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.
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