Dear Mr Tan
I have a third party motor insurance policy with NTUC. I greatly appreciate that you had led NTUC to reduce fradulent claims and thereby bring down the premiums.
I have a specific case. I agree that NTUC should compensate to the third party, but I dispute the quantum. How do the surveyors determine the damage that is caused due to the accident?
I followed up after 6 weeks and found that NTUC had paid the compensation to the third party claim against my policy.
NTUC requested that I sign and return a statement to dispute any of the damages from the photographs. What will happen after I sign this statement?
I thought NTUC has a team of professionals to ascertain the damages caused, why NTUC need me to sign and return the statement to dispute part of the damages ?
I was told over the telephone that there is a team to assess and award claims. How can I meet this team in person to discuss this claim ?
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REPLY:
I have passed your feedback to the general manager in NTUC Income. He will reply to you.
Wednesday, May 30, 2007
Bus to Kuala Lumpur
I learned from my travel agent that it is possible to take a bus to Kuala Lumpur.
The seats are like business class seats on an airplane. The journey taks 5 hours. The return fare is about SGD 110 (compared with SGD 420) by air.
If you consider the waiting time at the airport and the travel time from KLIA to the city, the journey by air is 3 hours.
I shall try the "business class" bus in the future.
The seats are like business class seats on an airplane. The journey taks 5 hours. The return fare is about SGD 110 (compared with SGD 420) by air.
If you consider the waiting time at the airport and the travel time from KLIA to the city, the journey by air is 3 hours.
I shall try the "business class" bus in the future.
Visit to Jakarta
I am now in Jakarta.
My friend told me that Indonesia has a population of 230 million, of which 10 million (about 4%) are Chinese.
There are more Chinese in Indonesia than in Malaysia (35% of the population) or in Singapore (75% of the population).
This is the magic of large numbers.
My friend told me that Indonesia has a population of 230 million, of which 10 million (about 4%) are Chinese.
There are more Chinese in Indonesia than in Malaysia (35% of the population) or in Singapore (75% of the population).
This is the magic of large numbers.
Tuesday, May 29, 2007
Expensive Taxi Ride
I took a taxi from UIC building (Shenton Way) to Carlton Hotel (Bras Basah Road). The journey took 30 minutes (due to heavy traffic) and cost $7. It is quite expensive. The distance is actually quite short.
We need to provide better and cheaper form of public transport, including taxis.
We need to provide better and cheaper form of public transport, including taxis.
More trains for a comfortable ride
I took the MRT train at 9.40 am this morning. This is the off-peak period.
The train arrive at intervals of 7 minutes. It was packed all the way from Yio Chu Kang station to Raffles City station. I had to stand all the way.
During the peak period, the train run at intervals of 3 minutes. I can understand that it is difficult to put more trains due to safety issues.
During the off-peak period, it should be possible to run more tains (say 1 train every 5 minutes), so that the train is not so crowded and more commuters have the chance of a comfortable ride.
I hope that SMRT will take this factor into consideration, and run more trains during the off-peak hours.
The train arrive at intervals of 7 minutes. It was packed all the way from Yio Chu Kang station to Raffles City station. I had to stand all the way.
During the peak period, the train run at intervals of 3 minutes. I can understand that it is difficult to put more trains due to safety issues.
During the off-peak period, it should be possible to run more tains (say 1 train every 5 minutes), so that the train is not so crowded and more commuters have the chance of a comfortable ride.
I hope that SMRT will take this factor into consideration, and run more trains during the off-peak hours.
Switch 50% of investments into the Balanced Fund
Dear Mr Tan,
The global equity markets, and in particular China, have hit new records in the last few months. There is an increasing risk of the so-called "bubble bursting" especially in China, where valuations are simply unsustainable.
I have a substantial holding of the "growth" combined fund. Given the state of the equity markets today, would it be advisable to switch to more defensive funds and if so, what you would recommend.
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REPLY:
Recently, my wife and daughter decided to switch 50% of their investment from the Singapore Equity fund (100% in Singapore equities) to the balanced fund (50% equity, 50% bond). I decided to keep my investment in the growth fund (70% equities, 30% bonds).
Pick your choice.
The global equity markets, and in particular China, have hit new records in the last few months. There is an increasing risk of the so-called "bubble bursting" especially in China, where valuations are simply unsustainable.
I have a substantial holding of the "growth" combined fund. Given the state of the equity markets today, would it be advisable to switch to more defensive funds and if so, what you would recommend.
------------------
REPLY:
Recently, my wife and daughter decided to switch 50% of their investment from the Singapore Equity fund (100% in Singapore equities) to the balanced fund (50% equity, 50% bond). I decided to keep my investment in the growth fund (70% equities, 30% bonds).
Pick your choice.
Yield on Single Premium Endowment
Name: UOB Life Maxi Dollars
Started: 28 June 2002 $30,000
Matured: 28 June 2007 $35493.09
Key feature: Capital guranteed
Yield: 3.42%
This is a single premium endowment. The yield is quite satisfactory.
Started: 28 June 2002 $30,000
Matured: 28 June 2007 $35493.09
Key feature: Capital guranteed
Yield: 3.42%
This is a single premium endowment. The yield is quite satisfactory.
Make the chemistry right
Getting the chemistry right with materials in the laboratories is a far easier exercise for a chemist to do than getting the chemistry right in real life situations with human beings.
Nevertheless there are many similarities between the Nature of Matter and the Nature of Man. If we can apply this knowledge appropriately we can make many things happen for our good which we thought could not be done before.
Read some of the examples Dr. Lee Kum Tatt gives in his article on this subject in his blog.
Nevertheless there are many similarities between the Nature of Matter and the Nature of Man. If we can apply this knowledge appropriately we can make many things happen for our good which we thought could not be done before.
Read some of the examples Dr. Lee Kum Tatt gives in his article on this subject in his blog.
Monday, May 28, 2007
Business Simulation Training
I presented the Business Simulation comuter software(BEST) to 20 participants from the three organisations in Kuala Lumpur. This simulation game teaches the participants on how to run an insurance company.
The participants enjoyed the game. They were surprised that it gave an interesting insight into the market environment, economic trends, competitive situation, and how they impact on the business strategy.
More details of this game is shown in my website. It can be applied to many businesses, such as insurance, banking, hotel, airlines and retail.
I plan to introduce this software to many organisations in Singapore and Malaysia for their managers to learn about business strategy and entrepreneurship.
The participants enjoyed the game. They were surprised that it gave an interesting insight into the market environment, economic trends, competitive situation, and how they impact on the business strategy.
More details of this game is shown in my website. It can be applied to many businesses, such as insurance, banking, hotel, airlines and retail.
I plan to introduce this software to many organisations in Singapore and Malaysia for their managers to learn about business strategy and entrepreneurship.
Public Transport in Kuala Lumpur
I finished a meeting at the International Center for Islamic Finance in Kuala Lumpur. They are located next to the office of Bank Negara.
My host took me to a LRT station a short walk from the office. He said that it is difficult to call a taxi during the peak hour, and on a rainy day.
I took the LRT for 2 stops to KL Sentral station. I changed to the KLIA Express to get to the airport. The entire journey took 45 minutes. It was easy and comfortable.
This is the advantage of a good public transport system. It beats taxis and private cars.
My host took me to a LRT station a short walk from the office. He said that it is difficult to call a taxi during the peak hour, and on a rainy day.
I took the LRT for 2 stops to KL Sentral station. I changed to the KLIA Express to get to the airport. The entire journey took 45 minutes. It was easy and comfortable.
This is the advantage of a good public transport system. It beats taxis and private cars.
Sunday, May 27, 2007
Selecting winning funds
In his book, John Bogle said that it is difficult to select the winning funds.
He analysed 355 funds that existed in 1970. By 2006 (36 years later), the results are:
* 223 funds did not exist anymore (in most cases, the investors left the fund)
* 60 performed worse than market benchmark by more than 1%
* 48 performed within 1% (plus or minus) of benchmark
* 15 performed 1% to 2% better than benchmark
* 9 performed more than 2% better than benchmark
It is difficult to pick the 24 funds out of 355 funds. Most of these funds performed well when they were small. When they became big, their performance dropped.
There is no certainty that these 24 funds will perform well in the future. In fact, it is likely that they will not.
Lesson: invest in low cost, indexed funds.
He analysed 355 funds that existed in 1970. By 2006 (36 years later), the results are:
* 223 funds did not exist anymore (in most cases, the investors left the fund)
* 60 performed worse than market benchmark by more than 1%
* 48 performed within 1% (plus or minus) of benchmark
* 15 performed 1% to 2% better than benchmark
* 9 performed more than 2% better than benchmark
It is difficult to pick the 24 funds out of 355 funds. Most of these funds performed well when they were small. When they became big, their performance dropped.
There is no certainty that these 24 funds will perform well in the future. In fact, it is likely that they will not.
Lesson: invest in low cost, indexed funds.
Repay loan on a HDB flat
Hi Mr Tan,
I've been reading your blog for a few weeks now. I really appreciate that you're sharing your experience.
My father bought a 5 room flat about 10 years ago for over $500k. It is probably worth 300k+ today. He has difficulty to pay the loan. It will take another 25 years to pay off the outstanding loan.
I'm about to graduate from the university. Is there anything I can do to help the situation? We have a few tenants. I'm thinking about moving to a 3 room flat to reduce the loan quantum.
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REPLY:
If your family can afford the repayment, it is better to keep the current flat. If your loan is with HDB, your pay interest at a very low rate.
With the current boom in the property market, there is a chance that the value of the HDB flat can recover. You can sell it later, when the price has recovered.
As you are renting out some rooms, it should give you a good rental to help with the repayment.
I've been reading your blog for a few weeks now. I really appreciate that you're sharing your experience.
My father bought a 5 room flat about 10 years ago for over $500k. It is probably worth 300k+ today. He has difficulty to pay the loan. It will take another 25 years to pay off the outstanding loan.
I'm about to graduate from the university. Is there anything I can do to help the situation? We have a few tenants. I'm thinking about moving to a 3 room flat to reduce the loan quantum.
-------------------------------------
REPLY:
If your family can afford the repayment, it is better to keep the current flat. If your loan is with HDB, your pay interest at a very low rate.
With the current boom in the property market, there is a chance that the value of the HDB flat can recover. You can sell it later, when the price has recovered.
As you are renting out some rooms, it should give you a good rental to help with the repayment.
Invest in a single premium endowment
Dear Mr Tan,
I'm a working mother. I wanted to buy an insurance policy for my retirement, maybe in 10 years' time. I intend to invest $100,000 using my CPF.
My sister asked me to buy an endowment plan for 10 years. Does NTUC income has such a plan? What would you recommend?
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REPLY:
If you buy an endowment plan using a single premium, you should be able to get a return of 3 to 4% per annum over 10 years from NTUC Income.
I will ask X to send a quotation to you. You can compare it with the plan offered by your sister.
FAQ
I'm a working mother. I wanted to buy an insurance policy for my retirement, maybe in 10 years' time. I intend to invest $100,000 using my CPF.
My sister asked me to buy an endowment plan for 10 years. Does NTUC income has such a plan? What would you recommend?
---------------------------------------------------
REPLY:
If you buy an endowment plan using a single premium, you should be able to get a return of 3 to 4% per annum over 10 years from NTUC Income.
I will ask X to send a quotation to you. You can compare it with the plan offered by your sister.
FAQ
Jubilee Series Link Earner Notes
Hi Mr Tan,
Would like to seek your advice on the recently offered Jubilee Series 3 - LinkEarner Notes. Is it a Safe Investment?
A copy of the propectus is attached for your reference. I do not understand the clause "your investment will be secured with portfolio credit-linked notes, (synthetic collateralised debt obligations".
I am on the verge of my retirement. In 9 months times I will be reaching 55 yrs old. I will have some cash from my CPF.
--------------------------------------------
REPLY:
This is a structured product. I have not found any structured product that make sense to the investor. Please read my FAQ in www.tankinlian.com/faq.
I shall try to look at this product and give you my detailed comments later.
Tip: Never invest in a product that you do not understand.
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ANALYSIS BY LARRY HAVERKAMP
Credit linked notes look to be a good deal on the surface. The drawback is that if interest rates decline, the notes will rise and the company will call them -- (buy them back). Then you are left to invest your cash at a lower interest rate.
Second, most credit linked notes are not a unit trust or ILP -- and therefore do not disclose their expense ratio.
These are the two drawbacks -- (and they are big ones).
Would like to seek your advice on the recently offered Jubilee Series 3 - LinkEarner Notes. Is it a Safe Investment?
A copy of the propectus is attached for your reference. I do not understand the clause "your investment will be secured with portfolio credit-linked notes, (synthetic collateralised debt obligations".
I am on the verge of my retirement. In 9 months times I will be reaching 55 yrs old. I will have some cash from my CPF.
--------------------------------------------
REPLY:
This is a structured product. I have not found any structured product that make sense to the investor. Please read my FAQ in www.tankinlian.com/faq.
I shall try to look at this product and give you my detailed comments later.
Tip: Never invest in a product that you do not understand.
--------------------------------------
ANALYSIS BY LARRY HAVERKAMP
Credit linked notes look to be a good deal on the surface. The drawback is that if interest rates decline, the notes will rise and the company will call them -- (buy them back). Then you are left to invest your cash at a lower interest rate.
Second, most credit linked notes are not a unit trust or ILP -- and therefore do not disclose their expense ratio.
These are the two drawbacks -- (and they are big ones).
Saturday, May 26, 2007
Fair Dealing
When I met John Bogle in Vanguard, he told me that NASDAQ requires all products traded through the exchange to pass the test of "fair dealing".
If any product is not designed to be "fair", then NASDAQ will not allow the product to be traded.
I like this concept. I hope that a similar concept should be adopted in Singapore.
In recent years, many structured products were introduced in the Singapore that were, in my opinion, not fair to consumers.
For example there was a capital guaranteed product that earned a return of only 2.1% over 5 years (or 0.4% per year) for the investor.
If the investor had invested in government bonds (which are guaranteed by the government), the investor would have earned at last 15% for the 5 years.
According to the product structure, the investor could have earned more than 2.1% under certain conditions. It was impossible for the investor to know the chance of earning more than 2.1%. The chance must be extremely slim.
In my view, such a product could not have passed the test of "fair dealing".
If any product is not designed to be "fair", then NASDAQ will not allow the product to be traded.
I like this concept. I hope that a similar concept should be adopted in Singapore.
In recent years, many structured products were introduced in the Singapore that were, in my opinion, not fair to consumers.
For example there was a capital guaranteed product that earned a return of only 2.1% over 5 years (or 0.4% per year) for the investor.
If the investor had invested in government bonds (which are guaranteed by the government), the investor would have earned at last 15% for the 5 years.
According to the product structure, the investor could have earned more than 2.1% under certain conditions. It was impossible for the investor to know the chance of earning more than 2.1%. The chance must be extremely slim.
In my view, such a product could not have passed the test of "fair dealing".
Wrong trade entered into SGX
I read that a wrong trade was entered into SGX, which caused the ST Index to drop by 400 points.
The traded wanted to sell DBS warrants at 27 cents. Instead, the trade was entered under DBS (which was traded at $24.00). The trade was done.
This problem could have been avoided by a simple check in the SGX computer system. Every trade should be checked against the last done price. Any difference of more than 5% (say) should be highlighted for the trader to confirm the trade.
If the difference is more than 10%, perhaps a second re-confirmation should be required.
The traded wanted to sell DBS warrants at 27 cents. Instead, the trade was entered under DBS (which was traded at $24.00). The trade was done.
This problem could have been avoided by a simple check in the SGX computer system. Every trade should be checked against the last done price. Any difference of more than 5% (say) should be highlighted for the trader to confirm the trade.
If the difference is more than 10%, perhaps a second re-confirmation should be required.
Building A Great Society
Everybody wants a role to build a Great Society. Here are some of Dr. Lee Kum Tatt’s experiences on this matter and how this can be achieved even now.
Blog
Blog
Enhanced Income Fund
Dear Mr Tan,
Other than NTUC Income's Flexi-cash, do you invest in any other money market funds, like DBS Enhanced Income fund? How would you compare the two?
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REPLY:
Here is an analysis done by an expert.
The DBS Enhanced Income Fund has half of its investments are outside of Singapore. This makes it partly a currency speculation fund -- and you are betting on a weakening Singapore dollar. It is riskier than a straight money market fund.
It is also actively managed, and has a rather high expense ratio of 0.46 per cent. On top of that it charges an initial sales charge of 0.2 per cent.
Because of the foreign investments, you must also pay currency conversion costs -- (which are a hidden expense that is deducted directly from the fund's yield and not included in the expense ratio).
Other than NTUC Income's Flexi-cash, do you invest in any other money market funds, like DBS Enhanced Income fund? How would you compare the two?
------------------------
REPLY:
Here is an analysis done by an expert.
The DBS Enhanced Income Fund has half of its investments are outside of Singapore. This makes it partly a currency speculation fund -- and you are betting on a weakening Singapore dollar. It is riskier than a straight money market fund.
It is also actively managed, and has a rather high expense ratio of 0.46 per cent. On top of that it charges an initial sales charge of 0.2 per cent.
Because of the foreign investments, you must also pay currency conversion costs -- (which are a hidden expense that is deducted directly from the fund's yield and not included in the expense ratio).
$1,000 is sufficient for a retiree
Dear Mr Tan,
Your concise advice on annuity in the FAQ are gems distilled from your experience. I agree that $1000 - $1500 a month is enough for most of us during our retirement, if we had planned ahead, and dispense with the non-necessities and excesses.
If only writers are able to emulate your style of writing. I certainly gain from that.
Your concise advice on annuity in the FAQ are gems distilled from your experience. I agree that $1000 - $1500 a month is enough for most of us during our retirement, if we had planned ahead, and dispense with the non-necessities and excesses.
If only writers are able to emulate your style of writing. I certainly gain from that.
No overlap in coverage
Hi Mr Tan,
After reading your blog I am convinced we should buy term insurance and invest the difference.
At present, I have on insurance policy. I am a SAFRA member. I know that NTUC income underwrites affordable policies for SAFRA members as follows:
* SAFRA Essential Term
* SAFRA Living Care policies.
I am thinking of getting a 100k converage under the Essential Term and another 100k coverage under the Living Care policy.
What do you think of this combination? Would there be a overlap in coverage?
----------------------------
REPLY:
There is no overlap. It is useful to have cover under both policies. In the event of death, your dependents can claim $200,000 under both policies. For a critical illness, you can claim foro $100,000.
You can buy both policies, if you find the premium to be affordable. If it is expensive, you can insure $50,000 under each policy.
After reading your blog I am convinced we should buy term insurance and invest the difference.
At present, I have on insurance policy. I am a SAFRA member. I know that NTUC income underwrites affordable policies for SAFRA members as follows:
* SAFRA Essential Term
* SAFRA Living Care policies.
I am thinking of getting a 100k converage under the Essential Term and another 100k coverage under the Living Care policy.
What do you think of this combination? Would there be a overlap in coverage?
----------------------------
REPLY:
There is no overlap. It is useful to have cover under both policies. In the event of death, your dependents can claim $200,000 under both policies. For a critical illness, you can claim foro $100,000.
You can buy both policies, if you find the premium to be affordable. If it is expensive, you can insure $50,000 under each policy.
Appeal from a motor cyclist
Dear Mr Tan,
I encountered a ridiculous driver, who horned at me, just because I am in front of his car.
What has happened to road safety in Singapore today? It is sad to read of the father and daughter on motorcycle, died in accident last Saturday. Is there attitude problem in driving or has more drivers been having poor judgment on the road?
1. Motorist today has poor lane discipline; many do not keep a safe distance between cars.
2. There are many who imagine they are grand prix driver tailing even a car that is moving on at 90km/h.
3. In merging lane condition, such motorist must be ahead.
4. Motorist when tailing behind motorcyclist, will not bother about the speedometer, until they overtook motor cyclist.
5. Motorist who cannot even allow motor cylist riding on lane 4 (extreme left lane) of highway and attempt to over take by the left, squeezing between road shoulder and lane 4 of motorcylist.
In wet weather condition, motor cyclist is even more exposed. Please be patience and bear a thought for motorcyclist. Give motorcyclist space to manoeuvre. Treat the motorcyclist as your friend or relative.
Insurance will pay for the mistake of a driver,but it will never bring back the life of the victim and the loss to their family. Drive with loving kindness, bearing a thought for the family of each other.
Thomas Phua
Visit my blog.
I encountered a ridiculous driver, who horned at me, just because I am in front of his car.
What has happened to road safety in Singapore today? It is sad to read of the father and daughter on motorcycle, died in accident last Saturday. Is there attitude problem in driving or has more drivers been having poor judgment on the road?
1. Motorist today has poor lane discipline; many do not keep a safe distance between cars.
2. There are many who imagine they are grand prix driver tailing even a car that is moving on at 90km/h.
3. In merging lane condition, such motorist must be ahead.
4. Motorist when tailing behind motorcyclist, will not bother about the speedometer, until they overtook motor cyclist.
5. Motorist who cannot even allow motor cylist riding on lane 4 (extreme left lane) of highway and attempt to over take by the left, squeezing between road shoulder and lane 4 of motorcylist.
In wet weather condition, motor cyclist is even more exposed. Please be patience and bear a thought for motorcyclist. Give motorcyclist space to manoeuvre. Treat the motorcyclist as your friend or relative.
Insurance will pay for the mistake of a driver,but it will never bring back the life of the victim and the loss to their family. Drive with loving kindness, bearing a thought for the family of each other.
Thomas Phua
Visit my blog.
Fixed deposit with a finance company
Dear Mr Tan,
I wish to deposit $80,000 in a fixed deposit with a bank that pays the highest interest rate.
I also that the finance companies generally pay higher interest rates than the local banks. If you are a senior citizen 55 yrs old and above, you even qualify for a higher rate.
Should I put my money with the finance company?
----------------------------------------
REPLY:
A finance company is financially less secure than a bank. That is why they have to pay a higher interest rate. But, I think that the risk of failure is quite small, in Singapore.
If you are willing to take the risk, then it should be all right. Perhaps, you should put half of your money in a finance company and the other half in a bank.
Always, spread your risk.
I wish to deposit $80,000 in a fixed deposit with a bank that pays the highest interest rate.
I also that the finance companies generally pay higher interest rates than the local banks. If you are a senior citizen 55 yrs old and above, you even qualify for a higher rate.
Should I put my money with the finance company?
----------------------------------------
REPLY:
A finance company is financially less secure than a bank. That is why they have to pay a higher interest rate. But, I think that the risk of failure is quite small, in Singapore.
If you are willing to take the risk, then it should be all right. Perhaps, you should put half of your money in a finance company and the other half in a bank.
Always, spread your risk.
Friday, May 25, 2007
Bond and money market fund
Dear Mr Tan,
What is the difference between a bond fund and a money market fund? It seems that both funds pay a rate of return that is linked to the interest rate?
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REPLY:
The bond fund is invested in bonds, using from 2 to 15 years of duration. The yield on these investments is locked up for the period. If the yield on newly purchased bonds drops, the value of the bond fund will increase (as the yield of the fund has been locked in). Similarly, if the yield on bonds increase, the value of the bond fund will drop.
Hence, a bond fund is sensitive to changes in the yield on bonds, and will move in the opposite direction. A change of 1% in the yields on bonds can cause a change of 3% to 10% in the price of the bond fund.
A money market fund is invested in short term investments with a maturity of 1 to 12 months. It will also be impacted by changes in the yields of these investments, but as the locked in period is short, the impact of these changes is small.
What is the difference between a bond fund and a money market fund? It seems that both funds pay a rate of return that is linked to the interest rate?
-----------------------
REPLY:
The bond fund is invested in bonds, using from 2 to 15 years of duration. The yield on these investments is locked up for the period. If the yield on newly purchased bonds drops, the value of the bond fund will increase (as the yield of the fund has been locked in). Similarly, if the yield on bonds increase, the value of the bond fund will drop.
Hence, a bond fund is sensitive to changes in the yield on bonds, and will move in the opposite direction. A change of 1% in the yields on bonds can cause a change of 3% to 10% in the price of the bond fund.
A money market fund is invested in short term investments with a maturity of 1 to 12 months. It will also be impacted by changes in the yields of these investments, but as the locked in period is short, the impact of these changes is small.
My friend likes your blog
Hi Mr Tan
I introduced my friend to read your blog. He likes it. He finds your tips to be useful. He asked me to convey this message to you.
---------------------------------------------------
REPLY:
Thank you for introducing my blog to your friend. Please ask him to tell his friends as well.
I introduced my friend to read your blog. He likes it. He finds your tips to be useful. He asked me to convey this message to you.
---------------------------------------------------
REPLY:
Thank you for introducing my blog to your friend. Please ask him to tell his friends as well.
Swing Fund
A customer invested $25,000 in the Swing Fund (managed by a local bank) in early 2002. After waiting for 5 years, the customer received a return of $25,528. The gain is $528 (i.e 2.1% for 5 years, or 0.4% per year).
The formula used to compute this return is:
(a) 5% for 5 years or
(b) 45% of the smallest absolute performance of 1 stock out of 15 selected stocks.
Among the 15 selected stocks, at least 1 of them showed an absolute loss for the 5 years. So, formula (b) produced nothing.
The investor gets 5% for 5 years under formula (a), but after deducting the sales charge, the net return is only 2.1% for 5 years.
During these 5 years, the return from the 15 stocks is probably 30% or more. The customer gets 2.1%. Where does the difference go?
What is the logic of formula (b)? I cannot understand its logic. It seems to me (and I stand corrected), that it is designed to take advantage of the naive customers.
I cannot understand how the regulators can allow the financial institutions to market this type of complicated product to unsavvy customers. We need stronger protection for consumers.
The formula used to compute this return is:
(a) 5% for 5 years or
(b) 45% of the smallest absolute performance of 1 stock out of 15 selected stocks.
Among the 15 selected stocks, at least 1 of them showed an absolute loss for the 5 years. So, formula (b) produced nothing.
The investor gets 5% for 5 years under formula (a), but after deducting the sales charge, the net return is only 2.1% for 5 years.
During these 5 years, the return from the 15 stocks is probably 30% or more. The customer gets 2.1%. Where does the difference go?
What is the logic of formula (b)? I cannot understand its logic. It seems to me (and I stand corrected), that it is designed to take advantage of the naive customers.
I cannot understand how the regulators can allow the financial institutions to market this type of complicated product to unsavvy customers. We need stronger protection for consumers.
Structured products that have matured
Did you invest in any structured or capital protected products that have now matured? What is the return that you have earned during the past years?
Please send to me, the following details:
* name of product
* when you first invested in it?
* what are the payouts that you have received?
* what is the maturity amount, and date that you received it?
* what are the key features of the product?
I will compute the yield on this product, and to see if you have obtained a fair rate of return.
I will share the experience of these products, so that consumers can be better educated, and learn how to invest in products that give them a fair rate of return.
Please send to me, the following details:
* name of product
* when you first invested in it?
* what are the payouts that you have received?
* what is the maturity amount, and date that you received it?
* what are the key features of the product?
I will compute the yield on this product, and to see if you have obtained a fair rate of return.
I will share the experience of these products, so that consumers can be better educated, and learn how to invest in products that give them a fair rate of return.
Thursday, May 24, 2007
Switch to Balanced Fund
Dear Mr Tan,
I invested in the Enhanced Fund using money from my CPF. I invested a total of $35,000 and the value is now $54,000.
May I have your advice? Should I continue with this fund or realise the profit and switch to a more conservative fund? I am in my late 40s, and I need it for my retirement.
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REPLY:
I suggest that you switch to the Balanced Fund. It is invested 50% in equities and 50% in bonds, and is less volatile.
But, if you decide to keep the investment to keep the investment in the Enhanced Fund, it is also all right.
I invested in the Enhanced Fund using money from my CPF. I invested a total of $35,000 and the value is now $54,000.
May I have your advice? Should I continue with this fund or realise the profit and switch to a more conservative fund? I am in my late 40s, and I need it for my retirement.
------------------
REPLY:
I suggest that you switch to the Balanced Fund. It is invested 50% in equities and 50% in bonds, and is less volatile.
But, if you decide to keep the investment to keep the investment in the Enhanced Fund, it is also all right.
Air fare to Kuala Lumpur
The return air fare to Kuala Lumpur is SGD 420. I find this to be too expensive, compared to the air fare for other destinations in the region, eg Bangkok, Bali.
I hope that the fare between Singapore and Kuala Lumpur will come down soon, to reflect what is happening in other routes.
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I found from the Zuji website that Japan airlines offer a return air ticket for SGD 180 (excluding taxes). However, they only offer 1 flight daily. If I fly by this airline, I have to take the night flight and stay 1 night in Kuala Lumpur.
I hope that the fare between Singapore and Kuala Lumpur will come down soon, to reflect what is happening in other routes.
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I found from the Zuji website that Japan airlines offer a return air ticket for SGD 180 (excluding taxes). However, they only offer 1 flight daily. If I fly by this airline, I have to take the night flight and stay 1 night in Kuala Lumpur.
Protect unit trust investors
Hi Mr. Tan,
Your blog provides informative advice for financial planning. The contents are relevant in the Singapore context. I check out your blog daily as part of my online routine.
I invested some money in unit trusts through 2 local online distributors, i.e. finatiq.com and fundsupermart.com. By investing through these distributors, I only pay sales charge ranging from 2.25% and 2.5%. It is much lower than the fund sales charge by our local banks.
If, one day, the online distributor cease business operations. what will happen to my unit trust? Is there any regulations that protect the unit trust investors like the Deposit Insurance Scheme that protects bank depositors?
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REPLY:
Your money are kept with the unit trust manager and trustee. They are quite well protected and safe. They are not kept with the distributors.
The deposit insurance scheme is only for bank deposits. There is no similar arrangement for unit trusts.
Your blog provides informative advice for financial planning. The contents are relevant in the Singapore context. I check out your blog daily as part of my online routine.
I invested some money in unit trusts through 2 local online distributors, i.e. finatiq.com and fundsupermart.com. By investing through these distributors, I only pay sales charge ranging from 2.25% and 2.5%. It is much lower than the fund sales charge by our local banks.
If, one day, the online distributor cease business operations. what will happen to my unit trust? Is there any regulations that protect the unit trust investors like the Deposit Insurance Scheme that protects bank depositors?
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REPLY:
Your money are kept with the unit trust manager and trustee. They are quite well protected and safe. They are not kept with the distributors.
The deposit insurance scheme is only for bank deposits. There is no similar arrangement for unit trusts.
Life annuity gives financial security
Hi Mr Tan,
Recently, I asked the agent to give me a life annuity. I get a return of about 5 percent only. My capital disappears when I die. I find this to be not attractive. Is there anything better?
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REPLY:
The return of 5 percent is actually quite good, considering that you can earn only 2% from bank deposit. The additional payout of 3% comes from your capital.
You actual return will be more than 5 percent. NTUC Income gives you an annual bonus that depends on the yield of their annuity fund. Under normal circumstances, the bonus will be about 1% to 3% and will be at a compounding rate. Your return will increase over the years.
You also get the guarantee that the payment will continue to be paid for as long as you live. You do not have to worry that your capital will run out earlier, if you live a long life. This is the best form of financial security.
Find out more from this FAQ.
Recently, I asked the agent to give me a life annuity. I get a return of about 5 percent only. My capital disappears when I die. I find this to be not attractive. Is there anything better?
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REPLY:
The return of 5 percent is actually quite good, considering that you can earn only 2% from bank deposit. The additional payout of 3% comes from your capital.
You actual return will be more than 5 percent. NTUC Income gives you an annual bonus that depends on the yield of their annuity fund. Under normal circumstances, the bonus will be about 1% to 3% and will be at a compounding rate. Your return will increase over the years.
You also get the guarantee that the payment will continue to be paid for as long as you live. You do not have to worry that your capital will run out earlier, if you live a long life. This is the best form of financial security.
Find out more from this FAQ.
Pay My Uni
Dear Mr Tan,
I saw the advertisement by NTUC on "Pay My Uni". Is this a good policy to save for my child's cost of university education?
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REPLY:
You can talk to the insurance adviser and see what product is recommended to you. I prefer the investment linked plan from NTUC Income, as it has the flexibility and can give you a better return. You can read more about it in this FAQ.
I saw the advertisement by NTUC on "Pay My Uni". Is this a good policy to save for my child's cost of university education?
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REPLY:
You can talk to the insurance adviser and see what product is recommended to you. I prefer the investment linked plan from NTUC Income, as it has the flexibility and can give you a better return. You can read more about it in this FAQ.
Success of Indexed Funds
Extracted from John Bogle's book.
Index funds have been successful. The total amount invested in classic stock indexed funds grew from USD 16 million in 1976 to USD 445 million (28 times) in 1986 to USD 68 billion (153 times) in 1996 to USD 369 billion (5.4 times) in 2006. It now represents 7 percent of total investments in mutual funds.
The classic funds are those that represent borad stockmarket, such as the S&P 500, Dow Jones Wilshire 5000 and the Morgan Stanley EAFE (Europe, Australia, Far East).
Index funds have been successful. The total amount invested in classic stock indexed funds grew from USD 16 million in 1976 to USD 445 million (28 times) in 1986 to USD 68 billion (153 times) in 1996 to USD 369 billion (5.4 times) in 2006. It now represents 7 percent of total investments in mutual funds.
The classic funds are those that represent borad stockmarket, such as the S&P 500, Dow Jones Wilshire 5000 and the Morgan Stanley EAFE (Europe, Australia, Far East).
Money Market Fund
The money market fund of NTUC Income shows a price of 1.065 as at 22 May 07. The price on 1 June 06 was 1.031. The appreciation for 11 months 21 days was 3.3%.
Although the interest rate had softened in recent weeks, the unit price of the money market fund continued to show the same rate of appreciation, ie about 0.3% every month.
I sold some shares recently. I have just re-invested the proceeds into the money market fund.
Although the interest rate had softened in recent weeks, the unit price of the money market fund continued to show the same rate of appreciation, ie about 0.3% every month.
I sold some shares recently. I have just re-invested the proceeds into the money market fund.
Insurance claim on World Trade Center, New York
The World Trade Center was destroyed by terrorists on September 11, 2001. There was a dispute between the owners and the insurers on the amount of the claim.
Under the insurance contract, there was a limit of USD 1 billion in claim arising from one event. The two buildings were destroyed by two aircrafts which into them a few minutes apart. The total loss was more than the limit of USD 1 billion.
The insurers argued that these two losses were part of 1 event, and is subject to the limit of USD 1 billion. As the insurer was protected by reinsurance, the decision was taken by the insurer and the lead reinsurers collectively.
I read recently that the claim was settled out of court for USD 2 billion. This means that the insurers (and reinsurers) have agreed to recognise them as two separate events. This is good news for the owners. However, the decision was delayed by more 6 years.
Lesson: As this is a very large claim, there is need to spend time to sort out the legal issues. In normal cases, where the claim is of modest amount, the issues could be settled more quickly.
Under the insurance contract, there was a limit of USD 1 billion in claim arising from one event. The two buildings were destroyed by two aircrafts which into them a few minutes apart. The total loss was more than the limit of USD 1 billion.
The insurers argued that these two losses were part of 1 event, and is subject to the limit of USD 1 billion. As the insurer was protected by reinsurance, the decision was taken by the insurer and the lead reinsurers collectively.
I read recently that the claim was settled out of court for USD 2 billion. This means that the insurers (and reinsurers) have agreed to recognise them as two separate events. This is good news for the owners. However, the decision was delayed by more 6 years.
Lesson: As this is a very large claim, there is need to spend time to sort out the legal issues. In normal cases, where the claim is of modest amount, the issues could be settled more quickly.
Wednesday, May 23, 2007
Singapore Transport Guide
I carry a copy of the Singapore Transport Guide in my bag. It is like a street directory, but is less bulky. It shows all the bus stops and the bus services that uses the stop. It is a useful reference for taking the bus.
NTUC Income distributes this copy to its policyholders a few years ago. If you want to buy a copy, it is available in the bookshops. It is printed by SCIP Enterprise.
NTUC Income distributes this copy to its policyholders a few years ago. If you want to buy a copy, it is available in the bookshops. It is printed by SCIP Enterprise.
High charges can take away 70% of the total return
Assume an average return on stocks of 8% p.a. over a period of 50 years. If the money is invested in a fund that takes away an average of 2.5% p.a. the net return is 5.5%.
$10,000 invested at 8% p.a. for 50 years will accumulate to $469,000. Invested at 5.5% p.a. it will accumulate to $145,400. The difference is $323,600.
The charges of 2.5% p.a. takes away 70% of the total return!
Lesson: invest in a low charge fund
$10,000 invested at 8% p.a. for 50 years will accumulate to $469,000. Invested at 5.5% p.a. it will accumulate to $145,400. The difference is $323,600.
The charges of 2.5% p.a. takes away 70% of the total return!
Lesson: invest in a low charge fund
Difficult to beat the market average
Source: Economist magazine, as quoted in John Bogle's book
For the most part, fund managers have offered extremely poor value for money. Their records of outperformance are almost always followed by stretches of underperformance. Over long periods of time, hardly any fund managers have beaten the market average.
They encourage investors, rather than spread their risks wisely or seek the best match for their future liabilities, to put their money into the most modish assets going, often just when they become overvalued.
And all the while, they cahrge their clients big fees for the privilege of losing their money.
Lesson: invest in an indexed fund that promises a market return but with significantly lower fees.
For the most part, fund managers have offered extremely poor value for money. Their records of outperformance are almost always followed by stretches of underperformance. Over long periods of time, hardly any fund managers have beaten the market average.
They encourage investors, rather than spread their risks wisely or seek the best match for their future liabilities, to put their money into the most modish assets going, often just when they become overvalued.
And all the while, they cahrge their clients big fees for the privilege of losing their money.
Lesson: invest in an indexed fund that promises a market return but with significantly lower fees.
Distribution by a mutual fund
Dear Mr Tan,
Is it better to invest in a fund that pays an annual dividend, or a fund that accumulates the dividend?
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REPLY
It does not make any difference. If the fund earns a total return of 12% (comprising of income and capital gains), the unit price will increase by 12%. If it pays a dividend of 5%, the unit price will drop by 5%. The total return will still be 12%.
In the USA, the income tax authority makes it mandatory for the fund to distribute the dividend and the capital gain separately, so that the investor can report them for payment of income tax and capital gains tax.
This requirement does not apply in Singapore.
Is it better to invest in a fund that pays an annual dividend, or a fund that accumulates the dividend?
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REPLY
It does not make any difference. If the fund earns a total return of 12% (comprising of income and capital gains), the unit price will increase by 12%. If it pays a dividend of 5%, the unit price will drop by 5%. The total return will still be 12%.
In the USA, the income tax authority makes it mandatory for the fund to distribute the dividend and the capital gain separately, so that the investor can report them for payment of income tax and capital gains tax.
This requirement does not apply in Singapore.
Tips on Investments
Quotes from "The Little Book of Common Sense Investing" by Jack Bogle.
Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees - Warren Buffett.
A low-cost index fund is the most sensible equity investment for the great majority of investors. My mentor, Ben Graham, took this position many years ago, and everything I have seen since convinces me of its truth - Warren Buffett.
Investing is all about common sense. Owning a diversified portfolio of stocks and holding them for the long term is a winner's game. Trying to beat the stockmarket is theoretically a zero sum game (for every winner, there must be a loser), and after the substantial cost of investing are deducted, it becomes a loser's game.
Common sense tells us, and history confirms, that the simplest and most effective investment strategy is to buy and hold all of the nation's publicly held businesses at very low cost. The classic index fund that owns this market portolio is the only investment that guarantees you with your fair share of stock market returns - John Bogle.
Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees - Warren Buffett.
A low-cost index fund is the most sensible equity investment for the great majority of investors. My mentor, Ben Graham, took this position many years ago, and everything I have seen since convinces me of its truth - Warren Buffett.
Investing is all about common sense. Owning a diversified portfolio of stocks and holding them for the long term is a winner's game. Trying to beat the stockmarket is theoretically a zero sum game (for every winner, there must be a loser), and after the substantial cost of investing are deducted, it becomes a loser's game.
Common sense tells us, and history confirms, that the simplest and most effective investment strategy is to buy and hold all of the nation's publicly held businesses at very low cost. The classic index fund that owns this market portolio is the only investment that guarantees you with your fair share of stock market returns - John Bogle.
Tuesday, May 22, 2007
Indexed funds for small investors
A few people have asked me to get Vanguard to set up their indexed funds in Singapore. They like to have access to low cost funds.
There is already a way for investors to access an indexed fund. It is called the STI ETF.
However, some small investors may find it difficult to open a account with a stockbroker or with the Central Depository.
I will study a way to set up a mutual fund that allows small investors to invest in:
* indexed fund, eg STI ETF
* government bonds
This service can be handled through the internet or contact center, and can be at a very low cost (say 0.1% per annum).
There is already a way for investors to access an indexed fund. It is called the STI ETF.
However, some small investors may find it difficult to open a account with a stockbroker or with the Central Depository.
I will study a way to set up a mutual fund that allows small investors to invest in:
* indexed fund, eg STI ETF
* government bonds
This service can be handled through the internet or contact center, and can be at a very low cost (say 0.1% per annum).
Using SingPass
I logged into the portal of the People's Association using my SingPass. I was surprised that the SingPass works well. I used to have problems previously.
Singpass is a password issued by an government agency to identify each Singaporean. You can use it for several government agencies, such as the Central Provident Fund.
I shall use Singpass regularly from now.
Singpass is a password issued by an government agency to identify each Singaporean. You can use it for several government agencies, such as the Central Provident Fund.
I shall use Singpass regularly from now.
Invest in the money market
Dear Mr Tan
Please explain the difference between this fund & share. I have to buy @ bid price which is very much like buying share from the market. I do not understand how the yield of 3% is calculated. Some good shares give a better dividend yield.
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REPLY:
The money market fund is invested in money market investments, such as short term bonds and certificates of deposits. These investments currently yield about 3% per annum.
When you invest in the money market, you buy units at its unit price (or net asset value). The unit price changes everyday according to the value of its underlying investments.
If you measure change in the unit price over a few weeks, you will probably find that the annualised yield is about 3% per annum. This yield may change according to the underlying investments.
The manager of the fund will take a small charge (usually less than 0.5% per annum) from the fund. This charge has already been deducted to give you the net yield as reflected in the unit price.
I understand that the money market fund managed by NTUC Income has the following features:
* annual charge of 0.25% per annum (already deducted from the net yield)
* no transaction cost or sales charge when you buy or sell the units.
* a policy fee payable on the flexi-cash policy (invest in the money market fund)
* currently, a net yield of about 3% per annum.
To be sure, you should call NTUC Income and talk to their consultant, or visit their website.
Please explain the difference between this fund & share. I have to buy @ bid price which is very much like buying share from the market. I do not understand how the yield of 3% is calculated. Some good shares give a better dividend yield.
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REPLY:
The money market fund is invested in money market investments, such as short term bonds and certificates of deposits. These investments currently yield about 3% per annum.
When you invest in the money market, you buy units at its unit price (or net asset value). The unit price changes everyday according to the value of its underlying investments.
If you measure change in the unit price over a few weeks, you will probably find that the annualised yield is about 3% per annum. This yield may change according to the underlying investments.
The manager of the fund will take a small charge (usually less than 0.5% per annum) from the fund. This charge has already been deducted to give you the net yield as reflected in the unit price.
I understand that the money market fund managed by NTUC Income has the following features:
* annual charge of 0.25% per annum (already deducted from the net yield)
* no transaction cost or sales charge when you buy or sell the units.
* a policy fee payable on the flexi-cash policy (invest in the money market fund)
* currently, a net yield of about 3% per annum.
To be sure, you should call NTUC Income and talk to their consultant, or visit their website.
Insurance planning for the family
Dear Mr. Tan,
I have been visiting your blog and your website to get some ideas on insurance tips.
I am from a middle income family. Both my husband and I work. Our combined income is about $7,000 per month. I have two young children.
I plan to buy term policy for my husband and myself, and perhaps some investment linked plans for my children. Is the investment linked plans suitable to save for their education funds?
Why do people opt for decreasing term if the sum assured reduces every year? It does not sound reasonable to opt for decreasing term just because the premium is slightly lower?
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REPLY
I prefer the investment linked plan to save for the child's education fund. You can read this FAQ.
I recommend the decreasing term assurance as the premium cost half of the normal term. As your savings build up each year, your need for insurance cover reduces correspondingly.
However, if you wish to keep to a level term, so that the total amount of the term and savings increases over the years, it is also a good idea. It is all right to pay twice the premium for a level term, as the premium is quite low anyway.
I have been visiting your blog and your website to get some ideas on insurance tips.
I am from a middle income family. Both my husband and I work. Our combined income is about $7,000 per month. I have two young children.
I plan to buy term policy for my husband and myself, and perhaps some investment linked plans for my children. Is the investment linked plans suitable to save for their education funds?
Why do people opt for decreasing term if the sum assured reduces every year? It does not sound reasonable to opt for decreasing term just because the premium is slightly lower?
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REPLY
I prefer the investment linked plan to save for the child's education fund. You can read this FAQ.
I recommend the decreasing term assurance as the premium cost half of the normal term. As your savings build up each year, your need for insurance cover reduces correspondingly.
However, if you wish to keep to a level term, so that the total amount of the term and savings increases over the years, it is also a good idea. It is all right to pay twice the premium for a level term, as the premium is quite low anyway.
Adequate insurance
Hi Mr Tan,
Under Financial Plannign for young, it is stated "If you have dependents, you should have life insurance for 5 to 10 years of your earnings. If you earn $30,000 a year, you should have life insurance for $150,000 or more."
Why is the life insurance amount tied to earning instead of spending? For e.g. if one earns $30,000 a year but spends only $15,000 a year, does he need to have $150,000 or more insurance? What is the assumption make here? Assuming that most people spent all their income?
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REPLY:
You are right. The amount of life insurance should be tied to spending. But, for most people, the spending is quite closely related to the earnings.
Some people, however, think that it is the loss of earnings that should be insured. So, both formulas are about right.
Under Financial Plannign for young, it is stated "If you have dependents, you should have life insurance for 5 to 10 years of your earnings. If you earn $30,000 a year, you should have life insurance for $150,000 or more."
Why is the life insurance amount tied to earning instead of spending? For e.g. if one earns $30,000 a year but spends only $15,000 a year, does he need to have $150,000 or more insurance? What is the assumption make here? Assuming that most people spent all their income?
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REPLY:
You are right. The amount of life insurance should be tied to spending. But, for most people, the spending is quite closely related to the earnings.
Some people, however, think that it is the loss of earnings that should be insured. So, both formulas are about right.
How To Get A Good Research Job
Dr. Lee Kum Tatt spent his life promoting and doing various types of research. He tells us that the joys he got from his work far outweigh the price he had to pay. Read the articles on this subject in his blog.
FAQ: Save for your child's education
www.tankinlian.com/faq
1. How much should I save for my child's education?
It depends on the amount that you can afford to set aside, and your plan for your child's education. Most parents set aside $100 a month for a child, but some save as much as $500 a month.
2. Will the saving be adequate to pay for the total cost of the university education?
If your child can be admitted to a local university, the cost is affordable and is largely subsidised by the government. The quality is among the best, by international standards.
If your child wish to or have to go overseas , there are many universities to choose from. They offer a wide range of degrees at various budget. You can find one that meets your budget and your child's interest.
Your child may be able to qualify for a scholarship. Many students can find part time work to pay for their education. Some universities offer a student loan.
You should set aside some savings for your child's education. If it cannot meet the full cost of the education, it can at least meet part of the cost. This will be helpful to your child.
3. How should I invest the savings?
You have the following choices:
* buy an endowment plan (also called an "education" plan)
* buy an investment linked plan, supplemented with decreasing term insurance
4. Should I buy an endowment plan?
Under this plan, you have to pay a fixed monthly premium for a specified number of years. The plan pays the sum assured plus bonuses, on the maturity date or on the premature death of the parent.
In today's environment, the endowment plan may give a yield of about 4% per annum (for illustration only). For a monthly saving of $150 over 18 years, the maturity sum is projected to be $52,000. This projected sum comprise of a guaranteed portion (about 80%). The remainder depends on the bonuses, which is not guaranteed.
5. Should I buy an investment linked plan?
Under this plan, you can set aside about 3% of your savings to buy a decreasing term assurance and invest the remaining 97% in an investment linked fund. This is likely to give you a higher yield.
After deducting for the cost of the decreasing term insurance and the cost of investment, the investment-linked plan (invested in a balanced fund, with moderately low risk) is likely to give 10% to 15% more than the endowment plan. This could mean $5,000 to $8,000 more for a monthly saving of $150 over 18 years.
The investment-linked plan can give a better return, as its charges are generally lower than an endowment plan.
This plan also give the flexibility to the parent as follows:
* change the monthly savings
* change the maturity date and period of savings
* withdraw the investment partially, and in stages
* stop saving for a temporary period, and make up at a later date
These changes can be done without any penalty.
6. What is the duration of the saving plan?
If you buy an endowment plan, you have to fixed the duration in advance. Most parents will take a plan to mature at a specified age for the child (say 18 years).
If you buy an investment-linked plan, you do not have to specify the duration in advance. You have the flexibility to continue the plan for as long as needed. You can also make an earlier withdrawal, partially or in full, without any penalty.
7. How much should I insure under the investment-linked plan?
You can decide on the amount of insurance. If you intend to save $150 a month over 18 years, you can insure for $32,400 (i.e. total saving for the period) under a decreasing term insurance plan. The amount payable in the event of premature death of the parent will decreasing gradually with each year. As the accumulated saving increase yearly, the total sum will most likely be higher than the payout under the endowment plan.
As the premium is so low, it is better for you to insure for a higher sum, say $50,000.
8. Can I get a higher return under the investment-linked plan?
You can invest in a global equity fund and earn a higher return over the saving period. You should choose a large, well diversified, low cost fund.
Although the fund has higher volatility (i.e. the value of the investments can fluctuate significantly at any point of time), you have the option to time your withdrawal to earn a better return.
By taking some risk, you can a higher return, say up to 20% more. This can give up to $10,000 more, for a monthly saving of $150.
9. Why does the endowment plan give a lower return?
An endowment plan give a lower return compared to an investment-linked plan for the following reasons:
* a higher amount of commission is paid to the agent
* the insurance company takes a larger share of profits
* after buying the policy, the policyholder is locked into the contract for many years
An investment-linked plan gives a better return, as the plan is transparent and flexible. The insurance company has to offer competitive terms all the time.
1. How much should I save for my child's education?
It depends on the amount that you can afford to set aside, and your plan for your child's education. Most parents set aside $100 a month for a child, but some save as much as $500 a month.
2. Will the saving be adequate to pay for the total cost of the university education?
If your child can be admitted to a local university, the cost is affordable and is largely subsidised by the government. The quality is among the best, by international standards.
If your child wish to or have to go overseas , there are many universities to choose from. They offer a wide range of degrees at various budget. You can find one that meets your budget and your child's interest.
Your child may be able to qualify for a scholarship. Many students can find part time work to pay for their education. Some universities offer a student loan.
You should set aside some savings for your child's education. If it cannot meet the full cost of the education, it can at least meet part of the cost. This will be helpful to your child.
3. How should I invest the savings?
You have the following choices:
* buy an endowment plan (also called an "education" plan)
* buy an investment linked plan, supplemented with decreasing term insurance
4. Should I buy an endowment plan?
Under this plan, you have to pay a fixed monthly premium for a specified number of years. The plan pays the sum assured plus bonuses, on the maturity date or on the premature death of the parent.
In today's environment, the endowment plan may give a yield of about 4% per annum (for illustration only). For a monthly saving of $150 over 18 years, the maturity sum is projected to be $52,000. This projected sum comprise of a guaranteed portion (about 80%). The remainder depends on the bonuses, which is not guaranteed.
5. Should I buy an investment linked plan?
Under this plan, you can set aside about 3% of your savings to buy a decreasing term assurance and invest the remaining 97% in an investment linked fund. This is likely to give you a higher yield.
After deducting for the cost of the decreasing term insurance and the cost of investment, the investment-linked plan (invested in a balanced fund, with moderately low risk) is likely to give 10% to 15% more than the endowment plan. This could mean $5,000 to $8,000 more for a monthly saving of $150 over 18 years.
The investment-linked plan can give a better return, as its charges are generally lower than an endowment plan.
This plan also give the flexibility to the parent as follows:
* change the monthly savings
* change the maturity date and period of savings
* withdraw the investment partially, and in stages
* stop saving for a temporary period, and make up at a later date
These changes can be done without any penalty.
6. What is the duration of the saving plan?
If you buy an endowment plan, you have to fixed the duration in advance. Most parents will take a plan to mature at a specified age for the child (say 18 years).
If you buy an investment-linked plan, you do not have to specify the duration in advance. You have the flexibility to continue the plan for as long as needed. You can also make an earlier withdrawal, partially or in full, without any penalty.
7. How much should I insure under the investment-linked plan?
You can decide on the amount of insurance. If you intend to save $150 a month over 18 years, you can insure for $32,400 (i.e. total saving for the period) under a decreasing term insurance plan. The amount payable in the event of premature death of the parent will decreasing gradually with each year. As the accumulated saving increase yearly, the total sum will most likely be higher than the payout under the endowment plan.
As the premium is so low, it is better for you to insure for a higher sum, say $50,000.
8. Can I get a higher return under the investment-linked plan?
You can invest in a global equity fund and earn a higher return over the saving period. You should choose a large, well diversified, low cost fund.
Although the fund has higher volatility (i.e. the value of the investments can fluctuate significantly at any point of time), you have the option to time your withdrawal to earn a better return.
By taking some risk, you can a higher return, say up to 20% more. This can give up to $10,000 more, for a monthly saving of $150.
9. Why does the endowment plan give a lower return?
An endowment plan give a lower return compared to an investment-linked plan for the following reasons:
* a higher amount of commission is paid to the agent
* the insurance company takes a larger share of profits
* after buying the policy, the policyholder is locked into the contract for many years
An investment-linked plan gives a better return, as the plan is transparent and flexible. The insurance company has to offer competitive terms all the time.
Structured deposit in foreign currency
Dear Sir,
I saw your blog on structured deposit. I had observed our local banks' structured deposits are out there to make a lot of money, in particular one bank which I really dislike.
I have help my parents to invest wrongly in one of the structured products with formula involving CMS (interest rate swap).
However, I had satisfactory experience with foreign banks. Their rates are competitive and the structured products are better. I had one with a formula with CMS, but almost 3 yrs till today, I still get 6 percent coupon payment, but suffered forex loss (mainly I did not hedge the investment).
I obtained almost 10 percent on my investment with a foreign bank. Luckily, I sold off recently before it plunged a few percent (due to credit rating).
I am thinking if you are writing a investment related book ? I had a good working experience with my friends in United States and we had published a book under John Wiley. I wish to thank you for working on your blog. I like to read your articles very much.
--------------------------------------------
REPLY:
If you invest in a foreign currency product, you can get a higher return (as interest rates on foreign currency deposits are higher than Singapore dollar deposits). You stand the risk of foreign currency loss.
If you hedge this risk, the return will be reduced to almost the same as a Singapore dollar deposit After deducting the charges on the structured product, you will be worse off.
You can only get a higher return by making the right timing on the foreign exchange, but this is uncertain.
I saw your blog on structured deposit. I had observed our local banks' structured deposits are out there to make a lot of money, in particular one bank which I really dislike.
I have help my parents to invest wrongly in one of the structured products with formula involving CMS (interest rate swap).
However, I had satisfactory experience with foreign banks. Their rates are competitive and the structured products are better. I had one with a formula with CMS, but almost 3 yrs till today, I still get 6 percent coupon payment, but suffered forex loss (mainly I did not hedge the investment).
I obtained almost 10 percent on my investment with a foreign bank. Luckily, I sold off recently before it plunged a few percent (due to credit rating).
I am thinking if you are writing a investment related book ? I had a good working experience with my friends in United States and we had published a book under John Wiley. I wish to thank you for working on your blog. I like to read your articles very much.
--------------------------------------------
REPLY:
If you invest in a foreign currency product, you can get a higher return (as interest rates on foreign currency deposits are higher than Singapore dollar deposits). You stand the risk of foreign currency loss.
If you hedge this risk, the return will be reduced to almost the same as a Singapore dollar deposit After deducting the charges on the structured product, you will be worse off.
You can only get a higher return by making the right timing on the foreign exchange, but this is uncertain.
Do what is best for the customers
Mr Tan
You build a big and successful business for NTUC Income. In growing the business, did you adopt the same approach as other CEOs in facing the real challenges, and seizing the opporunities?
--------------------------------
REPLY:
The business environment, challenges and opportunities are similar. But,I adopted an approach that was quite different from most other CEOs.
My starting point is: what are the real needs of our customers? how can we best serve these needs?
By putting customers first, I was able to build a large business and still make it profitable. We marketed products that were always the best for the customers at that time.
We did not have rely on "hype" to market the products. We keep the products simple and educate the customers truthfully on the features of the product.
We could still run a profitable business, by keeping our expenses low and avoiding wasteful expenditure.
In most other businesses, the CEO's primary focus is to meet the sales and profit targets - at all cost.
These CEOs might be forced, under competitive pressure, to adopt unethical practices. They may market products that make profit for the shareholders, but are not to the benefit of the customers. For example, some structured products introduced recently fall into this category. Some even manipulated the accounts.
I hope that CEOs of all businesses can adopt the approach of, "do what is best for the customers".
You build a big and successful business for NTUC Income. In growing the business, did you adopt the same approach as other CEOs in facing the real challenges, and seizing the opporunities?
--------------------------------
REPLY:
The business environment, challenges and opportunities are similar. But,I adopted an approach that was quite different from most other CEOs.
My starting point is: what are the real needs of our customers? how can we best serve these needs?
By putting customers first, I was able to build a large business and still make it profitable. We marketed products that were always the best for the customers at that time.
We did not have rely on "hype" to market the products. We keep the products simple and educate the customers truthfully on the features of the product.
We could still run a profitable business, by keeping our expenses low and avoiding wasteful expenditure.
In most other businesses, the CEO's primary focus is to meet the sales and profit targets - at all cost.
These CEOs might be forced, under competitive pressure, to adopt unethical practices. They may market products that make profit for the shareholders, but are not to the benefit of the customers. For example, some structured products introduced recently fall into this category. Some even manipulated the accounts.
I hope that CEOs of all businesses can adopt the approach of, "do what is best for the customers".
Increase value for all stakeholders
Many companies have a focus, "to increase shareholder value". They aim to maximise the profit, so that the share price goes up exponentially. This is the best way to increase the sharehbolder value.
I hope that more companies will recognise that the importance of all stakeholders:
* customers
* employees
* shareholders
* the community
The focus should be to increase the total value to all stakehholders, and to distribute the rewards fairly.
This can be achieved by:
* give good value to the customers
* pay good wages to employes
* pay good dividends to shareholders
* contribute to the community
How is this possible?
* by improving efficiency
* by cutting down on wasteful activities
* by offering good products that are valuable to customers
* by operating honestly and ethically
I hope that more companies will recognise that the importance of all stakeholders:
* customers
* employees
* shareholders
* the community
The focus should be to increase the total value to all stakehholders, and to distribute the rewards fairly.
This can be achieved by:
* give good value to the customers
* pay good wages to employes
* pay good dividends to shareholders
* contribute to the community
How is this possible?
* by improving efficiency
* by cutting down on wasteful activities
* by offering good products that are valuable to customers
* by operating honestly and ethically
ETFs sold by Vanguard Mutual Group
Vanguard offer 4 bond ETFs and 27 stock ETFs. The stock ETFs cover different segments, such as large cap, mid cap, small cap, speciality, sector and international.
An ETF (exchange traded fund) is a fund comprising of many investments. You can trade the units of the ETF in a stock exchange at a specific price. The trade will be done, if there is another person willing to trade with you at that price.
A mutual fund is also a fund comprising of many investments. You will buy and sell based on the net asset value computed by the fund manager at the end of the day.
The Vanguard ETFs are large, well diversified, low cost funds.
The expense ratio for most of these ETFs are around 0.11% (yes, one tenth of 1%). The lowest is 0.07% and the highest is 0.28%. (By contrast, the actively managed funds in Singapore have an expense ratio of 1.5% to 3.5%.)
Some of the ETFs have more than 3,000 holdings. This is clearly a well diversified fund. Most of them have more than 200 holdings (which is quite well diversified).
Here are Vanguard's key advantages:
* indexing expertise, with 30 years of experience
* low expense ratio
* trusted name: competitive performance, low cost and high ethical standards.
I found that I can buy and sell the Vanguard ETFs through POEMS (offered by Philips).
An ETF (exchange traded fund) is a fund comprising of many investments. You can trade the units of the ETF in a stock exchange at a specific price. The trade will be done, if there is another person willing to trade with you at that price.
A mutual fund is also a fund comprising of many investments. You will buy and sell based on the net asset value computed by the fund manager at the end of the day.
The Vanguard ETFs are large, well diversified, low cost funds.
The expense ratio for most of these ETFs are around 0.11% (yes, one tenth of 1%). The lowest is 0.07% and the highest is 0.28%. (By contrast, the actively managed funds in Singapore have an expense ratio of 1.5% to 3.5%.)
Some of the ETFs have more than 3,000 holdings. This is clearly a well diversified fund. Most of them have more than 200 holdings (which is quite well diversified).
Here are Vanguard's key advantages:
* indexing expertise, with 30 years of experience
* low expense ratio
* trusted name: competitive performance, low cost and high ethical standards.
I found that I can buy and sell the Vanguard ETFs through POEMS (offered by Philips).
Leaving the assets to the family
Hi Mr Tan,
I hope that you are enjoying your visit to America. I like your tips on investment and insurance, especially for a young person. What are your ideas about leaving the assets to the family, for a person who has enough for his or her own needs?
-----------------------------------------
REPLY:
For a person who is very well off, I suggest the following approach:
1. Set aside sufficient funds to take care of your own future needs, e.g. cost of living and medical care. Buy a life annuity to provide a monthly income.
2. Set aside an additional lump sum to be used for emergencies. Invest in a fund to earn an good rate of return. Make sure that it can be withdrawn without penalty.
3. Transfer some of the assets to your children and grandchildren now. It will be more useful to them now, rather than many years later. If you do not wish to make a lump sum transfer, you can buy a fixed term annuity to transfer this sum over 5, 10 or 15 years.
4. Be generous. Donate to the community and to charity.
I hope that you are enjoying your visit to America. I like your tips on investment and insurance, especially for a young person. What are your ideas about leaving the assets to the family, for a person who has enough for his or her own needs?
-----------------------------------------
REPLY:
For a person who is very well off, I suggest the following approach:
1. Set aside sufficient funds to take care of your own future needs, e.g. cost of living and medical care. Buy a life annuity to provide a monthly income.
2. Set aside an additional lump sum to be used for emergencies. Invest in a fund to earn an good rate of return. Make sure that it can be withdrawn without penalty.
3. Transfer some of the assets to your children and grandchildren now. It will be more useful to them now, rather than many years later. If you do not wish to make a lump sum transfer, you can buy a fixed term annuity to transfer this sum over 5, 10 or 15 years.
4. Be generous. Donate to the community and to charity.
Monday, May 21, 2007
Recognised by my voice
I went to Grassroot club with a friend.
Someone approached me, "Are you Mr Tan, formerly from NTUC Income?" He was not sure about my appearance (as I was dressed casually and wore glasses). But he recognised my voice.
He had attended my talks before. He said, "You speak slowly, carefully and clearly. I find it easy to understand you."
Ths is the first time that I was recognised by my voice.
Someone approached me, "Are you Mr Tan, formerly from NTUC Income?" He was not sure about my appearance (as I was dressed casually and wore glasses). But he recognised my voice.
He had attended my talks before. He said, "You speak slowly, carefully and clearly. I find it easy to understand you."
Ths is the first time that I was recognised by my voice.
Why is CPF inadequate?
Hi Mr Tan
We used to have a high saving rate to the CPF. Why is the saving inadequate for people to retire?
-----------------------------------------------------
REPLY:
The CPF system encountered the following shortcomings during the past years:
* too much savings were invested in expensive property
* interest rate on CPF was quite low, at 2.5% p.a.
* the contribution to CPF were cut on a few occasions to reduce business cost
* when CPF was liberalised, many members made bad investments in financial products with high charges
These shortcomings have been recognised in recent years, and are now being addressed.
I wish to give some tips for young people on how to invest their CPF savings and also set aside an 10% to 15% of the earnings as additional savings for the future. Read my tips in this FAQ.
We used to have a high saving rate to the CPF. Why is the saving inadequate for people to retire?
-----------------------------------------------------
REPLY:
The CPF system encountered the following shortcomings during the past years:
* too much savings were invested in expensive property
* interest rate on CPF was quite low, at 2.5% p.a.
* the contribution to CPF were cut on a few occasions to reduce business cost
* when CPF was liberalised, many members made bad investments in financial products with high charges
These shortcomings have been recognised in recent years, and are now being addressed.
I wish to give some tips for young people on how to invest their CPF savings and also set aside an 10% to 15% of the earnings as additional savings for the future. Read my tips in this FAQ.
Singaporeans have to work 10 years longer
Dear Mr Tan,
Yes, I think what you say is correct. It seems there is no choice but for people to keep working in order to fund those extra years of life. It is part of the "new reality" that we should learn to accept.
It is not really anyone's fault. It simply results from our longer lifespans.
Another point is that it doesn't necessarily have to be a negative thing. Since many people are still energetic and vibrant in those 10 years -- from age 55 to 65 -- they will probably want something useful to do. (Work gives them that chance.)
In fact, many rich people keep working eventhough they don't have to.
Work gives a sense of accomplishment that is very fulfilling. It adds meaning to life that you don't get if you retire to watch TV all day.
Larry
Yes, I think what you say is correct. It seems there is no choice but for people to keep working in order to fund those extra years of life. It is part of the "new reality" that we should learn to accept.
It is not really anyone's fault. It simply results from our longer lifespans.
Another point is that it doesn't necessarily have to be a negative thing. Since many people are still energetic and vibrant in those 10 years -- from age 55 to 65 -- they will probably want something useful to do. (Work gives them that chance.)
In fact, many rich people keep working eventhough they don't have to.
Work gives a sense of accomplishment that is very fulfilling. It adds meaning to life that you don't get if you retire to watch TV all day.
Larry
Have enough money to retire gracefully
In his letter published in Today, the writer said, "It is sad that a worker in Singapore, after working for 35 years does not have CPF money or savings to lead a retired life, even though he has lived frugally all his life".
Another person posted this strong view in my blog:
"Why should older workers be working? They should be at home looking after their grand-kids. What kind of Singapore have we created where the dreams of the lower class have been smashed?"
We have to recognise an important fact. Life expectancy have improved by about 15 years, during the past forty years. People should now be working at least 10 years longer, before they retire.
In the past, people think of retiring at 55 years. Today, we have to think about retiring at 65 years. We need to work longer to fund a longer period of life after retirement.
Another person posted this strong view in my blog:
"Why should older workers be working? They should be at home looking after their grand-kids. What kind of Singapore have we created where the dreams of the lower class have been smashed?"
We have to recognise an important fact. Life expectancy have improved by about 15 years, during the past forty years. People should now be working at least 10 years longer, before they retire.
In the past, people think of retiring at 55 years. Today, we have to think about retiring at 65 years. We need to work longer to fund a longer period of life after retirement.
High expense ratio of structured products
Dear Mr Tan
I enjoy your posting on your meeting with Mr Bogle of Vanguard. You said that structured products are being sold in Singapore with high expense ratios (which are not disclosed). The end investors get a yield of 1% p.a. or lower after investing for 3 to 5 years.
Can you give some examples?
--------------------------------------------
REPLY:
I suggest that you read the following FAQs in my website:
Avoid Structured Products
Structured Investment Products
I enjoy your posting on your meeting with Mr Bogle of Vanguard. You said that structured products are being sold in Singapore with high expense ratios (which are not disclosed). The end investors get a yield of 1% p.a. or lower after investing for 3 to 5 years.
Can you give some examples?
--------------------------------------------
REPLY:
I suggest that you read the following FAQs in my website:
Avoid Structured Products
Structured Investment Products
Consumer Protection - Financial Products
21 May 2007
Editor
Today Paper
Paul Chan Poh Hoi wrote in Today paper, "I see a paradox in the spirit of the Consumer Protection and Fair Trading Act".
Under this Act, several professional bodies, such as the medical association, are asked to dump their fee guidelines and let the fees be decided by market forces.
Mr Chan thinks that fee guidelines "may not necessarily be a bad thing". Without fee guidelines, consumers may be overcharged for the services, especially if the fees are not transparent. "Unwary consumers may be put at a disadvantageous position."
I agree with the views expressed by Paul Chan.
I can quote a similar situation with financial products. Under the "let the buyer's beware", a financial institution is allowed to sell almost any product, so long as they provide certain information about their product.
In many cases, the disclosed information is inadequate for consumers to make a right choice.
Some of these products require the investor to bet on how many investment counters or indices will reach certain levels over a number of years, for which they may make a loss or have a large proportion of the gain taken away. Even an actuary (like me) cannot assess the probability and the fairness of the transaction.
There are also unspecified charges that are taken away from the investment fund to pay the various parties that design, market and manage the product. The structuring do not create any value to the investors collectively. The charges eat into the total return from the investments.
I hope that the regulators can take a more effective approach towards consumer protection.
Tan Kin Lian
Read more about the structured products.
Editor
Today Paper
Paul Chan Poh Hoi wrote in Today paper, "I see a paradox in the spirit of the Consumer Protection and Fair Trading Act".
Under this Act, several professional bodies, such as the medical association, are asked to dump their fee guidelines and let the fees be decided by market forces.
Mr Chan thinks that fee guidelines "may not necessarily be a bad thing". Without fee guidelines, consumers may be overcharged for the services, especially if the fees are not transparent. "Unwary consumers may be put at a disadvantageous position."
I agree with the views expressed by Paul Chan.
I can quote a similar situation with financial products. Under the "let the buyer's beware", a financial institution is allowed to sell almost any product, so long as they provide certain information about their product.
In many cases, the disclosed information is inadequate for consumers to make a right choice.
Some of these products require the investor to bet on how many investment counters or indices will reach certain levels over a number of years, for which they may make a loss or have a large proportion of the gain taken away. Even an actuary (like me) cannot assess the probability and the fairness of the transaction.
There are also unspecified charges that are taken away from the investment fund to pay the various parties that design, market and manage the product. The structuring do not create any value to the investors collectively. The charges eat into the total return from the investments.
I hope that the regulators can take a more effective approach towards consumer protection.
Tan Kin Lian
Read more about the structured products.
Sunday, May 20, 2007
Critical illness coverage - expensive
A policyholder was sold a critical illness coverage at age 55. She paid $17,000 in premium for 6 years and received a total of $9,000 when the policy was terminated. The cost of the insurance was $8,000 for 6 years for a coverage of about $45,000.
She decided to terminate the policy after finding out that the non-guaranteed benefit (i.e. bonus) had reduced by 75% from the initial projection.
She asked:
1. Should the agent recommend this coverage for me, when I was already 55 years old?
2. Did I make the right decision to terminate my policy after 6 years?
----------------------------
MY REPLY:
The agent was required to assess your needs and to offer a suitable plan for you. It depends on your needs, and the discussion that you had with your agent.
If I were in your position, I would probably have taken the same decision to terminate the policy. This plan is costly and the cost has increased due to the reduction in the bonus.
She decided to terminate the policy after finding out that the non-guaranteed benefit (i.e. bonus) had reduced by 75% from the initial projection.
She asked:
1. Should the agent recommend this coverage for me, when I was already 55 years old?
2. Did I make the right decision to terminate my policy after 6 years?
----------------------------
MY REPLY:
The agent was required to assess your needs and to offer a suitable plan for you. It depends on your needs, and the discussion that you had with your agent.
If I were in your position, I would probably have taken the same decision to terminate the policy. This plan is costly and the cost has increased due to the reduction in the bonus.
Make it easy to move to a new home
In many countries, it is common for a person to move to a new home, if he were to work in another town.
This concept is not yet popular in Singapore.
With traffic congestion, it may be useful to encourage this concept. This may be more suitable for singles and families without children.
To make this possible, a few changes have to be introduced:
* reduce or remove the stamp duty for purchase of property
* make it easy for children to change schools, to be near the home.
I hope that these suggestions can be considered. It will lead to a better quality of life. It will also reduce traffic congestion.
This concept is not yet popular in Singapore.
With traffic congestion, it may be useful to encourage this concept. This may be more suitable for singles and families without children.
To make this possible, a few changes have to be introduced:
* reduce or remove the stamp duty for purchase of property
* make it easy for children to change schools, to be near the home.
I hope that these suggestions can be considered. It will lead to a better quality of life. It will also reduce traffic congestion.
Skype - Online
When I am on my computer, Skype is automatically loaded. Anyone who has my Skype address will know that I am "Online". They can send an instant message to me.
If I wish to make an appointment for a Skype meeting, I ask someone to log into Skype at a certain time. They can see that I am "online" and can contact me by Skype. We can use instant message or talk over Skype.
Skype is free, if used computer to computer. This is useful for international calls.
If I wish to make an appointment for a Skype meeting, I ask someone to log into Skype at a certain time. They can see that I am "online" and can contact me by Skype. We can use instant message or talk over Skype.
Skype is free, if used computer to computer. This is useful for international calls.
Appointment for a telephone call
In the past, many people arrangement to meet face to face.
I find it better to discuss over the telephone. We can send materials by e-mail and arrange a time to have a telephone call (like making an appointment for a meeting).
This is more productive. It is a new way of working.
I find it better to discuss over the telephone. We can send materials by e-mail and arrange a time to have a telephone call (like making an appointment for a meeting).
This is more productive. It is a new way of working.
Personal Email account
I sent an e-mail to my daughter in her company e-mail account.
The e-mail was delivered after a few days. It appears that the company's email server has some mechanism to block certain types of incoming mail that appear to be "personal" in nature.
I asked my daughter to open a Gmail account. This is for her personal mail (ie not connected with her business).
I suggest that each person should have a personal e-mail account with Gmail, Yahoo or hotmail. Use this for your personal e-mails.
The e-mail was delivered after a few days. It appears that the company's email server has some mechanism to block certain types of incoming mail that appear to be "personal" in nature.
I asked my daughter to open a Gmail account. This is for her personal mail (ie not connected with her business).
I suggest that each person should have a personal e-mail account with Gmail, Yahoo or hotmail. Use this for your personal e-mails.
Jobs for Seniors - Seah Leong Khai
In his letter published in Today paper, Seah Leong Khai said that the proposed law to get employers to rehire workers beyond age 62 may not make business sense from a business point of view.
If required by law, most companies will rehire them on a part-time or temporary basis, and on unimportant jobs "at lower rates of pay and benefits" to justify the lower productivity and at higher operating costs.
I agree with this point of view.
However, I wish to find ways to enhance the value of older workers. They bring the following benefits:
* experience
* maturity
* positive work attitude
They may be able to bring this value to their current employer or to a new employer (ie to make a change of job).
If required by law, most companies will rehire them on a part-time or temporary basis, and on unimportant jobs "at lower rates of pay and benefits" to justify the lower productivity and at higher operating costs.
I agree with this point of view.
However, I wish to find ways to enhance the value of older workers. They bring the following benefits:
* experience
* maturity
* positive work attitude
They may be able to bring this value to their current employer or to a new employer (ie to make a change of job).
Pupsik
Dear Mr Tan
Why is the website for your grand-daughter called Pupsik?
---------------------
REPLY:
Pupsik is a Russian word for "baby doll". Su Ling decided to use this name for the website for her daughter, Vera. Vera's father is Vitali, from Russia. Vera is half Russian.
Su Ling wanted to share her experience in raising Vera. She also gives tips on the products that she buys as a mother. She says that her blog will be interesting for young moms and dads.
Why is the website for your grand-daughter called Pupsik?
---------------------
REPLY:
Pupsik is a Russian word for "baby doll". Su Ling decided to use this name for the website for her daughter, Vera. Vera's father is Vitali, from Russia. Vera is half Russian.
Su Ling wanted to share her experience in raising Vera. She also gives tips on the products that she buys as a mother. She says that her blog will be interesting for young moms and dads.
How to overcome myths
Dr Lee Kum Tatt tells me that Benjamin Franklin is one of his hero scientists who inspired him to do many of the things he did in his life.
He was deeply involved in the building of the science infrastructure Singapore needed in the early days of its development. He actively participated in the establishment of organizations to promote science and technology for national development. He launched the quality movement and R & D activities.
He encountered obstacles in the process but he managed to get many people to work with him.
You can read his blog and learn how he overcame myths that stood in his way.
Tan Kin Lian
19th May 2007
He was deeply involved in the building of the science infrastructure Singapore needed in the early days of its development. He actively participated in the establishment of organizations to promote science and technology for national development. He launched the quality movement and R & D activities.
He encountered obstacles in the process but he managed to get many people to work with him.
You can read his blog and learn how he overcame myths that stood in his way.
Tan Kin Lian
19th May 2007
Personal accident insurance
Dear Dr Tan.
Firstly I would like to say good job on your blog, truly inspiring.
Term life in Malaysia, somehow seems to be quite expensive. For RM100,00 protection (living benefit), I need to pay about RM67 per month.
This seems to be much more expensive in comparison to other countries, i.e. USA and Singapore.
I decided to consider a personal accident plan, which looks the same as a term life, but covers accidental death only.
Do you have personal accident, like in Malaysia? What is your view about buying a personal accdient plan, compared to a term life?
---------------------
REPLY:
Personal accident plans are sold in Singapore as well. The premium is less than $100 per annum, for a cover of $100,000. It covers death and permanent total disability caused by accidents.
In my view, a personal accident plan is suitable, especially for younger people.
As a Malaysian, you can buy a term life in Singapore, if you wish. You can also buy it from overseas.
Firstly I would like to say good job on your blog, truly inspiring.
Term life in Malaysia, somehow seems to be quite expensive. For RM100,00 protection (living benefit), I need to pay about RM67 per month.
This seems to be much more expensive in comparison to other countries, i.e. USA and Singapore.
I decided to consider a personal accident plan, which looks the same as a term life, but covers accidental death only.
Do you have personal accident, like in Malaysia? What is your view about buying a personal accdient plan, compared to a term life?
---------------------
REPLY:
Personal accident plans are sold in Singapore as well. The premium is less than $100 per annum, for a cover of $100,000. It covers death and permanent total disability caused by accidents.
In my view, a personal accident plan is suitable, especially for younger people.
As a Malaysian, you can buy a term life in Singapore, if you wish. You can also buy it from overseas.
Investment linked products in India
I met an actuary from India.
He told me that the regular premium investment linked products now sold in India have 95% allocation. This means that 95% of the premium is invested from the first month. Only 5% of the premium is used to pay commission to the agent.
Although there is a penalty on early termination, the amount of the penalty is small as the agent get a maximum commission of 30% in the first year.
I was surprised.
After being on the market for more than 15 years in Singapore, the investment linked products still have extremely high charges. More than 100% of the premium is taken away during the first two or three years. The exception is NTUC Income, where the charges are much lower than the market.
Consumers in Singapore are paying too much for their investment linked products. I hope that, when the consumers shop around for a better deal, the sales charges in Singapore can come down to a lower level.
He told me that the regular premium investment linked products now sold in India have 95% allocation. This means that 95% of the premium is invested from the first month. Only 5% of the premium is used to pay commission to the agent.
Although there is a penalty on early termination, the amount of the penalty is small as the agent get a maximum commission of 30% in the first year.
I was surprised.
After being on the market for more than 15 years in Singapore, the investment linked products still have extremely high charges. More than 100% of the premium is taken away during the first two or three years. The exception is NTUC Income, where the charges are much lower than the market.
Consumers in Singapore are paying too much for their investment linked products. I hope that, when the consumers shop around for a better deal, the sales charges in Singapore can come down to a lower level.
Saturday, May 19, 2007
MiniBond Series
Hi Mr. Tan
I read your blog everyday and enjoy your good advice.
When you are the CEO of INCOME, I had full confidence in you and invested 90% of my saving/investment in INCOME until to-day. I made a lot of money through INCOME shares, endowment policy, combined fund).
My insurance policy will mature soon. I like to invest in the Minibond Series to earn interest from 5.1% to 6.4%)
Is this a low or high risk investment? What is the disadvantage to investor? I do not want to put the more money in the INCOME money market fund because I already had more than $300,000 invested with INCOME.
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REPLY:
I am not familiar with this Minibond series. Can you send some details to me?
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Dear Mr Tan,
Thank you for your reply.
Since you are not familiar with this Minibond, I will not invest it. I do not want to take away to much of your time to look into this.
Anyway, I want to say thanks to you again. Because of your good & frank advice, I have make money from my saving/investment through NTUC INCOME during your time as a CEO.)
I read your blog everyday and enjoy your good advice.
When you are the CEO of INCOME, I had full confidence in you and invested 90% of my saving/investment in INCOME until to-day. I made a lot of money through INCOME shares, endowment policy, combined fund).
My insurance policy will mature soon. I like to invest in the Minibond Series to earn interest from 5.1% to 6.4%)
Is this a low or high risk investment? What is the disadvantage to investor? I do not want to put the more money in the INCOME money market fund because I already had more than $300,000 invested with INCOME.
--------------------------------------------------
REPLY:
I am not familiar with this Minibond series. Can you send some details to me?
--------------------------------------------------
Dear Mr Tan,
Thank you for your reply.
Since you are not familiar with this Minibond, I will not invest it. I do not want to take away to much of your time to look into this.
Anyway, I want to say thanks to you again. Because of your good & frank advice, I have make money from my saving/investment through NTUC INCOME during your time as a CEO.)
Yields on money market fund
Dear Mr Tan,
From its website, fundsupermarket now pays 2.26% p.a. on its cash fund. I am not familiar with the money market fund from OCBC Lion.
What does NTUC offer for its flexi-cash?
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REPLY:
When I studied the NTUC money market fund a month ago, the yield was about 3% p.a.
I suggest that you call the business center and ask them about the yield on their money market fund.
From its website, fundsupermarket now pays 2.26% p.a. on its cash fund. I am not familiar with the money market fund from OCBC Lion.
What does NTUC offer for its flexi-cash?
-------------------------------
REPLY:
When I studied the NTUC money market fund a month ago, the yield was about 3% p.a.
I suggest that you call the business center and ask them about the yield on their money market fund.
Difference between personal and group plan
Dear Mr Tan
I enjoy reading your blog daily, especially topics on money markets and term insurance.
I recently bought the NTUC Income family insurance plan with living benefit rider for protection against 30 critical illnesses. I am paying a premium of about $24 per month for the term insurance. The plan will cover me till 64 years old with possibilty of further renewal.
NTUC Income came up with a new living plan for union members. The deluxe plan covers 30 critical illness as well but it seems to be cheaper.
Which product will you recommend?
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REPLY:
The coverage under a group insurance plan is subject to change on each yearly renewal. The premium may increase or the coverage may be withdrawn. Sometimes, the premium depends on the age in each year, and may be increased when you get older.
Generally, it is better to have a personal plan that provides guaranteed coverage.
My advice: Buy a basic amount of coverage under a personal plan (in spite of the slightly higher premium) and to take the additional coverage under a group plan.
I enjoy reading your blog daily, especially topics on money markets and term insurance.
I recently bought the NTUC Income family insurance plan with living benefit rider for protection against 30 critical illnesses. I am paying a premium of about $24 per month for the term insurance. The plan will cover me till 64 years old with possibilty of further renewal.
NTUC Income came up with a new living plan for union members. The deluxe plan covers 30 critical illness as well but it seems to be cheaper.
Which product will you recommend?
-------------------------------------------
REPLY:
The coverage under a group insurance plan is subject to change on each yearly renewal. The premium may increase or the coverage may be withdrawn. Sometimes, the premium depends on the age in each year, and may be increased when you get older.
Generally, it is better to have a personal plan that provides guaranteed coverage.
My advice: Buy a basic amount of coverage under a personal plan (in spite of the slightly higher premium) and to take the additional coverage under a group plan.
Yield on life insurance policies
Dear Mr. Tan,
Your wrote in your blog that whole life policy gives terribly low return of 1%. My family has 2 living policies with NTUC and 2 with Great Eastern. What is the return for living policies? In your opinion what type of insurance policy commands the highest returns?
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REPLY:
The yield on a living policy is lower than a whole life policy, as it provides a much wider cover.
Generally, the yield from NTUC Income is quite satisfactory. You can read about the return in my FAQs.
For a person who has already committed to a life insurance policy and incurred the sales charge, it is usually better to keep the policy.
The yield over the next 10 years, in the case of NTUC Income, is about 3% to 4% p.a. The return from other insurance companies is usually lower, due to their higher charges.
Your wrote in your blog that whole life policy gives terribly low return of 1%. My family has 2 living policies with NTUC and 2 with Great Eastern. What is the return for living policies? In your opinion what type of insurance policy commands the highest returns?
-------------------------------------
REPLY:
The yield on a living policy is lower than a whole life policy, as it provides a much wider cover.
Generally, the yield from NTUC Income is quite satisfactory. You can read about the return in my FAQs.
For a person who has already committed to a life insurance policy and incurred the sales charge, it is usually better to keep the policy.
The yield over the next 10 years, in the case of NTUC Income, is about 3% to 4% p.a. The return from other insurance companies is usually lower, due to their higher charges.
Contribute to my blog
I wish to invite my readers to contribute to my blog. If you have any views on the topics covered in my blog, send them to me at kinlian@gmail.com. I will edit them (if necessary) and post them in my blog. You can ask to be named or anonymous.
Let us work together to create a more interesting blog with contributions from several people.
Let us work together to create a more interesting blog with contributions from several people.
A versatile two letter word
There is a two-letter word that perhaps has more meanings than any other two-letter word, and that word is "UP."
It's easy to understand UP, meaning toward the sky or at the top of the list, but when we awaken in the morning, why do we wake UP?
At a meeting, why does a topic come UP? Why do we speak UP , and why are the officers UP for election and why is it UP to the secretary to write UP a report?
We call UP our friends. And we use it to brighten UP a room, polish UP the silver, we warm UP the leftovers and clean UP the kitchen. We lock UP the house and some guys fix UP the old car.
At other times the little word has real special meaning. People stir UP trouble, line UP for tickets, work UP an appetite, and think UP excuses.
To be dressed is one thing but to be dressed UP is special. And this UP is confusing:
A drain must be opened UP because it is stopped UP.
We open UP a store in the morning but we close it UP at night. We seem to be pretty mixed UP about UP !
To be knowledgeable about the proper uses of UP, look the word UP in the dictionary. In a desk-sized dictionary, it takes UP almost 1/4 of the page and can add UP to about thirty definitions.
If you are UP to it, you might try building UP a list of the many ways UP is used. It will take UP a lot of your time, but if you don't give UP, you may wind UP with a hundred or more.
When it threatens to rain, we say it is clouding UP. When the sun comes out we say it is clearing UP.
When it rains, it wets UP the earth.
When it doesn't rain for awhile, things dry UP.
One could go on and on, but I'll wrap it UP , for now my time is UP,
So............. Time to shut UP ....!
It's easy to understand UP, meaning toward the sky or at the top of the list, but when we awaken in the morning, why do we wake UP?
At a meeting, why does a topic come UP? Why do we speak UP , and why are the officers UP for election and why is it UP to the secretary to write UP a report?
We call UP our friends. And we use it to brighten UP a room, polish UP the silver, we warm UP the leftovers and clean UP the kitchen. We lock UP the house and some guys fix UP the old car.
At other times the little word has real special meaning. People stir UP trouble, line UP for tickets, work UP an appetite, and think UP excuses.
To be dressed is one thing but to be dressed UP is special. And this UP is confusing:
A drain must be opened UP because it is stopped UP.
We open UP a store in the morning but we close it UP at night. We seem to be pretty mixed UP about UP !
To be knowledgeable about the proper uses of UP, look the word UP in the dictionary. In a desk-sized dictionary, it takes UP almost 1/4 of the page and can add UP to about thirty definitions.
If you are UP to it, you might try building UP a list of the many ways UP is used. It will take UP a lot of your time, but if you don't give UP, you may wind UP with a hundred or more.
When it threatens to rain, we say it is clouding UP. When the sun comes out we say it is clearing UP.
When it rains, it wets UP the earth.
When it doesn't rain for awhile, things dry UP.
One could go on and on, but I'll wrap it UP , for now my time is UP,
So............. Time to shut UP ....!
Avoid triple insurance
Dear Mr Tan,
I have bought the incomeshield Plan P for my children and Plan A for me and my spouse. We are also covered under the Hospital and Surgical Plan with NTUC.
Is it neccessary for us to insure under H&S if we are covered under the incomeshield? Moreover, I and my wife have company hospital insurance coverage.
IF it's not neccessary to cover under the H&S I would rather use the money to invest.
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REPLY:
At present, you have triple insurance (ie company plan, Incomeshield, H&S insurance). This is not necessary. You can discontinue your H&S plan.
If you do not have the company plan, you have the following options:
* take an Incomeshield rider to cover the deductible and co-insurance (which is not covered under the Incomeshield plan)
* pay the deductible and co-insurance out of your Medisave account (ie you do not need to insure these items).
Some advisers sell the H&S plan to cover the deductible and co-insurance, before the rider was available. The rider is a better plan to cover these items, as it avoids the duplication (and higher cost) of the H&S plan.
My personal preference is to take Incomeshield only to cover the big bills, and to pay the deductible and co-insurance out of Medisave savings.
I have bought the incomeshield Plan P for my children and Plan A for me and my spouse. We are also covered under the Hospital and Surgical Plan with NTUC.
Is it neccessary for us to insure under H&S if we are covered under the incomeshield? Moreover, I and my wife have company hospital insurance coverage.
IF it's not neccessary to cover under the H&S I would rather use the money to invest.
------------------------
REPLY:
At present, you have triple insurance (ie company plan, Incomeshield, H&S insurance). This is not necessary. You can discontinue your H&S plan.
If you do not have the company plan, you have the following options:
* take an Incomeshield rider to cover the deductible and co-insurance (which is not covered under the Incomeshield plan)
* pay the deductible and co-insurance out of your Medisave account (ie you do not need to insure these items).
Some advisers sell the H&S plan to cover the deductible and co-insurance, before the rider was available. The rider is a better plan to cover these items, as it avoids the duplication (and higher cost) of the H&S plan.
My personal preference is to take Incomeshield only to cover the big bills, and to pay the deductible and co-insurance out of Medisave savings.
Selecting a good whole life plan
Mr Tan,
Are you saying that a whole life policy gives a poor return? Why are so many whole life policies sold even today? Even NTUC sells them in large numbers.
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REPLY:
If you are investing in a financial product for many years, it is important to have a product that have low charges. The difference in yield of 1% or 2% p.a. can be a lot of money (may 50% more) over 30 years.
Many whole life plans have high charges (to pay commission to the sales agent and profit to the insurance company). They take away an additional 1% or 2% from your yield. It also have a high front end charge, of up to 18 months of your premium. You are locked into this plan and can only cancel the plan after paying a heavy penalty. This is bad.
NTUC Income has lower charges, and can give a yield of about 1% p.a. better than similar plans in the market. It is fairly attractive.
A better plan is to buy a decreasing term insurance and to invest the difference in a low cost, large well diversified fund. Look for an investment plan that has a low sales charge. Better still, look for a plan that has no sales charge.
Are you saying that a whole life policy gives a poor return? Why are so many whole life policies sold even today? Even NTUC sells them in large numbers.
-------------------------------------
REPLY:
If you are investing in a financial product for many years, it is important to have a product that have low charges. The difference in yield of 1% or 2% p.a. can be a lot of money (may 50% more) over 30 years.
Many whole life plans have high charges (to pay commission to the sales agent and profit to the insurance company). They take away an additional 1% or 2% from your yield. It also have a high front end charge, of up to 18 months of your premium. You are locked into this plan and can only cancel the plan after paying a heavy penalty. This is bad.
NTUC Income has lower charges, and can give a yield of about 1% p.a. better than similar plans in the market. It is fairly attractive.
A better plan is to buy a decreasing term insurance and to invest the difference in a low cost, large well diversified fund. Look for an investment plan that has a low sales charge. Better still, look for a plan that has no sales charge.
Friday, May 18, 2007
Modest cost of land in America
10 years ago, the market value of land located within 30 minutes of downtown Columbus (Ohio) was about USD 20,000 per acre. Today, it is probably worth about US$40,000 per acre, or USD 1 per square foot. Land in Singapore cost about 200 times of this price.
If you buy a property in Singapore, the cost of the land probably takes up about 70% of the total cost. In America, you get a large piece of land, and it probably takes up only 30% of the total cost of the property.
If you buy a property in Singapore, the cost of the land probably takes up about 70% of the total cost. In America, you get a large piece of land, and it probably takes up only 30% of the total cost of the property.
High monthly subscription to golf clubs
The annual subscription to a golf club in America varies from USD 4,000 to 6,000, depending on the faciliteis of the club. They are about 5 to 10 times of the fees payable in Singapore.
The entrance fee is comparable to Singapore. It is expensive to be a member of a golf club in USA.
The entrance fee is comparable to Singapore. It is expensive to be a member of a golf club in USA.
Discount for seniors in USA
Many businesses in USA gave discount for seniors. They include food outlets and entertainment places. This is an initiative taken by the business outlets to reach out to an important and affluent market of seniors. I hope that businesses in Singapore will also reach out to this market by offering a modest discount.
My stay in Deseret
My wife and I stayed with our friends, Dimon and Darlene McFerson, in their country house in Powell, Ohio. It is about30 minutes from downtown Columbus.
They own a 40 acre property which they named as Deseret (which meant Honeycomb in Hebrew). They built six houses in this property occupied by their 5 children and 30 grandchildren. They also have a club house and large barn (with an indoor basket ball court.
The club house is to be used by their grandchildren for swimming and to bring their friends, so that they do not need to use their grandparent's home for these activities!
The landscape in the property is magnificent. I enjoyed looking out of the window to see the trees and the lawn, and watching the birds and wild deer. I also enjoyed walking outdoors to feel the cool weather.
Thursday, May 17, 2007
Bushes and Clintons
Someone observed that during the last 20 over years, America was governed by two families, the Bushes and the Clintons. If Hillary Clinton were to win the next Presidential election, it will extend this unique pattern.
There was a joke that the period of Bill Clinton was called "sex between the bushes". How creative and humorous!
There was a joke that the period of Bill Clinton was called "sex between the bushes". How creative and humorous!
A country house
I asked my friend if his home in Deseret can be considered to be in the suburbs of Columbus.
He said that a suburb is a place where they have many houses close together. If it is a house built in the countryside with a large land area, it is considered as a country house.
It is nice to live in a country house to be near the trees and the water, and yet within 30 minutes from downtown Columbus.
He said that a suburb is a place where they have many houses close together. If it is a house built in the countryside with a large land area, it is considered as a country house.
It is nice to live in a country house to be near the trees and the water, and yet within 30 minutes from downtown Columbus.
The tulip bubble
I took a picture of these tulips at the Tulip Festival in Ottawa Canada.
They remind me about the tulip bubble which occurred 100 years ago. Speculators bidded up the price of a tulip until it cost more than a house. The bubble burst and many people were financially destroyed.
The last bubble that burst in 2001 was the dotcom bubble. After it burst, the benchmark dropped by 75 percent. Many stocks lost 90 percent or more of their value.
The stockmarket is now at a high. Will it be another bubble? We do not know. The former chairman of the Fed said that one can recognise a bubble only after it burst. If it has not burst, it is not a bubble.
I hope that the current boom is not a bubble.
Wednesday, May 16, 2007
Higher interest on Money Market Fund
The money market funds in the USA earn a higher interest rate than time deposits in a bank.
Why?
The bank keep the difference. They justify it by saying that they provide a guarantee, which is backed by the Federal Deposit Insurance Scheme.
As the money market funds are invested in quite secure investments, many people are willing to forgo this guarantee and earn an higher interest rate from the money market funds.
A similar situation applies in Singapore. I expect more people to invest in money market funds in the future.
Why?
The bank keep the difference. They justify it by saying that they provide a guarantee, which is backed by the Federal Deposit Insurance Scheme.
As the money market funds are invested in quite secure investments, many people are willing to forgo this guarantee and earn an higher interest rate from the money market funds.
A similar situation applies in Singapore. I expect more people to invest in money market funds in the future.
Anticipation policy
COMMENT IN MY BLOG (on Whole Life policy with cash payment every 5 years):
If such policies are bad for the consumers, why does NTUC Income, which claims to work in the interest of their policy holders, continue to offer the Anticipation Policy which has a cash payout every 3 years? Looks like a case of saying one thing but doing another.
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REPLY
The Anticipation policy was offered by NTUC Income about 25 years ago, when I was the general manager.
At that time, it offered an attractive yield of 4% or better. The reasons were:
* the sales charge of NTUC Income were much lower than the market
* the investments earned a good rate of return (during a period when interest rate was higher)
* the flexible investment-linked plan was not available
* the return was better than bank deposits
I will not recommend the sale of the Anticipation policy today, for the reasons that I have posted about the whole life policy with cash payment every 5 years.
If such policies are bad for the consumers, why does NTUC Income, which claims to work in the interest of their policy holders, continue to offer the Anticipation Policy which has a cash payout every 3 years? Looks like a case of saying one thing but doing another.
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REPLY
The Anticipation policy was offered by NTUC Income about 25 years ago, when I was the general manager.
At that time, it offered an attractive yield of 4% or better. The reasons were:
* the sales charge of NTUC Income were much lower than the market
* the investments earned a good rate of return (during a period when interest rate was higher)
* the flexible investment-linked plan was not available
* the return was better than bank deposits
I will not recommend the sale of the Anticipation policy today, for the reasons that I have posted about the whole life policy with cash payment every 5 years.
Tuesday, May 15, 2007
Start Maths at five months
First posted on 15 April 2007
My granddaughter, Vera, is now five months old. She is starting to learn Mathematics. Maybe she will be smarter than her grandpa one day. Ha. Ha.
My granddaughter, Vera, is now five months old. She is starting to learn Mathematics. Maybe she will be smarter than her grandpa one day. Ha. Ha.
Creative message
My daughter Su Ling moved house recently. She created this message to tell her friends about her new address. The baby is my granddaugher, Vera.
Subway system in Philadelphia
I went into a subway station at 8 pm, in the downtown area. It was quite deserted. There were no commutters waiting for the train. The station was small, and could take less than 100 commuters, if it was full.
Perhaps most people drive in Philadephia or take the bus.
Perhaps most people drive in Philadephia or take the bus.
Poor return on a whole life policy
Hi Mr Tan,
You posted a story about a whole life policy that gives a return of 1% p.a. over the next 10 years. Why is the return so low? How does the cash payment every 5 years caused the return to be lower?
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REPLY:
Normally, a basic whole life policy should give a return of about 2% p.a. (after paying for the cost of life insurance and the sales charges). If you add a cash payment every 5 years, it reduces the return by about 1% p.a. Here is the reason.
To fund the cash payment, you have to pay an additional premium. The yield on this additional payment should be about 3% p.a. However, after deducting the high commission paid to the agent, you will get a negative return on this additional premium. This reduces the return on the basic whole life policy.
The agent likes to sell this product to you. He or she can earn the high commission on this additional premium as well. But, it is not in the interest of the consumer.
I hope that insurance agents or advisers can act ethically and offer products that give good value to their clients.
You posted a story about a whole life policy that gives a return of 1% p.a. over the next 10 years. Why is the return so low? How does the cash payment every 5 years caused the return to be lower?
----------------------
REPLY:
Normally, a basic whole life policy should give a return of about 2% p.a. (after paying for the cost of life insurance and the sales charges). If you add a cash payment every 5 years, it reduces the return by about 1% p.a. Here is the reason.
To fund the cash payment, you have to pay an additional premium. The yield on this additional payment should be about 3% p.a. However, after deducting the high commission paid to the agent, you will get a negative return on this additional premium. This reduces the return on the basic whole life policy.
The agent likes to sell this product to you. He or she can earn the high commission on this additional premium as well. But, it is not in the interest of the consumer.
I hope that insurance agents or advisers can act ethically and offer products that give good value to their clients.
Next "Core Fund" of Vanguard
Vanguard carried out a research on the most preferred fund selected by new investors.
Can you guess their findings? It is so simple!
It is a money market fund that gives a yield that is slightly higher than the interest on savings accounts. There is no front end load (ie sales charge) on the money market fund. The investor is allowed to write cheques against this account.
These investors are willing to move their money to the other bond or stock funds at a later date.
Wow! This is a simple and effective way of marketing.
Can you guess their findings? It is so simple!
It is a money market fund that gives a yield that is slightly higher than the interest on savings accounts. There is no front end load (ie sales charge) on the money market fund. The investor is allowed to write cheques against this account.
These investors are willing to move their money to the other bond or stock funds at a later date.
Wow! This is a simple and effective way of marketing.
A restricted blog for a traveller
I have an idea.
If you are travelling overseas for a short term assignment, you can create a blog and restrict its access to a few identified family members and friends.
You can update your blog at regular intervals. This is to tell them that things are all right.
You can store your contact information, eg address, telephone numbers, so that the family members can get in touch with you in an emergency.
You can also share your experience, eg photos, places of visit, etc.
If you are travelling overseas for a short term assignment, you can create a blog and restrict its access to a few identified family members and friends.
You can update your blog at regular intervals. This is to tell them that things are all right.
You can store your contact information, eg address, telephone numbers, so that the family members can get in touch with you in an emergency.
You can also share your experience, eg photos, places of visit, etc.
Restricted Blog for networking
I have created a new blog that is restricted only to a few specified people who share a common interest. I am experimenting with this new form of communication. I find blogspot tobe easy to use, and is better than other platforms, such as an website forum.
Monday, May 14, 2007
How to select the Vanguard ETFs
I showed a list of 31 Vanguard ETFs (exchange traded funds) to an expert and asked, "Which funds do you recommend?" Here is his reply.
----------------------------------------------
Hi --
The textbook answer on how to invest is to invest according to your risk preference. But no one really knows their risk preference -- so you can follow a rule of thumb, like to make the per cent of non-risky assets in your portfolio equal to your age.
Then a person at age 60 could put, say, 20 per cent into a stock fund, like the All-World ex-US index and 20 per cent in the Total Stock Market index (which is US stocks) -- and 60 per cent in the short-term bond fund.
On the other hand, if you don't want to take the robot approach and you want to have some fun with it, you can pick and choose what to buy -- (and do market timing).
If I were to market time (even though we know it can't be done), I would probably put 100 per cent in a bond fund and wait for the market to come down.
Suppose I am wrong and the market keeps marching higher at its normal pace of about 12 per cent per year (including dividends).
Then the short-term bond fund has returned about 5 per cent per year over the past 10 years, the intermediate bond fund about 6.5 per cent per year and the long-term bond fund about 8 per cent per year -- (as reflected in the average yield curve during that period).
So, even in the short-term bond fund, you would miss out on only 7 per cent return (12 - 5). If the market corrects, however, the loss in stocks would probably be more.
So, that is my advice.
Penn's Landing
Near my hotel in Pennsylvania is a well known landmark called "Penn's Landing". My friend told me that it is the place that William Penn from England first landed in America. The state Pennsylvania is named after William Penn.
Visit to Vanguard Mutual Fund Group
I visited Vanguard at Valley Forge today.
I met with eight senior executives in charge of various aspects of their operations: retail, institutional, call center, fund accounting, marketing, international, data center and the legendary Jack Bogle.
I had a photograph taken with Mr Bogle. I shall post it into the blog in a few days time.
I learned many useful aspects of the Vanguard way of doing business. They are useful for my IC21 project (Insurance Company for the 21st Century).
I met with eight senior executives in charge of various aspects of their operations: retail, institutional, call center, fund accounting, marketing, international, data center and the legendary Jack Bogle.
I had a photograph taken with Mr Bogle. I shall post it into the blog in a few days time.
I learned many useful aspects of the Vanguard way of doing business. They are useful for my IC21 project (Insurance Company for the 21st Century).
Raising a baby
My daughter, Su Ling, shares her experience in raising her daughter, Vera, in this blog. This may be of interest to mothers of baby during the first year.
Whole life a cash payment every 5 years
Here is a whole life policy with a cash payment every 5 years:
* sum assured $25,000
* cash value in 2007: $4,300
* cash payment of $3,750 in 2007 and 2012
* cash value in 10 years time: $8,250
* annual premium: $1,158
I computed the yield on this policy for the next 10 years to be 1% p.a. It is a poor yield. (In my calculation, I assume that the cash payment can be reinvested to earn 2% p.a.)
If he had bought a straight forward whole life plan, without the cash payment, the yield would have been better (ie maybe closer to 2% p.a.). The cash payment reduced the yield.
Tip: Do not invest in a plan with a cash payment every few years. You get a poor return.
* sum assured $25,000
* cash value in 2007: $4,300
* cash payment of $3,750 in 2007 and 2012
* cash value in 10 years time: $8,250
* annual premium: $1,158
I computed the yield on this policy for the next 10 years to be 1% p.a. It is a poor yield. (In my calculation, I assume that the cash payment can be reinvested to earn 2% p.a.)
If he had bought a straight forward whole life plan, without the cash payment, the yield would have been better (ie maybe closer to 2% p.a.). The cash payment reduced the yield.
Tip: Do not invest in a plan with a cash payment every few years. You get a poor return.
Advice on real life issues
I post in my blog, the real life issues faced by my readers. I edit their question and post my reply.
I remove specific details that can identify the writer to people that they are associated with. This is to preserve anonymity.
Usually, other readers face similar issues. I hope that my posting will be beneficial to them as well.
It hope that my blog will be more interesting with these real life issues.
I remove specific details that can identify the writer to people that they are associated with. This is to preserve anonymity.
Usually, other readers face similar issues. I hope that my posting will be beneficial to them as well.
It hope that my blog will be more interesting with these real life issues.
The coming of the entrepreneurial society
Here is a some key points from a chapter in The Essential Drucker by Peter Drucker.
Institutions, systems, policies eventually outlive themselves. They do it when they accomplish their objectives and they do it when they fail to accomplish their objectives. The mechanisms may still tick. But the assumptions on which they were designed have become invalid.
Theories, values and all the artifacts of human minds and human hands do age and rigidify, becoming obsolete, becoming afflictions.
Innovation and entrepreneurship are needed in society, in the economy, in public service institutions, and in businesses.
They are not planned but focused on this opportunity or that need. They are tentative and will disapper if they do not produce the expected and needed results. They are pragmatic rather than dogmatic, modest rather than grandoise.
They promise to keep any society, economy, industry, public service or business flexible and self-renewing.
Planning is incompatible with an entrepreneurial society and economy. Innovation has to be decentralised, ad hoc, autonomous, specific and microeconomic. It has to start small, tentative, flexible.
The opportunity for innovation has to be found way down and close to events.
Conclusion: Innovation is needed to keep a society relevant. Planning is incompatible with an entrepreneurial society.
Institutions, systems, policies eventually outlive themselves. They do it when they accomplish their objectives and they do it when they fail to accomplish their objectives. The mechanisms may still tick. But the assumptions on which they were designed have become invalid.
Theories, values and all the artifacts of human minds and human hands do age and rigidify, becoming obsolete, becoming afflictions.
Innovation and entrepreneurship are needed in society, in the economy, in public service institutions, and in businesses.
They are not planned but focused on this opportunity or that need. They are tentative and will disapper if they do not produce the expected and needed results. They are pragmatic rather than dogmatic, modest rather than grandoise.
They promise to keep any society, economy, industry, public service or business flexible and self-renewing.
Planning is incompatible with an entrepreneurial society and economy. Innovation has to be decentralised, ad hoc, autonomous, specific and microeconomic. It has to start small, tentative, flexible.
The opportunity for innovation has to be found way down and close to events.
Conclusion: Innovation is needed to keep a society relevant. Planning is incompatible with an entrepreneurial society.
Congestion on the Central Expressway
I moved into Yio Chu Kang in 1998 (nearly 10 years ago). I noticed, at that time, that it was getting congested.
I wrote to the authority to suggest the building of a second layer, above the Central Expressway. This would be similar to the second layer above Keppel Road.
Many cities adopted this approach.
The authority worked on another approach: to develop the Kallang Paya-Lebar Expressway. After 10 years, it is now almost ready.
If I were given the power to decide, my choice would be a second layer above the Central Expressway. Why? It could probably be implemented in half the time.
I hope that the new Kallang, Paya Lebar Expresway will finally ease the congestion on the Central Expressway.
I wrote to the authority to suggest the building of a second layer, above the Central Expressway. This would be similar to the second layer above Keppel Road.
Many cities adopted this approach.
The authority worked on another approach: to develop the Kallang Paya-Lebar Expressway. After 10 years, it is now almost ready.
If I were given the power to decide, my choice would be a second layer above the Central Expressway. Why? It could probably be implemented in half the time.
I hope that the new Kallang, Paya Lebar Expresway will finally ease the congestion on the Central Expressway.
Promotional rates for bank deposits
Many banks offer an attractive rate to draw new funds, but renew the deposits at their normal board rates (which are lower than the promotional rate).
Is this a fair deal?
If the bank is transparent about the arrangement, then it is all right. But if they do it quietly, then it is unfair to the depositor.
There are three ways for the bank to handle the renewal:
1. renew it automatically (without telling the depositor)
2. send a letter to inform the depositor
3. telephone the depositor
The fairest way is to telephone the deposit (method #3) and tell them the fact - i.e that the deposit is being renewed at the board rate. The bank is reluctant to do it, as the depositor will renew the deposit at a higher promotional rate that is available in the market
Some banks send a letter (method #2) to the depositor. Many depositors do not open their mail on time, and miss the deadline. The deposit is automatically renewed at the lower board rate.
Here is my suggestion to the depositor. If you put your deposit at a promotional rate, put an entry into your diary or organiser. It will remind you to call the bank before the expiry date to check what is on offer. You can also search for the best offer available from other banks.
Just get organised.
Quote from Tan Kin Lian: If you do not take care of your financial matters, your bank will take care of it for you, but in their favour.
Is this a fair deal?
If the bank is transparent about the arrangement, then it is all right. But if they do it quietly, then it is unfair to the depositor.
There are three ways for the bank to handle the renewal:
1. renew it automatically (without telling the depositor)
2. send a letter to inform the depositor
3. telephone the depositor
The fairest way is to telephone the deposit (method #3) and tell them the fact - i.e that the deposit is being renewed at the board rate. The bank is reluctant to do it, as the depositor will renew the deposit at a higher promotional rate that is available in the market
Some banks send a letter (method #2) to the depositor. Many depositors do not open their mail on time, and miss the deadline. The deposit is automatically renewed at the lower board rate.
Here is my suggestion to the depositor. If you put your deposit at a promotional rate, put an entry into your diary or organiser. It will remind you to call the bank before the expiry date to check what is on offer. You can also search for the best offer available from other banks.
Just get organised.
Quote from Tan Kin Lian: If you do not take care of your financial matters, your bank will take care of it for you, but in their favour.
Sunday, May 13, 2007
Use Skype and SkypeOut
I am use Skype for computer-to-computer chat.
I arrange a time for this chat with my friend. I log into Skype and see if my friend is "online". I dial my friend using Skype. It can take the call on the computer. We have a voice conversation.
This process was quite easy and convenient. It is free. The voice quality is very good.
For those who have not tried, it is quite easy. Get a friend to try it with you in Singapore. You can use it later, when you are overseas.
There is another way to call someone using SkypeOut. You can use Skype to dial someone on a telephone. They take the call in the usual way.
The international connection is free (using Skype). There is a small charge for the local connection. In Singapore, the charge is about 5 cents a minute.
I arrange a time for this chat with my friend. I log into Skype and see if my friend is "online". I dial my friend using Skype. It can take the call on the computer. We have a voice conversation.
This process was quite easy and convenient. It is free. The voice quality is very good.
For those who have not tried, it is quite easy. Get a friend to try it with you in Singapore. You can use it later, when you are overseas.
There is another way to call someone using SkypeOut. You can use Skype to dial someone on a telephone. They take the call in the usual way.
The international connection is free (using Skype). There is a small charge for the local connection. In Singapore, the charge is about 5 cents a minute.
Blog - keep in touch
My daughter read from my blog that I am in Philadelphia. She sent an e-mail to recommend me to try the cheese steaks at Pat's King of Stakes. She also sent the URL link to this address. It is not far from my hotel.
She also read that her mother had food poisoning. She asked if she is all right now.
She also read that her mother had food poisoning. She asked if she is all right now.
Transport Operators make good profits
I read several stockbroker reports that our transport operators make good profits during the past year.
This is good news for their shareholders.
I hope that the transport operators will use some of the profits to improve service for commuters.
* operate more buses and trains on the routes
* reduce waiting time
* give more comfort to commuters, ie less crowding
* improve the taxi service
This is good news for their shareholders.
I hope that the transport operators will use some of the profits to improve service for commuters.
* operate more buses and trains on the routes
* reduce waiting time
* give more comfort to commuters, ie less crowding
* improve the taxi service
Historic district in Philadelphia
I am staying at the Sheraton Society Hill in Philadelphia. It is located in the historic, waterfront district, next to the Delaware River. The grand Benjamin Franklin Bridge cross the Delaware River nearby.
I walked around the hotel this evening. I came across many places of interest and monuments, bringing the visitor back to the days of the American Independence movement, some 250 years ago.
Philadephia has an excellent street naming system. Running north to south, the streets are named in numerical order, ie 1st street, 2nd street, etc.
Running east to west, the streets have names of trees and personalities, eg Pine St, Walnut St, Washington Avenue.
To the west, across the Schuylkill River, is the University of Pennysylvania. The famous Wharton Business School is located in this university. They have some collaboration with the Singapore Management University.
I walked around the hotel this evening. I came across many places of interest and monuments, bringing the visitor back to the days of the American Independence movement, some 250 years ago.
Philadephia has an excellent street naming system. Running north to south, the streets are named in numerical order, ie 1st street, 2nd street, etc.
Running east to west, the streets have names of trees and personalities, eg Pine St, Walnut St, Washington Avenue.
To the west, across the Schuylkill River, is the University of Pennysylvania. The famous Wharton Business School is located in this university. They have some collaboration with the Singapore Management University.
Make an interesting blog
I invite my visitors to send me views for posting into my blog. This will help to make my blog to be more interesting.
I welcome different perspectives. Some may agree with me. Others have different views. The diversity of views will spice up my blog.
Here are some tips about giving your views:
* be positive
* avoid making judgement
* respect the views of other people.
I welcome different perspectives. Some may agree with me. Others have different views. The diversity of views will spice up my blog.
Here are some tips about giving your views:
* be positive
* avoid making judgement
* respect the views of other people.
Saturday, May 12, 2007
Mr Tan, your blog is boring
Dear Mr. Tan,
You have been coercing people to read your blog. I am afraid, you need to improve your articles somewhat.
You wrote, "I have a good impression of Ottawa". In what way? You need to elalorate on the salient points to persuade readers to your view point.
Am, afraid you blog is getting too boring to justify your growing readership.
You have been coercing people to read your blog. I am afraid, you need to improve your articles somewhat.
You wrote, "I have a good impression of Ottawa". In what way? You need to elalorate on the salient points to persuade readers to your view point.
Am, afraid you blog is getting too boring to justify your growing readership.
Visiting Vanguard on May 14
I will be visiting Vanguard Mutual Fund Group in Valley Forge, Pennysylvania on Monday 14 May. They are among the top fund managers in the world.
I shall be looking at the following:
* how they market their funds to their customers
* how they educate their customers
* how they service their customers
I will be meeting John (Jack Bogle) who was the founder of Vanguard.
My host for the visit is a Sudoku fan. I shall bring 6 volumes of my Logic9 pocket book to present to him.
I shall be looking at the following:
* how they market their funds to their customers
* how they educate their customers
* how they service their customers
I will be meeting John (Jack Bogle) who was the founder of Vanguard.
My host for the visit is a Sudoku fan. I shall bring 6 volumes of my Logic9 pocket book to present to him.
Try to negotiate a fair settlement
Dear Mr. Tan
I need your personal advice regarding a traffic accident claim for my relative.
He was hit by a motorbike and has been seriously injured for more than half a year. I engaged a lawyer and the case is now being decided by the court. The insurer's lawyer is asking for settlement out of court.
The insurer is offering a partial settlement due to contributory negligence on the part of my relative. Is the proposed settlement fair? What is your advice?
--------------------
REPLY
Let me give you my suggestion:
1. Ask your lawyer to give a report to you, stating his recommendation on the apportionment of liability and on the quantum that is claimable for special and general damages
2. Ask the insurer's lawyer to give the reason to support their offer.
3. Meet with the insurer (in the presence of your lawyer) to negotiate a settlement.
4. If there is a large gap, suggest that the matter be referred to an arbitrator that is appointed by both parties.
5. Try to find a reasonable settment, so as to reduce the legal fees on both sides. A contested cases can be costly (ie legal fees can take away 30% to 50% of the total settlement) and take a long time to settle.
6. Generally, the insurer is willing to come to a fair settlement, to avoid the costly legal fees.
I need your personal advice regarding a traffic accident claim for my relative.
He was hit by a motorbike and has been seriously injured for more than half a year. I engaged a lawyer and the case is now being decided by the court. The insurer's lawyer is asking for settlement out of court.
The insurer is offering a partial settlement due to contributory negligence on the part of my relative. Is the proposed settlement fair? What is your advice?
--------------------
REPLY
Let me give you my suggestion:
1. Ask your lawyer to give a report to you, stating his recommendation on the apportionment of liability and on the quantum that is claimable for special and general damages
2. Ask the insurer's lawyer to give the reason to support their offer.
3. Meet with the insurer (in the presence of your lawyer) to negotiate a settlement.
4. If there is a large gap, suggest that the matter be referred to an arbitrator that is appointed by both parties.
5. Try to find a reasonable settment, so as to reduce the legal fees on both sides. A contested cases can be costly (ie legal fees can take away 30% to 50% of the total settlement) and take a long time to settle.
6. Generally, the insurer is willing to come to a fair settlement, to avoid the costly legal fees.
Invest in a life annuity?
Hi Mr Tan
I have a total of $350,000 in my savings. How much should I invest in a life annuity? What are its advantages, as compared to other types of investments?
I wish to have a good income, without taking risk on my capital
------------------
REPLY
You can read my FAQ on life annuity. I suggest that you invest $200,000 in a life annuity, to earn about $1,000 a month, and keep the balance in an investment fund, or the money market fund.
You can talk to an insurance adviser or visit the business center of NTUC Income.
I have a total of $350,000 in my savings. How much should I invest in a life annuity? What are its advantages, as compared to other types of investments?
I wish to have a good income, without taking risk on my capital
------------------
REPLY
You can read my FAQ on life annuity. I suggest that you invest $200,000 in a life annuity, to earn about $1,000 a month, and keep the balance in an investment fund, or the money market fund.
You can talk to an insurance adviser or visit the business center of NTUC Income.
Interview: My blogging experience
I gave this e-mail interview about my blogging experience. The newspaper just printed one line.
----------------------------------------
I'm doing a story about older people who blog. As you understand, blogging is often taken to be a younger person's phenomenom. But we are trying to show the exceptions.
1. What got you to start blogging?
I created my blog about two years ago, after reading a newspaper article. I found it easy to create and maintain a blog. I created my blog to offer my views on financial matters, investments and insurance. Many people write to me for advice. I also wanted to give my views on social issues, so that more people can learn to live a better life in Singapore.
2. What's your philosophy on blogging?
My philosophy is:
* be helpful
* be positive
* keep things simple
3. How has your blogging experience been so far? What have you learnt?
I enjoyed writing my blog. Many of my regular visitors tell me that they enjoy reading my blog. They find my views to be useful and refreshing. Some told me that they are regular visitors.
I learned that it is better to keep the blog simple and short. Many people find it easier to read.
4. Any surprising insights?
Many people like things to be simple. Often, I am not able to give a complete answer. But, people find my answers to be acceptable. They will take what they can use. They will probably ignore those views that they do not agree with, or do not understand. They are generally quite positive.
5. What are some of the difficulties you faced when you started blogging? Such as the technical aspects. Any anecdotes?
For the first year, I had great difficulty in inserting photographs. I read the instructions and followed them closely. But, it just did not work.
This was surprising, as many people appeared to be able to post their pictures and photographs quite easily. I did ask someone for advice, but somehow the advice did not work. So, I gave up for a few months.
One day, I stumbled on the right way, by accident. It was really quite easy to use. I only need to click on the image button (which I did not use before) and locate the image or picture to be inserted. It was so easy.
When my daughter sent me some photos of my grand-daughter learning mathematics at five months old, I was able to upload them into my blog within a few mintues. It was quite easy.
6. Do you consider yourself technologically savvy?
I am knowledgeable in the use of the internet and common software, but does not qualify to be technically savvy. If I have difficulty, I ask the expert to help me. They know the technical matter much more than me.
7. What do your family think of you blogging? Do any of them blog as well?
My daughter and my son wrote their blogs. They do not maintain it as regularly as me. They their their own following among their friends.
8. What do you think of blogs written by the younger generation?
It is a good idea for people to communicate through various channels. A blog is a good channel. If the young people enjoy writing a blog, it is good for them. They can communicate in their own style with their friends and fans.
Each group of people will have to reach out to their friends in their own ways. I do not wish to make any judgement of other people. As long as they write on matters that are useful to other people, the habit should be encouraged.
----------------------------------------
I'm doing a story about older people who blog. As you understand, blogging is often taken to be a younger person's phenomenom. But we are trying to show the exceptions.
1. What got you to start blogging?
I created my blog about two years ago, after reading a newspaper article. I found it easy to create and maintain a blog. I created my blog to offer my views on financial matters, investments and insurance. Many people write to me for advice. I also wanted to give my views on social issues, so that more people can learn to live a better life in Singapore.
2. What's your philosophy on blogging?
My philosophy is:
* be helpful
* be positive
* keep things simple
3. How has your blogging experience been so far? What have you learnt?
I enjoyed writing my blog. Many of my regular visitors tell me that they enjoy reading my blog. They find my views to be useful and refreshing. Some told me that they are regular visitors.
I learned that it is better to keep the blog simple and short. Many people find it easier to read.
4. Any surprising insights?
Many people like things to be simple. Often, I am not able to give a complete answer. But, people find my answers to be acceptable. They will take what they can use. They will probably ignore those views that they do not agree with, or do not understand. They are generally quite positive.
5. What are some of the difficulties you faced when you started blogging? Such as the technical aspects. Any anecdotes?
For the first year, I had great difficulty in inserting photographs. I read the instructions and followed them closely. But, it just did not work.
This was surprising, as many people appeared to be able to post their pictures and photographs quite easily. I did ask someone for advice, but somehow the advice did not work. So, I gave up for a few months.
One day, I stumbled on the right way, by accident. It was really quite easy to use. I only need to click on the image button (which I did not use before) and locate the image or picture to be inserted. It was so easy.
When my daughter sent me some photos of my grand-daughter learning mathematics at five months old, I was able to upload them into my blog within a few mintues. It was quite easy.
6. Do you consider yourself technologically savvy?
I am knowledgeable in the use of the internet and common software, but does not qualify to be technically savvy. If I have difficulty, I ask the expert to help me. They know the technical matter much more than me.
7. What do your family think of you blogging? Do any of them blog as well?
My daughter and my son wrote their blogs. They do not maintain it as regularly as me. They their their own following among their friends.
8. What do you think of blogs written by the younger generation?
It is a good idea for people to communicate through various channels. A blog is a good channel. If the young people enjoy writing a blog, it is good for them. They can communicate in their own style with their friends and fans.
Each group of people will have to reach out to their friends in their own ways. I do not wish to make any judgement of other people. As long as they write on matters that are useful to other people, the habit should be encouraged.
Target of 1000 visitors a day
Dear Mr Tan,
Why do you wish to have 1,000 visitors a day to your blog? Is it to boost your ego?
---------------------
REPLY:
Many visitors told me that they enjoy my honest advice on insurance and financial planning. They found my ideas to be helpful.
I like them to tell their friends. I hope that my advice can reach out to more people, and benefit them as well.
I also like to experiment with this new way of communication. I post many contributions from readers of my blog.
Maybe, this can be like a daily newspaper for some people.
Why do you wish to have 1,000 visitors a day to your blog? Is it to boost your ego?
---------------------
REPLY:
Many visitors told me that they enjoy my honest advice on insurance and financial planning. They found my ideas to be helpful.
I like them to tell their friends. I hope that my advice can reach out to more people, and benefit them as well.
I also like to experiment with this new way of communication. I post many contributions from readers of my blog.
Maybe, this can be like a daily newspaper for some people.
Visit Ottawa, Canada
I am now staying with a friend in Ottawa, Canada. It is the capital city of Canada.
According to a recent survey, Ottawa is the best city to live in Canada. This is based on certain criteria, such as the economy, health, low level of crime, facilities and other factors. This survey covered 50 cities.
Ottawa has a population of 700,000. 40% work for the government and related agencies. 40% work in the information technology sector. The remaining 20% work for other sectors.
I have a good impression of Ottawa.
According to a recent survey, Ottawa is the best city to live in Canada. This is based on certain criteria, such as the economy, health, low level of crime, facilities and other factors. This survey covered 50 cities.
Ottawa has a population of 700,000. 40% work for the government and related agencies. 40% work in the information technology sector. The remaining 20% work for other sectors.
I have a good impression of Ottawa.
Friday, May 11, 2007
Transport using BMW
My friend told me that his son prefers to use BMW for his transport. It means: Bus, MRT, Walk.
I recommend BMW, instead of any ordinary car.
I recommend BMW, instead of any ordinary car.
How to play Logic9 (Sudoku)
Hi Mr Tan
You mention about the three tips on how to play Logic9. Does it apply to Sudoku? Where can I find these three tips?
--------------------------
REPLY:
Logic9 is the same as Sudoku. The three tips apply to Logic9 and Sudoku puzzles.
You can get the three tips from the Logic9 pocket book, which is sold in most bookstores at $5 only. You can ask the cashier to tell you where Logic9 pocketbooks are kept. They are small and may be difficult to find.
I am giving talks on these three tips at the following events:
* Ang Mo Kio Library, Sat 19 May, 3- 4 pm
* Prime of Life exhibition, Jul 17-19, 2 to 5 pm, Millenia Walk
The three tips are:
* find the missing number
* 3 box method
* eliminate the blanks
Attendance is free at these events. Mark your diary. You will enjoy my three tips. See you there!
You mention about the three tips on how to play Logic9. Does it apply to Sudoku? Where can I find these three tips?
--------------------------
REPLY:
Logic9 is the same as Sudoku. The three tips apply to Logic9 and Sudoku puzzles.
You can get the three tips from the Logic9 pocket book, which is sold in most bookstores at $5 only. You can ask the cashier to tell you where Logic9 pocketbooks are kept. They are small and may be difficult to find.
I am giving talks on these three tips at the following events:
* Ang Mo Kio Library, Sat 19 May, 3- 4 pm
* Prime of Life exhibition, Jul 17-19, 2 to 5 pm, Millenia Walk
The three tips are:
* find the missing number
* 3 box method
* eliminate the blanks
Attendance is free at these events. Mark your diary. You will enjoy my three tips. See you there!
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