If you are investing your money for 10, 20 or more years, you should find a low cost fund. A difference of 1% over 20 years can contribute to an additional 20% (plus) to your retirement funds.
Read about it in this FAQ.
Friday, July 20, 2007
Renewal of motor insurance
Dear Mr Tan,
My motor insurance is due for renewal. Where can I find the best terms and premium?
REPLY:
I suggest that you read this FAQ.
By shopping around, you can get a better rate. The insurance cover is quite standard anyway.
My motor insurance is due for renewal. Where can I find the best terms and premium?
REPLY:
I suggest that you read this FAQ.
By shopping around, you can get a better rate. The insurance cover is quite standard anyway.
A cooperative has to answer to its members
COMMENT POSTED IN MY BLOG
Yes, but being a co-operative can also mean that they answer to nobody, just like what I am experiencing now. Phone call to CEO cannot get him, leave message to make contact, no response. Email to him, no response. Talk to agent, say management told her not to respond to me.
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REPLY:
I suggest that you raise your issue with the service quality manager. If you still do not get a reply, you can write a complaint to FIDReC.
The CEO of a co-operative has to answer to its board of directors and to its members at its annual meeting. This is similar to a private company.
If you write to the CEO of many large companies, you will not get a reply from them as well. They are busy people. They will normally get a subordinate to reply to you.
Yes, but being a co-operative can also mean that they answer to nobody, just like what I am experiencing now. Phone call to CEO cannot get him, leave message to make contact, no response. Email to him, no response. Talk to agent, say management told her not to respond to me.
------------------------
REPLY:
I suggest that you raise your issue with the service quality manager. If you still do not get a reply, you can write a complaint to FIDReC.
The CEO of a co-operative has to answer to its board of directors and to its members at its annual meeting. This is similar to a private company.
If you write to the CEO of many large companies, you will not get a reply from them as well. They are busy people. They will normally get a subordinate to reply to you.
Underlying assets of structured products
Some structured products are invested in CDOs (collateralised debt obligations). These are described as their "underlying assets".
These underlying assets are NOT the same as the "reference entities" which are used to determine the additional return based on certain complicated formulas involving their share prices.
As the reference entities are large, familiar companies, many investors MISUNDERSTOOD that their money are invested in these entities (which is NOT the case).
CDOs are invested in bonds and mortgages of various quality (including subprime mortgages that are now seeing high default rates in USA). The manager re-packages the assets into various tranches of the CDOs, rated from AAA (least risky) to the equity tranche (most risky).
The rating of CDOs are NOT the same as the rating of corporate bonds. CDOs earn a higher return (up to 2% p.a. more) than corporate bonds, due to the higher risk.
If you buy a structured product that is invested in the CDOs, you may not get the full extent of the higher return (for the higher risk), due to the expenses of the structured product.
Two large funds managed by Bear Stearns have made significant investment in CDOs which were rated AA or AAA. They have recently marked down the value of these highly rated CDOs significantly. The investor in their funds have lost most or all of their money. (This is a worst case scenario).
Lessons:
Avoid investing in CDOs, either directly or through structured products, unless you are familiar with this type of product, and you get a return that commensurate with the risk.
These underlying assets are NOT the same as the "reference entities" which are used to determine the additional return based on certain complicated formulas involving their share prices.
As the reference entities are large, familiar companies, many investors MISUNDERSTOOD that their money are invested in these entities (which is NOT the case).
CDOs are invested in bonds and mortgages of various quality (including subprime mortgages that are now seeing high default rates in USA). The manager re-packages the assets into various tranches of the CDOs, rated from AAA (least risky) to the equity tranche (most risky).
The rating of CDOs are NOT the same as the rating of corporate bonds. CDOs earn a higher return (up to 2% p.a. more) than corporate bonds, due to the higher risk.
If you buy a structured product that is invested in the CDOs, you may not get the full extent of the higher return (for the higher risk), due to the expenses of the structured product.
Two large funds managed by Bear Stearns have made significant investment in CDOs which were rated AA or AAA. They have recently marked down the value of these highly rated CDOs significantly. The investor in their funds have lost most or all of their money. (This is a worst case scenario).
Lessons:
Avoid investing in CDOs, either directly or through structured products, unless you are familiar with this type of product, and you get a return that commensurate with the risk.
Consumer Protection on Mortgages - USA Experience
In his testimony to Congress, chairman Bernarke said that the Federal Reserve Board will implement the following measures to strenghten consumer protection on mortgages:
* improve the disclosure of the terms
* write the disclosures in a form suitable for the layman
* carry out focus group study to check if the layman understand the terms.
* ensure that the terms are fair to the consumers
Lesson: We can learn from the experience of USA. We have to make sure the financial products sold in Singapore meet the above tests.
* improve the disclosure of the terms
* write the disclosures in a form suitable for the layman
* carry out focus group study to check if the layman understand the terms.
* ensure that the terms are fair to the consumers
Lesson: We can learn from the experience of USA. We have to make sure the financial products sold in Singapore meet the above tests.
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