NTUC Income, send an e-mail to me. I shall ask my insurance adviser or consultant to follow up with you.

Income Tax Relief

A tax payer is allowed to deduct up to $5,000 of life insurance premium (less CPF contribution) from taxable income in a year.

For foreigners and self employed who do not contribute to CPF, they can enjoy this tax relief. I understand that 150,000 people take advantage of it each year.

If you are in this category, you should invest in a plan to enjoy the relief, before 31 December.

Advice on reducing risk

Hello Mr Tan

I am only 45 but am not a risk taker. I wish to invest lump sum $30K from CPF-OA to accumulate till age 62 to draw out monthly in future. Should I take a guaranteed annuity now?

J

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

Dear J,

I suggest that you invest in our Growth plan, which offers a guaranteed return of about 2%. With bonus, it should earn slightly more than 4%. You this FAQ: Growth

You should also consider investing in our combined fund. Although it has higher risk, the risk can be minimised by investing in a large, well diversified fund and invested for the long term (ie 10 years or longer). You can turn risk to your advantage. Read this FAQ: Ideal

You can convert your investments into a life annuity at age 62 or later. I will get an insurance consultant to advise you.

Tan Kin Lian

Logic9 books as Christmas gifts

A friend approached me to buy 30 pieces of the Logic9 pocketbooks. She finds Logic9 to be interesting and wanted to give the pocketbooks to her grandchildren as a Christmas gift.

Another friend, who runs a nursing home, bought 30 pieces of Logic9 pocketbooks to give to her employees, also as a Christmas gift.

If you are interested, you can buy them at any of the NTUC Income branches. If you buy 10 pieces of more, you enjoy a discount (i.e. $4 per pocketbook).

500 people attended the Logic9 Day

About 500 people attended the Logic9 Day held at HDB Hub, Toa Payoh. This was a good turnout for a weekend. The conference room was full for the first 3 sessions.

The attendees enjoyed the 3 tips given by me on how to solve the Logic9 (Sudoku) puzzles. Most of them were aware about the 1st tip (i.e. "find the missing number"). They were surprised to learn the next two tips (based on patterns).

I intended to hold another Logic9 Day at Income Center, Bras Basah Road. We will charge an admission fee of $5 and provide 2 pocketbooks (worth $10). And the free tips.

Feedback from a customer on our website

Mr Tan,

I am a 29-year-old working professional. However, in terms of financial investments, I am only a layperson.

As a hardworking and thrifty person, I am very concerned about investing my hard-earned money in cash and from my CPF Account.

In a bid to improve my own knowledge so as to understand investments better in future, I trawled the Internet & learnt from various websites.

I am very impressed by the NTUC Income website which provides very clear advice. I am now thinking of investing my very hard-earned money with NTUC Income (I am already a client with an NTUC Living Policy but now am thinking of making further investments by investing in the Combined Funds with cash and CPF monies).

From a layperson in this area, the website has helped greatly in my education in financial management. The details of the various funds are also provided in the pdf documents online, including the yields over various periods and the top holdings of each fund.

I am also deeply impressed that there was a link to your Blog. Seldom does a CEO find time to actually be at the ground level to connect with so many clients. It must be very busy for you. This is helpful and humble of you.

I wonder how you find the time to actually attend to the many queries that must have reached you since you provided your email address on the web, including the queries that you published on your blog.

The queries and the suggestions that you have published on your blog provide insights for laypersons like myself.

The reassurance that you have personally given to others like myself and the other interesting anecdotes that you provide, such as on customer service in other industries and the level of service in Dubai, provide insights in other areas to many Singaporeans as well.

Merry Christmas.

TMJ

Visit the Business Center

I met a few senior civil servants over lunch. They asked for my advice on the insurance and savings plans for their children. They are reluctant to talk to an insurance agent.

They felt that the insurance agent is more interested to recommend products that are attractive to the agent, and not to the customer.

I suggested that they visit the business center and talk to my salaried consultants. They welcomed this suggestion warmly.

I explained that the insurance advisers from NTUC Income are not pushy, and will recommend products that give good value to the customers. They will explain on our FAQs. They felt more assured and welcomed the approach taken by us.

Customer is stuck with structured deposit

Mr Tan,

I enjoy reading your blog it is very informative. Hopefully we can still read your blog after you left NTUC.

I have bought structured deposit from a bank in 2004. It was terminated in 2005 and my funds was transferred to purchase another structured deposit on the advise of the bank representative. He explained that the bank is revising the rate for the benefits of customer.

I was told to pay a replacement cost of 15% as I had terminated early. I was not getting the interest rate of 3.18% because the interest rate has gone up. I was also told it is a different kind of structured deposit.

I felt so cheated. How can I seek redress or highlight my experience to others so that they will not be trapped into a similar situation.

The product with the word "deposit" is misleading fom a layman's view. We always think that a structured deposit is like a fixed deposit.

Structured Deposit has some form of risk like unit trust, and is also tied to some interest rate which is too complicated for public to understand. Where is the transparancy of the product?

CS

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Dear CS

I suggest that you seek the advice of the MAS, Consumer Association (CASE) or of the Association of Banks regarding the unsatisfactory advice given to you by the bank representatives.

Tan Kin Lian

MENA region

What is the MENA region? It is the Middle East and North Africa. This region comprise mainly of people from the Arabic culture.

The Middle East includes the countries of Saudi Arabia, UAE, Qatar, Kuwait, Iraq, Syria and Jordan. North Africa includes the countries of Egypt, Libya, Tunisia, Algeria and Morocco.

After leaving NTUC Income, I expect to be active in the MENA region, to develop insurance based on the concept of the "Insurance Company for the 21st Century".

Find our more from: IC21

Best Low Cost Funds

Who offers the best low cost funds? Find out more from:

Ask Dr Money

If you invest in a low cost fund, you will get a higher return, after deducting the charges.

Best Life Annuity Rates

Who provide the best life annuity rates? Find out from:

Ask Dr Money

Invest in a unit trust or investment fund?

I was asked, "Is it better to invest regular savings in a unit trust (which does not have an upfront sales charge) compared to an investment-linked plan (where up to 18 months of premium are deducted to pay commission to the agent?"

Here is my reply: "The upfront charge from NTUC Income is about 6 months. This is less than half of the sales charge from similar plans provided by other insurance companies."

The unit trusts have higher annual fee. The fee, including trailer fee to the adviser, can take away between 2% to 3% from your investment yield in each year. This additional charge can be quite costly to you. If you are investing for 10 years or longer, it is better to buy a ILP plan from NTUC Income.

Why invest in a large well diversified fund?

Someone asked me why I recommend investing in a large well diversified fund. It can only provide an average return earned by the market. He feels that it is better to select a good fund manager that can perform better than the market.

I replied: "It is difficult to select a good fund manager. There are a few thousand managers to choose from. If you choose a manager with a good track record in the past, you are not sure that they can perform better than average in the future. You pay a higher fee, and may not get a better return (after deducting the fee).

By investing in a large, well diversified fund, you enjoy the following:

- low fees, due to economic of scale
- diversification (so that you are not affected by a few poor performing stocks)

If you can get an average market return on global equity, you are likely to do well over the long term. By investing for many years, you enjoy some good years and some bad years. The average has always earned more than bonds or cash over a 10 year period."

Lesson: Invest for the long term in a large, well diversified fund.

Enjoy your holiday at Snow City

There is a new, interesting activity at Snow City. Kids will enjoy it. They can experience the cold, and snowfall. They can take photographs with the mascots.

Snow City is in Jurong, next to the Science Center. You can also make a visit to the Science Center and see the interesting exhibits. Look for the photograph of President Nathan. Watch for a while, and he will turn his head and smile at you.

Logic9 (Sudoku) Day at HDB Hub

Sudoku is a popular game, which is a craze around the world.

Many Singaporeans are still not familiar with this game. Even if they have seen it before, they find it difficult to solve the puzzle.

I will be giving a demonstration and tips on how to solve the Sudoku puzzle. It will be held on 14 December at HDB Hub in Toa Payoh. Each demonstration takes about 30 mins. Several sessions will be held in the afternoon. You can come at any time.

I will present three tips, which helps you to solve the difficult puzzle.

This puzzle is good for children (to learn mathematics and be familiar with numbers), senior citizens (keep the brain alert, a good alternative to mahjong) and for adults (to challenge your friends or to occupy your time on the bus, train or plane).

All attendee will be presented with a Logic9 pocketbook (usual price $5). You can buy additional pocket books at a big discount.

Attend this demonstration. Impress your friends.

Policyholder Enquiry (POLE)

I access my insurance policies with NTUC Income using the Policyholder Online Enquire (POLE) service. It shows all my policies and transactions.

It is useful to check my records monthly. I make sure that my transactions are recorded properly and that the premiums are up to date.

My Folder in Big Trumpet

I have an account in Big Trumpet. I used the Folder to store my account numbers, passwords and other information. The information is encripted and protected by a second level password.

The information include:

- Google
- Skype
- Paypal
- Big Trumpet
- and others

If I forget any of these information, I access the Folder and get them quite easily.

I also store my medical records.

Try it.

Be positive in our approach

I wish to encourage Singaporeans to be positive in our approach. Here is a recent example.

Last week, I checked in at Changi Airport for my flight to Dubai. I was travelling economy class. I carry a "elite card" that allowed me to use the lounge and to bring a guest.

I asked the counter staff about this privilege. He said, "Sorry, you cannot bring a guest. SIA had issued an instruction last week that disallowed the guest privilege."

I checked in at Dubai airport a week later to return to Singapore. I asked the counter staff at Dubai, "Can I use the lounge"? She said, "Yes, you can. And you can bring in a guest as well".

I suspect that the counter staff in Singapore probably made a mistake. What is worrisome is that he seemed to so ready to say "no", instead of finding a "yes".

Risk is to your advantage!

Hi Mr Tan,

I am a 27-years-old trainee teacher. I am very new to investing. I attended 2 talks organised by NTUC Income early this year:

At the first dialogue, I asked you whether it would be advantageous, given the past performance, to invest purely in equity funds, as they have been outperforming the bond funds. The key message that I took home were your words of wisdom: "Risk is to your advantage!"

I decided to take a leap of faith. I invested $10,000 of my savings in May this year with NTUC Income. I chose the Flexi-Link Plan with a distribution of my single premium in 70% Global Equity and 30% Singapore Equity. The prices then were:

GE: $2.495
SE: $2.121

In July, I received your letter offering the 1% promotion if I topped up my
Flexi-Link Plan. As such, I decided to top up another $10,000. The prices then were:

GE: 2.336
SE: 1.984

Initially, I was concerned as to when I can see the returns to my investment. Now, the surrender value is $20,837.34. The prices are:

GE: $2.441
SE: $2.244

So if you take the profit of $837.34 in relation to my combined premiums of
$20,000 - I earned 4.2% in half a year! I am definitely impressed with the
performance of the equity funds.

Thank you and your colleague for your honest and convincing advice. I now am a believer and supporter of NTUC Income!

MS

Does your adviser take care of your interest?

I met a senior manager of a life insurance company in Malaysia. They sell their products through their advisers (agents) and through the bank.

They offer a better return on their product sold through the bank, as the regulator sets a maximum commission that can be paid through this channel.

For the same product sold through their advisers, they give higher commission to the agents and charge higher premium to their customers. They leave it to their advisers to convince the customers on the "value of the product".

I am disturbed that the adviser is willing to offer the same product at a higher premium to the customer. After all, they are supposed to take care of their customer.

Does this situation apply in Singapore? I think that our situation may be worse for customers. The commission rates paid in Singapore for advisers and through the bank channels are higher than in Malaysia for similar products.

NTUC Income operates differently. We keep our commission rates at a modest level, to give a modest income to the advisers. We give a higher return to our customers, on their savings.

My future investments

When I leave NTUC Income in early 2007, I intend to keep most of my personal investments with NTUC Income.

Why? They offer the lowest charges. I will be able to get a better return, compared to other forms of investments.

I may re-invest into the ST Tracker Fund in the future, if the market corrects.

I shall be looking out for indexed funds that have low charges, e.g. 0.5% or less a year. So far, I have not found any suitable fund in Singapore. If they are available, I may invest in these funds.

If I do make any re-investment, I shall share my experience in this blog.

Provide for welfare of parents

Hi,

I need some advice from you. The thoughts of buying an insurance plan had been on my mind for quite a while.

I am the only child and my parents are at their 50s. While working now, I am concurrently studying a part time university honors degree.

I am earning a gross wage of $1,500. 40% of it is used to pay for my school fees. Minus other expendure, I still manage to save 30%.

My mother had advised me to buy an insurance plan only after I graduate. However, because I am the only child, I want to buy some minimal plan to least protect the
welfare for my parents. The plan needs not benefit me but it must cover some of my parents' welfare when things happen to me i.e. accidents.

Is there any insurance plan which is suitable for me right now and when I graduate in 8 months time I will be able to increase the premium.

SL

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Dear SL,

I suggest the following:

i-Young to provide the protection. It cost only $100 a year.
Save and invest in a flexible saving plan, ie the Ideal plan.

Here are the FAQ

http://www.income.coop/insurance/i-young/faq.asp
http://www.income.coop/insurance/ideal/faq2.asp

Tan Kin Lian

Educational Planning Game

Here is an interesting game to guide parents on planning for their child's education. It is interesting and educational. It is worth a lot of money by investing in the right product.

Game

Heavy rain in Dubai

It rained heavily in Dubai yesterday. Many places were flooded.

Dubai is at the margin of a desert. It is a dry land with only 4 days of rain each year. So, it occurred while I was in Dubai.

Pleasant climate in Dubai

We think of the Middle East as a extremely hot place.

This occurs for only 2 months in a year. The temperature could go as high as 45 degrees. Most people stay indoors, in air conditioned homes, cars or shopping malls.

The other months of the year can be quite pleasant. I am now in Dubai, enjoying the cool weather of 20 degrees. It is nice to walk outside in the evenings.