How to stop a Ponzi

There were a few Ponzi schemes that were allowed to grow until to a large size, before they were stopped by the relevant authority. The late action had caused many investors to lose their hard earned savings, amounting to tens or hundred of million dollars. The Sunshine Empire is just one example, which has been prosecuted. If the authority had acted earlier, less investors would have been affected.

Which government agency is responsible to act on these investment scams? Should it be the Monetary Authority of Singapore, the Commercial Affairs Department or other agency?

The MAS said that they do not have the resources to investigate every investment scheme. I do not accept this reasoning. The Police does not have the resources to prevent or investigate every crime either. But it is still their duty to investigate a crime, if there is sufficient lead, and to pay more attention to the serious crimes.

Many of the investment scams could have been investigated early on the possible infringement of the regulations on deposit taking or money laundering, which are administered by the MAS. When MAS becomes aware of a scheme, e.g. when it places the scheme on its Investors Alert list, they could request the directors of the company promoting the scheme to visit MAS for a "discussion" on their schemes. This action is likely to lead to the early cessation of any potential scam.

If the directors refuse to cooperative, MAS could make a request to CAD for a more thorough investigation.   While the civil servants in MAS may not have the skill and resources to investigate a potential crime the people in CAD are more equipped to handle this task. I would expect that a request from MAS to CAD would be accorded with a higher degree of respect, compared to a complaint from the general public.

While MAS will not act on all investment schemes, they can and should act on schemes that are actively advertised, involve large number of investors and offer returns that are "too good to be true".

I hope that the MAS and CAD will learn from the lessons of several investment scams that had occurred in Singapore in recent years, and take pro-active action to prevent future scams of a similar nature from happening in the future.

Tan Kin Lian

Ponzi - how it can pay an attractive return

A Ponzi is an investment scheme which pays an attractive return, way above what can be earned in the market.  The promoter of the scheme pays the attractive return by using the money invested by the new investors to pay the return to the old investors.

Due to the attractive return, the inflow of money from new investors far exceed the payout to the old investors, so the promoter is able to pocket the difference.

Right from the start, the promoter already runs a deficit. For example, the money owing to investors is say $50 million. Next month, $5 million is due to be paid out to the old investors. But if new investors put in $15 million, the promoter can pay out the return and pocket the difference of $10 million. The promoter now owes $65 million to the investors, but there are no funds to back up this obligation.

The old investors may find the return so attractive that they reinvest their savings on redemption.

A Ponzi will continue to grow as more money flows in. When the new money stops coming in, the promoter is likely to run away, leaving the investors with a total loss of their investments.

Read this story about how the Ponzi first started, by a person called Charles Ponzi. As he created this scheme, his name was given to describe the scheme.
http://en.wikipedia.org/wiki/Charles_Ponzi

My experience with Standard Chartered Bank

The marketeer of Standard Chartered Bank went to a lot of trouble to get me to sign up for their credit cards.

The marketeer later told me that the bank will not pay her any fee for the cards sold to me, as I belonged to the older age group. It seemed that the bank wanted to target the young people who are likely to roll over their credit line and pay interest of 2% per month, plus a late payment fee of $50 (or whatever is the amount).

I am reluctant to start using the card until I got my GIRO authorization arranged. I had to get the GIRO form from their branch. After submitting the authorization forms, I did not hear from the bank for more than one month. I called their hotline and they said, "no record of GIRO arrangement".

I suspect that they are not really keen to have me spend on the credit card and pay by GIRO. Perhaps they are waiting for me to pay late, so they can impose their fees.

Tan Kin Lian's website

I have posted many articles on financial planning, investments and insurance in my website, www.tankinlian.com.

You can view the latest article here: http://tankinlian.com/Latest.aspx

You can search for all articles on a specific topic, e.g. "property" or "health" by typing the keyword in the search box. These articles may be written some time ago, but they are still relevant today.

Expedite probe on gold buyback firm for the sake of investors

DPM and Finance Minister Tharman Shanmugaratnam's parliamentary reply

("Tharman warns operators of gold buy-back schemes against fraud"; Oct 17)

and the replies by the Monetary Authority of Singapore 

("MAS spells out regulatory criteria"; Oct 20

 and

 "MAS explains extent of its alert list"; last Saturday)

have not comforted investors like me

who bought into the gold buyback scheme offered by Genneva,

which is currently under investigation.

Mr Tharman's reply suggested that the authorities indicated a recognition

of the heightened risk of non-discerning investors

putting money into seemingly high-yielding schemes

in the current low interest rate environment.

Yet, it seems that

there was no corresponding increase in regulatory oversight.

Ow Bin Bing (Ms)

http://www.straitstimes.com/premium/forum-letters/story/expedite-probe-gold-buyback-firm-the-sake-investors-20121031

Buying a property to stay

Here are some tips about buying a property to stay for the long term.
http://tankinlian.com/Admin/File.aspx?ID=549&Frame=1

Things to avoid:
1. Never buy a property and hope to become rich due to appreciation. You can also be poor
2. Never buy a property to rent out as an investment, unless you do not need to take a loan.
3. Never buy a property more than 5 years of your income. It will be a burden to service it.

Remember, making an investment on borrowed money in very risky, and that includes buying a property. The only exception is a home that you intend to stay and the mortgage payment is within your budget. Do allow for the possibility of loss of your job.

An honest view from a financial planner

Hi Mr. Tan,

 

I sold this policy to one of my good friends just a few short months back, and I went to re-download the BI from my company’s portal.

 

Honestly, I thought that I was doing my friend a good deed, because he approached me and told me that he wanted to buy insurance while he was young and the premium is cheap. He was looking at investments, and since he was still young and inexperienced with trading equities and bonds/ETF’s, I suggested that he buy this ILP which keeps the mortality charge constant for the whole duration of the policy. 

 

I really thought I was giving my friend a good deal. I calculated the mortality charge for him, and it would remain slightly less than $9 per month all the way until the policy expires when he reaches 60. After inspection of the BI, I realised that a similar term policy with bonds/ETFs investments would do far better. 

 

I told him that the ILP would take about 7-10 years to break even, so he cannot terminate the policy beforehand. I was taught this by my manager. While this holds true, it is only a half truth. If you look at the 5% return column, he would only break even from the 21st year onwards!! The fault lies in the fact that we chose a high life coverage for him, whereby less premium would go into investment of units. However, looking at it from a macro perspective, no matter what kind of coverage we choose and how we mix and match the numbers, an ILP will never beat returns had you invest by yourself. The effect of deductions in this case is horrendous.

 

Although my friend is not paying a large sum of money ($110/mth), and is willing to do this to support me, I think that I’m shortchanging him. And I’m very disappointed because I thought I was doing the right thing and it turns out that the company is eating a lot more money from him that I could ever imagine..

 

Mr. Tan, agents are trained to sell, and trained in the manners of product knowledge. But we are not trained in the financial knowledge and how to boost our clients returns. I feel that the companies should upgrade our knowledge regarding increasing wealth for our clients the ethical way.

The CMFAS papers are structured in a way to boost the insurance companies’ profits. While the companies and agents keep saying that we are helping our clients; we are only boosting the company’s profits. I know this is the same for the banking industry as well, and that consumer interests are always placed below the company’s bottom line. While this probably can never change due to human greed, however I hope that FISCA is able to work with MAS to help the lay people generate more wealth the ethical way.

 

I am more than willing to join the MAS to stamp out such practices, but I am a nobody. I hope that more things can be done for the finance industry in Singapore. I am getting disillusioned with the financial products sales line, and I don’t suppose I will be in sales for very much longer. However, I want to help as many people as possible know the industry better and for them to know better ways to boost their returns.

    Derrick (not his real name)

 

Confusing interest rate

For the sake of consumers, the regulators should disallow banks from offering products with confusing interest rates.
http://thestar.com.my/news/story.asp?file=/2012/10/30/focus/12244034&sec=focus

Gangnam Style

Gangnam Style has become a hit not only in Korea but in many countries around the world. Here is the video of this song and dance, which has received 590 million views in a short period. 

http://www.youtube.com/watch?v=9bZkp7q19f0

My Korean friend told me that Gangnam is a place in Seoul, (Gangnam translates to South of the River) and is a popular place with the young people.

The dance simulates riding a horse!

Here is another dance sequence, performed by an attractive girl group.

http://www.youtube.com/watch?v=kpZhZAr1cQU&feature=endscreen&NR=1

Accreditation of bloggers

http://www.todayonline.com/Voices/EDC121029-0000029/Press-accreditation-for-bloggers-can-be-part-of-an-online-code

I agree with Professor Ang Peng Hwa, in the report "Engaging bloggers and non-mainstream outlets" (Oct 27), that there are good reasons to grant them press accreditation, though not only due to space and time constraints at press events.

Over the past months, prominent bloggers here have almost unequivocally rejected the proposal to have an Internet code of conduct, mainly because they feel that it is a veiled effort to curtail free speech online.

Bhavan Jaipragas

Finance sector should not be too large

Finance, literally bids rocket scientists away from the satellite industry," Bank for International Settlements economists warned, saying that it competes for people with high qualifications.... "The result is that people who might have become scientists, who in another age dreamt of curing cancer or flying to Mars, today dream of becoming hedge fund managers." "Overall the lesson is that big and fast-growing financial sectors can be very costly for the rest of the economy.
http://www.interaksyon.com/business/46689/growth-not-just-a-question-of-finance-say-experts

Paying off the "insiders"

Mr. Lim (not his real name) invested in several plots of land in Canada. During the first two years, the local agent who sold the plots to him provided good service and kept him informed about developments in the project. After the Canadian company got into financial difficulty, the agent continued to update him on the developments.

Recently, the agent stopped updating him and even discouraged him from pursuing his trying to seek legal advice. The agent told him that "all is lost" and it is best to write off the loss. Mr. Lim wanted the agent to give him the names of other investors who had bought similar plots of land, as he wanted to contact them to take joint action.

The agent  refused to give the names of these investors to Mr. Lim and claimed that they do not wish to pursue their claims. The behavior and non-cooperation of the agent surprised Mr. Lim.

I told Mr. Lim that the agent, being an insider, had probably been paid off by the promoter and in return had probably signed an agreement not to provide further information to the investors. It is easy for the promoter to pay off a few "insiders" who had the information to round up the unhappy investors.

Mr. Lim agreed with my assessment. He regretted placing his trust in the agent earlier.

Genneva Gold in Malaysia

Many people are involved in this scheme and the amount invested are large.
http://www.themalaysianinsider.com/malaysia/article/genneva-gold-storm-poses-political-risks-ahead-of-polls/

Real estate investment trusts (REITS)

Investing in REITS are like investing in properties, but they offer two advantages:

a) You do not have to bother about managing the tenancy, handling repairs, looking for tenants, collecting rents
b) You can a better return - many REITS give a dividend yield of more than 5%, compared to a yield of 2% on renting your property.

Find out more about REITS in
http://tankinlian.com/Admin/File.aspx?ID=684&Frame=1

Facecard for business and professionals

Facecard is great to keep in touch with your university and polytechnics friends. It can also help you in your career or business!
You give your business card to people that you meet because you want them to know you and to contact you when there is a business or career opportunity. The trouble is that most of your contacts cannot find your name card when they need to find you!
Here is a better way. Create your name card in the Internet Cloud!

http://tankinlian.com/admin/file.aspx?id=693&IID=697

Pursuit of success and happiness

The late Dr. Richard Teo shared his life story before he passed away. This should get our young generation to reflect about success and happiness.
http://www.youtube.com/watch?v=umLkfADe17s

Keep in touch with friends for a lifetime!

Your years in polytechnic and university are the best time to make friends and keep in touch with them for life. How do you keep contact, when they change their e-mail address, mobile numbers and move from one job to another? Here is the ultimate solution. Create a Facecard.
http://tankinlian.com/admin/file.aspx?id=692&IID=696

Gold never glitters for investors

Here is an update of the investigation into the gold trading firms in Malaysia.
http://thestar.com.my/news/story.asp?file=/2012/10/28/focus/12238079&sec=focus

Many investors have also been caught in similar schemes in Singapore, but the news of the investigation here have been sketchy and sparce.

Happiness is not for sale

Seah Cheang Nee explain the difference between happiness and prosperity in this article. By leading a simple life, people can be happier and less stressed, such as in Bhutan.

http://thestar.com.my/news/story.asp?file=/2012/10/27/focus/12228126&sec=focus

Claims snag after upgrade to IncomeShield

From James Wong Chee Wah (printed in Today paper)

Last December, I converted to the Enhanced IncomeShield basic plan after being insured under MediShield since the scheme was introduced.

This year, I was admitted thrice to hospital for heart problems. I decided to stay in the "C" Class ward, even though my insurance plan entitled me to a B2 ward, and incurred a total hospital bill of about S$12,000.

However, NTUC Income did not pay my claim on the grounds that I did not disclose that I had a cancerous kidney removed in 1992 and other conditions which were cured, even though there was no relapse for almost 20 years. The insurer also wanted to cancel my policy and refund my premium.

I understand that for the integrated plan as specified by the Health Ministry, my claims should be covered under the basic MediShield plan, which I had all along.

NTUC Income, though, sent me this statement: "You will remain insured under Basic MediShield if you satisfy the CPF's eligibility criteria."

What does this mean? Surely, it is the insurer's duty to check and then decide if I am eligible to be paid under Central Provident Fund coverage. After four months, my claims have not been settled, causing me stress.

I would advise others to avoid upgrading to an enhanced plan, as they, too, may have claims rejected on unfair grounds. Does the ministry have views on this matter?

Buying property under development

There is a risk of buying a property under development. If the developer is not able to complete the project due to financial difficulty or other issues, you will be stuck with a partially completed project.

This has happened to investors who have bought properties under development in Malaysia and other countries. The control over the developers is not as reliable as in Singapore and some of the projects had been aborted. The investors had been stuck with the uncompleted projects.

It is better to wait and buy a completed property, even though the price may be higher.

When buying an overseas property, the purchaser of an overseas property should also be aware about the government regulations, e.g. property tax, capital gain tax, approval for foreign ownership, etc.  After taking all these risks and uncertainties into account, it may be better to avoid buying an overseas property.

Buying an overseas property

Mr. Lim (not his real name) invested in several plots of land in Alberta, Canada, sold by a Canadian company.  They were bought at different times, following briefings conducted by the Singapore office of the promoter.  He received titles to some of the plots and was waiting for the title for the remaining plots, when the Canadian company filed for insolvency.

Mr. Lim was shocked to learn that the Canadian company had taken a mortgage loan on his plots of land without his permission. After a lengthy legal process, the Canadian court had ruled that the mortgage was valid and the mortgage holder had higher priority on the land.

The land title showed that they had an undivided interest in the land. Presumably, the title of the land still resided with the Canadian company, which was able to take a mortgage loan on the land, to the detriment of the owners who had bought the "plots" of land. Mr. Lim and the other Singapore investors did not lodge a caveat to register their interest in the land.

When buying any property, whether in Singapore or overseas, it is important for the buyer to engage a lawyer who will take care of the legal formalities, including lodging a caveat to record your interest. Mr. Lim had trusted the promoter to handle the formalities, but that trust was misplaced, as the promoter had acted fraudulently.

As the registered owner of the land, Mr. Lim received notices from the Alberta Provisional Government to pay the property tax on the land. He is in a dilemma as he does not know if it is a crime for him not to pay the tax, and he does not know the real value of his land.

Purchasers should be aware of this risk, when they buy an overseas property.

Penalise executives who make risky bets

President Barack Obama said the next important step 

for making the U.S. financial sector safer

is to make sure executive pay is less closely tied to risky bets.

 

In an interview to be published on Friday in Rolling Stone magazine..

 

.. the stability of markets is still at risk

because people making risky bets

are handsomely rewarded if the bets pay off,

but face limited consequences if those bets go sour.

 

"It tilts the whole system in favor of very risky behavior,"

he said.

"By the time the chickens come home to roost,

 they're still way ahead of the game."

 

http://www.reuters.com/article/2012/10/26/usa-obama-financial-idUSL1E8LQ00V20121026

Do not lose your moral compass

Read this testimonial from a successful doctor who died from cancer at the age of 40.
http://www.tremeritus.com/2012/10/26/dont-lose-your-moral-compass/

Share buyout offer

Here are some tips on how to decide on a buyout offer, such as the offer by a conglomerate to buy the F&N shares.

http://tankinlian.com/admin/file.aspx?id=690&IID=694

Cooling measures in danger of losing credibility

URL: http://www.todayonline.com/Business/Property/EDC121026-0000066/Cooling-measures-in-danger-of-losing-credibility

Although it is still early days, many property market watchers are coming to the conclusion that the latest round of Government cooling measures - curbing the tenures of home loans - is having little or no impact.

Some have described them as "very disappointing". Even the knee-jerk reaction that accompanied the previous rounds of cooling measures was missing.
Show flats were packed the day after the Oct 5 announcement, with prospective...

Fee for credit card payment

25 October 2012

Editor, Voices

Today Paper

I wish to follow up on the letter by Alvin Ho (many companies
still charging swipe fees, Today, xxxxx 2012).

He said that in July, the Association of Banks in Singapore (ABS),

and the credit card companies had stated in the media

that merchants are not allowed to pass on any form of 
surcharge/swipe fees/administration charges to consumers

when they make payments with credit cards.

Recently, I booked a ticket with JetStar Asia and was given 
the option to pay by credit card (and incur an administrative charge of $18) 
or to pay using NETS at several outlets (and be free of the charge).

I am sure that the low cost airline incurs a higher cost to process
the NETS payment, rather than the credit card payment. It is ridiculous 
for the airline to encourage its consumers to adopt a more inconvenient 
and more costly way to make the payment.

I understand that the merchant now has to pay a high fee to the bank 
for the credit card payment. 

The ABS should ask its member banks to reduce their charge that they 
impose on merchants, so that in turn the merchant can offer the credit
card payment to their customers without the additional charge.

Tan Kin Lian
President
Financial Services Consumer Association

Online process of Government Agencies

This document explains why it is difficult to use the online processes of government agencies and suggests a simpler method for the public to submit their forms:
http://tankinlian.com/admin/file.aspx?id=689&IID=693

Tips on Motor Claims

If you meet with an accident and the other party is at fault, you can protect your No Claim Discount and avoid unexpected problems by following the tips shown here.
http://tankinlian.com/admin/file.aspx?id=688&IID=692

Cut credit card fees imposed on merchants

I refer to Mr Alvin Ho's letter "Many companies still charging swipe fees" (Oct 25).
He said that it was stated in July that merchants are not allowed to pass on any form of surcharge/swipe fees/administration charges to consumers who make credit card payments.
Recently, I booked a ticket with a budget carrier and was given the option to pay by credit card and incur an S$18 administrative charge, or to pay using NETS at several outlets,...

Visit TODAYonline at http://www.todayonline.com/

Many companies still charging swipe fees

In July,

the Association of Banks in Singapore (ABS),

as well as Visa/MasterCard/Amex stated in the media

that merchants are not allowed to pass on

any form of surcharge/swipe fees/administration charges to consumers

when they make payments with credit cards.

As the holiday season approaches,

it is disappointing

that many tour operators are still passing on their merchant fees to the consumers

via surcharges of between 1 and 6 per cent.

Separately,

there is also the 10 per cent "administrative charge"

for payment via credit cards by taxi companies.

http://www.todayonline.com/Voices/EDC121025-0000047/Many-companies-still-charging-swipe-fees

Third party claim went sour!

Mr. See (not the real name) was driving a van when a motor cyclist collided into his rear. A man saw the incident and claimed that he is representing workshop X. He took Mr. See to the workshop and advised that this is a straight forward claim and agreed to make a claim against the insurer of the motor cycle.

Mr. See was asked to sign some papers in small print and was offered a free rental car for 8 days. The car was also repaired at no cost to him.

!8 months later, workshop X told Mr. See that he was not able to claim from the insurer of the motor cycle and asked Mr. See to pay for the repair cost, amounting to over $10,000. Mr. See refused to pay this bill, as it was above the market rate. He received a writ from the lawyer acting for the workshop.

What can Mr. See do? 

Early action could have reduced losses

21 October 2012 

Editor, Forum Page

Straits Times

I refer to the letter from Ms. Angeline Fernandez, Director (Communications) of the 

Monetary Authority of Singapore ("MAS spells out regulatory criteria, ST. xx Oct 2012") 

Ms. Angeline said that MAS does not regulate schemes that involve investors

acquiring physical assets, such as property, gold, art or wine.

I understand that the property or gold schemes involve more than the acquisition of

the physical assets. There is a guarantee of a buy back of the assets for the invested sum

 and the payment of an attractive, guaranteed rate of interest. 

These schemes are more akin to taking of money on deposits with the promise of

payment of interest and capital, 

Most of the investors would not have invested in these schemes, if it did not carry 

these promises on the guaranteed payments.

MAS is responsible to regulate companies taking deposits. It issues licences to 

banks and finance companies to carry out this type of activity and supervises their

business. MAS should not have allowed other businesses to take money from the public 

with similar promises, without getting a licence from MAS.

MAS knew about the activities of these companies but decided to put their names in 

their website under its Investor Alert List. If MAS had investigated these companies at that 

time to find out if they are infringing the law on deposit taking, it was likely that these activities 

would have been stopped earlier, when fewer people were involved. 

Tan Kin Lian
President
FISCA

Termination of Financial Adviser

A Financial Planner asked for my views on whether he is entitled to the future commission on policies that he had sold previously, if he resigned from the company. His contract stated:

Either party may at any time terminate the Agreement by giving not less than 30 days written notice of such intention to the other party. The exercise by the Company of its right termination as stated above shall not disentitlle the Life Planner from receiving any commission (individual policies or group insurance products), overriding commission and production commission (hereinafter referred to as "the said Benefits") due to the Life Planner up to the date of termination and the Life Planner so affected in the manner described herein before shall further be entitled to the Renewal Commission due to on premium actually paid on policies (hereinafter referred to as " the said additional Benefits") in the year following after the date of such termination PROVIDED ALWAYS that the said Benefits and/or the additional Benefits, as the case may be, shall not be payable to the Life Planner if the Agreement has been terminated by the Life Planner under this clause. Such said Benefits and/or additional Benefits shall not paid to anyone else. 

It is clear to me that the Financial Planner will lose not only the commission that accrue after the termination of the contract, but also the commission that accrue from the date of notice of termination to the date of termination, described as "the said Benefits".

It seemed to be quite unfair that the commission that accrued during the period of service, i.e. before the termination date, is also forfeited. There should be a case for the Life Planner to argue that the contract terms are unfair.

Edgeworth Properties

An investor wanted to see me about his investment in Edgeworth Properties. I carried out a research and found that this was already covered in the Business Times Article:

http://www.asiaone.com/Business/News/Story/A1Story20120221-329306.html

There is another article that explained the liquidation of this company. 

http://www.grantthornton.ca/services/reorg/bankruptcy_and_insolvency/edgeworth

It is sad to see 2,000 investors in Singapore lost their hard earned savings in this bad investment. 

Lesson: Avoid buying property under development in other countries. Many things can happen.

Disappointed with an education policy

Where do average clients like us go to seek redress or recourse,

given the fact that we bought the policy on good faith

by trusting the agent of the insurer,

who understood the reason we wanted to invest in such a policy

more than 20 years ago?

Mohd Yusoff H. Hamdan

http://www.straitstimes.com/premium/forum-letters/story/20-years-later-its-different-story-20121024

Regulate for safer investments

 THE explanation by the Monetary Authority of Singapore

("MAS spells out regulatory criteria"; last Saturday)

to the question raised by Mr Tan Sin Liang about regulating questionable firms

("Not as good as gold at all..."; Oct 14)

is that these firms fall outside the MAS' jurisdiction.

 

If the MAS does not wish to,

perhaps some other government agency could step in

to regulate the investment industry

to ensure that Singapore is a city where investors can operate with peace of mind.

 

Eng Tiang Chuan

http://www.straitstimes.com/premium/forum-letters/story/regulate-safer-investments-20121024

 

Buyback lure requires stricter rules

THE Monetary Authority of Singapore said that

it does not regulate schemes that involve investors acquiring physical assets

like property, gold, art or wine

("MAS spells out regulatory criteria"; last Saturday).

It appears that the MAS knew about the activities of these companies

but decided to put their names on its website under its Investor Alert list.

If the MAS had investigated these companies at that time

to find out if they were infringing the law on deposit-taking,

it is likely that these activities would have been stopped earlier,

when fewer people were involved.

Tan Kin Lian

President

Financial Services Consumer Association

http://www.straitstimes.com/premium/forum-letters/story/buyback-lure-requires-stricter-rules-20121024

Shortage of babies

Lucky Tan disagree with the argument put forward by DPM Teo on the need for more foreign workers to cover the shortage of babies:
http://singaporemind.blogspot.sg/2012/10/debunking-dpm-teos-immigration-argument.html

He argued that if we are short of babies, we should be importing babies now, rather than older foreigners for the work force.

Multi-racial in spirit

At the ferry terminal, I observed this incident. Two Chinese ladies were speaking in English and Teochew. One of them asked in Teochew about a local dish. A Malay lady, sitting in front and wearing a tudong overhead them and told them the name of the dish. She was a Singaporean and shyly told me that she knew a little bit of Teochew, having mixed with the Chinese in the daily life.

This is multi-racialism in spirit; where every one can understand a little about the language, food and culture of the other communities. This is one positive aspect of life in Singapore that should be preserved. It may be a simple incident, but it is quite meaningful.

US Presidential Election and Singapore

Lucky Tan points out the similarities of the policies pursued by the Republicans in USA and the PAP in Singapore. I agree with this observation and dislike the policies of both parties.
http://singaporemind.blogspot.sg/2012/10/us-presidential-debate-high-stakes-high.html

My view of the ad - MyRetirement

I saw an advertisement of the new policy, called MyRetirement, from Aviva. Here are my views:

a) The capital is guaranteed


My view: A long term investment that is capital guaranteed usually pays a poor return. Please check carefully.

b) There is a guaranteed return of up to 2.38% per annum. This means that the return could be lower than 2.38% p.a. but could not be higher than 2.38% p.a.


My view: A return of 2.38% p.a., is quite poor for savings that is locked up for a long term.

c) It provides a guaranteed monthly income for 10 years.


My view: This statement means nothing. If I have $120 dollars, I can also get a monthly income of $1 over 10 years. It is more important to get an adequate return on your monthly income.

A better choice
 If you are investing for the long term, make sure that you can get a yield of at least 4% per annum.  You can attend the FISCA talk on financial planning or investments (see http://easyapps.sg/assn/Org/Event.aspx?id=5) to find out some better choices.

Simplify the filing process, ACRA

16 October 2012

Editor, Voices

Today Paper

I thank your paper for publishing my letters concerning providing feedback to 

ACRA and participating in their stakeholder's dialogue.

Five months earlier, I accepted their invitation. During this time, I was available

to attend their meetings, but they did not call for a meeting. It was wrong for 

ACRA to suggest that I was not interested or too busy to attend.

The annual report of ACRA for 2010/11 have a statement that "filing fines and prosecution 

penalties grew marginally by 6% to S$17.4 million (FY2009/10: S$16.4 million)."

I had to pay a fine of $120 for filing my annual returns late, although I acted promptly on

receiving their late reminder.  The revenue of $17.4 million suggested that over
100,000 people had failed in meeting their statutory responsibility. 

I had the personal experience of making online filings of the annual return and
change on share capital. The online process is extremely complicated. What should be

a simple matter in the traditional way of filing a paper-based return took hours to 

complete online.

To submit an online filing, the filer has to learn how to navigate the

complicated website and to understand the workings of the back-end system that they

are interacting with.  The potential of making mistakes is quite high. Quite often, the

    website hung and the filer had to repeat the process from the start.  I had to make several 

attempts to complete a simple filing.

I am sure that ACRA must have spent a lot of money on providing helpline support to people

who face difficulty in making online filing.  How wasteful for them and for the public!

I wanted to give my feedback to ACRA that they need to make a fundamental change

to their current approach. Something is clearly wrong, when so many people had

to pay fines and penalties.

Tan Kin Lian

A prudent taxi driver

I asked a taxi driver, who is in his 50s, if he has fully paid up his HDB flat. He shared his personal experience.

He bought a 3 room HDB flat for $29,000. Eight years later, its value increased to $60,000. He sold it and bought a resale 4 room HDB flat for $80,000. He took an additional loan for $20,000 and paid a monthly installment of $150 (or thereabouts) for 15 years. He has fully paid up his 4 room HDB flat, which is more than adequate for his needs. His children have grown up.

I said that he had managed his finances wisely.

He shared the experience of a neighbor who sold the first HDB flat, took out the profit and spent it away. The neighbor took a full loan on the resale HDB flat and now had to pay $1,000 a month up to age 75. This was very stressful.

Another friend sold the HDB flat on two occasions and took out the profit. He invested in the stock market and lost the money entirely. He could not pay the mortgage on the 5 room HDB flat which was repossessed. Now, he had to downgrade to a 3 room HDB flat, and was in a worse condition than the taxi driver.

Another relative could not pay the mortgage installment for more than 10 years. The HDB did not repossess his flat but continue to add interest and lawyer fees. As the value of the 5 room HDB flat was above the money owed, he was allowed to continue living in the flat. When he sells the flat, the net amount, after paying the loan, would not be sufficient to buy a 3 room flat today.

The three cases of over-spending on HDB flats are quite common and has harmed the finances of many Singaporeans.

Whole life "Umbrella" policy

The taxi driver who drove me to the airport told me this story. 30 years ago, he wanted a life insurance policy that pays him at age 55. The NTUC agent sold him the Umbrella policy. When he read the policy documents many years later, he was angry. The Umbrella policy required him to pay premium for 55 years, rather than allow him to collect his money at age 55. He found that the premium was very low, so he did not raise a complaint.

When he reached age 55, he was told that he could surrender his policy for more than $50,000. The increase in the surrender value each year was more than 9%. (I do not know if this figure is correct, but that was what he was told). The sum assured was $100,000 and the accumulated bonus was more than $20,000.

He then realized that it was a good life insurance policy and decided to keep it for as long as he could. He was still earning an income as a taxi driver. It allowed him to give more than $100,000 to his wife, if anything happened to him. He said that the NTUC agent had recommended a good policy to the customer, although this was not explained well at that time.

He recommended his son to buy the Umbrella policy, but found that it was no longer being sold by NTUC Income. To buy a similar coverage today, the premium would be a few times higher. (Again, I am not sure that he is given the correct figure).

I told him that I was running NTUC Income at that time. 

Basics of investing

I often receive e-mails from the public asking my views about investing in various types of investments. During the past week, the questions were about investing in silver and pre-IPO shares. They ask - are these investments safe?

My reply is, "attend the educational talks on financial planning and investments, organised by FISCA. Learn about investing in blue chip shares. They form a benchmark for you to compare about investing in other types of investments. The talks also tell you about dubious investments that you should avoid. "

The next talk is on 27 October. Details can be found here: http://easyapps.sg/assn/Org/Event.aspx?id=5. This talk is being held once in three months, so do not miss it. Register now.

Avoid investing in unfamiliar schemes

Dear Mr. Tan 
I was recently introduced to invest in a certain company ( X ). I was told that the company has partnerships with Y and Z. I was also told that the one of its companies will be listed by next year and thus an investment of $10,000 will reap a profit of 87%. 
As this is my first time in investing, I searched for information on X through the Internet. I found only bad reviews about X. Several people on the forums said that X is linked to another company which is believed to be a scam. I don't know what to look out for and how to protect my money. 

REPLY

Never invest in any scheme that you are not familiar with, as the potential for being a scam is quite high. 

Join FISCA and learn about investing in the proper way.

You can attend the education talks organised by FISCA here

http://easyapps.sg/assn/Org/Event.aspx?id=5 

You can join FISCA as a member and enjoy discounts on the talks

To join as a member, register here:

http://easyapps.sg/assn/Org/RegisterUser.aspx?id=5

The membership fee is $36 a year, and you can access the website and get a

newsletter twice a month.

Financial Planning 27 October 2012

There is a FISCA talk on Financial Planning on 27 October. Register now.
http://easyapps.sg/assn/Org/Event.aspx?id=5

Facecard on iPad

Facecard is a name card stored in the Cloud. You can create your Facecard at www.cfacecard.com.

You can download the Facecard app on iPhone or iPad. This allows you to download the Facecard of your contacts into your mobile device and to search for any contact. This beats storing the physical name cards at your desk!

You can also send links to your Facecard to your contacts. They can store your link in their Contact Box in the Cloud and download them into their mobile device. When you update your Facecard, they get the latest details automatically.

Try it now.
www.cfacecard.com

LTA App wins International Award

The LTA app, MyTransport.SG has won an international award. http://www.todayonline.com/Singapore/EDC121013-0000085/LTA-wins-award-for-smartphone-app-MyTransport,SG
I have downloaded it into my iPad but I hardly use it. My commonly used apps are Gothere.sg and SG Bus.
Do you use the LTA app regularly?

Alleged breach of policy conditions

Janet (not her real name) was negligent in knocking down a pedestrian. She reported the accident to her insurance company X promptly, as required by the policy, and X had to handle the injury claim from the pedestrian.

Half a year later, the Police issued an offer to Janet to pay a composition fine of $200 for her careless driving. She accepted and paid the fine.

She was not aware that she would have breached the a condition in the policy which required "Every letter claim writ summons and process shall be notified or forwarded to the Company immediately on receipt." 

X paid a sum of $30,000 as injury claim to the pedestrian and took legal action to recover this payment from Janet, as she had breached the policy condition and was not entitled to be covered by the policy. Janet had to engage a lawyer to fight against the recovery of this sum by X.

 

A new policy - Cash Cow

Someone sent me the Benefit Illustration of a new policy called the Cash Cow and asked for my views. This policy requires premium to be paid for 10 years and the policy can continue without any further premium payment.

I compare the surrender value under the Cash Cow policy at the end of 10 years and 20 years with the same amount invested in the STI ETF, assuming the same yield of 3.75% and 5.25%, and obtained the following amounts:

The payout from the STI ETF is at least 50% higher than the cash cow, assuming the same interest rate earned.

The life insurance cover provided by the Cash Cow is very low, so the cost is probably less than 1% of the premium that is being saved. The Cash Cow gives a poor return, compared to an investment in the STI ETF.

Motorists to be hit in the pocket again

A new GPS system of charging self-drive commuters

adds pressure to switch to public transport.

 

(Photo: Spluch)

 

In time, the GPS method of charging may become

even more unpopular

than the current electronic gantry system.

 

Some people believe it would be implemented

either long before or after 2016, the next general election.

 

http://thestar.com.my/news/story.asp?file=/2012/10/13/focus/12161347&sec=focus

Some gold trading is Ponzi scheme

Dear Mr Tan

Today's straits times A37 - "Bank Negara:  Some gold traders run Ponzi
schemes.  KL Central banks raids four firms, has another 20 on
consumer alert list"

It is interesting to know what our Authorities intend to do?  Are they
currently allowing some of these companies to liquidate their assets
before taking action or they just deem that their schemes are not
under their preview and they should not take any action.

This has happened in the past with the Minibonds and we are still
allowing such things to happen.
David

Paying a high interest rate for borrowings

Dear Mr Tan,
Please help to share this sad story in  your blog.

Bob (not his real name) is now 51 years old, a local Singaporean Chinese. Less than 6 six years ago, he  married a young Vietnamese lady through a marriage agency. She was in her early 20s and he was then 45 years old.

Today, he is in debt partly due to his gambling habits and partly due to his generous care of his young wife by providing for her immediate family in rural Vietnam, inclusive of building a family house for them. He also gave a significant portion of his net monthly income as allowance to his wife and paid for multiple trips for her and her mother to visit Singapore. Bob is not rich, just a typical heartland Singaporean with gross income slightly above $3,000 but he has a fully paid HDB flat fund through CPF through his years of hard work.

Bob owes at least six banks through easy credit scheme and cash advance from his stack of credit cards to the tune of $80,000. This debt amount was accrued during the past nine months due to his casino gambling trips. Recently, he even turned to another four "licensed" money lenders to loan for a smaller sum. This easy cash loan is directly deposited into bank account and accordingly to Bob, most of them don't have a shop or office front and there is no formal loan agreement, just through handphone conversations and SMS texts and weekly debt servicing payment also through ATM to a designated account given to him.

Looking into Bob's debt issues, is there anything an individual could learn?  Also, is there anything that our MAS could have done better to control easy credit card applications and approval?

In this case, if an individual earns only a gross monthly income of $3200, can he owns so many credit cards that allows him to have such easy cash advance to the tune of two months of annual salary for each credit card in his hand?  Also, Bob has to pay a weekly 5% interest rate (i.e. annualized rate of 260%). Is there no guidelines in which MAS can impose upon such of debt which many licensed money lender operation to control the max? Bank typically impose a 2% interest rate per month (annualized rate of 24%) for credit cards loan. I have not even mentioned about one last category of dangerous debt which many are exposed to i.e. loan sharks. 

One just need to walk into the numerous counselling sessions that are held all over the island to understand the full extent of the debt and loan issues which both Singaporean and non-Singaporean of all races are been traumatized. Bob now has to sell his HDB flat so that he can pay off his debts and he is also in the midst of a divorce proceeding initiated by his wife. He couldn't avoid to hire his own lawyer, but yet agreed to pay for his wife's lawyer for this uncontested divorce.

Upgrading of Shield plan turned sour

Mr. Wee (not his real name) is in his late 50s. On advice from his friends, he upgraded his Medishield to a private Shield and paid a higher premium. He thought that this would provide higher coverage for his medical expenses, but it turned out to be a nightmare for him.

A few months later, he had a heart condition that required him to be hospitalized on three occasions. Although his private Shield plan allowed him to use B2 ward, he opted for C class ward. The total bill for the three visits was $14,000, which was initially deducted from his Medisave account.

The insurer refused to pay the claims on account of non-declaration of a cancer treatment that occurred 20 years earlier. As there was no recurrence of this problem, Mr. Wee thought that it was a non-issue. The insurer also found that he did not declare his high blood pressure that was under control.

Mr.Wee had been insured under Medishield since its inception. Instead of paying the claims (which is fully recoverable from Medishield), the insurer wanted to cancel the private Shield insurance from inception,  and required Mr. Wee to make a claim directly from Medishield  But Medishield told Mr. Wee that he should claim under his private Shield, as Mr. Wee had transferred his policy to private Shield for half a year. It would be quite difficult to transfer the insurance back to Medishield retrospectively.

Mr. Wee had to move from one party to another and after a few months, his claim was still not paid. He advised the public not to upgrade to a private Shield from Medishield and faced this type of stress.

Singapore Transport rank top

In spite of glitches, Singapore transport still rank top among global cities.
http://www.businesstimes.com.sg/premium/singapore/spore-transport-infrastructure-rated-tops-20121011

I agree with this assessment. However, there are several simple and low cost measures that can be introduced immediately to make travel more comfortable for commuters.

Effective way to solve a problem

This story shows the difference between an effective and wasteful way to solve a problem. I find many cases of wasteful ways in Singapore and will share them. We need to recognize the wasteful ways and implement measures that are effective in achieve the results and reduce the cost.