Encourage more people to use public transport

The roads in Singapore are getting congested. The Government plans to extend the Electronic Road Pricing (ERP) to more roads, extend the chargeable hours and increase the rates. These are measures to reduce the congestions on the road.

The Minister for Transport said that building more roads does not help to solve the congestion problem. It encourages more people to use cars and will lead to more congestion at a later date.

I agree.

We need to encourage more people to use public transport. As a recently converted user of our public transport, I now prefer to use the train or bus, rather than to drive a car. I avoid paying ERP and parking charges and the hassle of driving on congested roads.

Previously, like many other car owners, I found the bus routes to be too complicated.

If we make some effort, we can learn how to take the bus from our home to the nearest MRT station. But, if we are travelling anywhere else by bus, it is quite difficult to find the right bus. This explains the heavy demand for taxis.

We need a revamp of our bus routes, to make it easier for many people to use them to move around.

I wish to suggest a longer term strategy and an interim measure for the shorter term.

For the longer term, we need a public transport system that has the following components.

• The MRT forms the backbone of the public transport
• Feeder services take commuters from pick up points within a town to the MRT station or bus interchange
• Express services bring commuters between the bus interchanges and provide an alternative to the MRT

The feeder services can use large or small buses and should preferably be operated by a number of small operators.

As the express bus does not require stop at pickup points, they can keep to a more reliable and frequent schedule.

This system may require a commuter to take up to three segments, if their start and end points are not within walking distance of the train station or bus interchange. This is not a problem, as the connection can be done at the same place. It is useful for the commuter to take a short walk or move around anyway.

As an interim measure, I suggest that the existing bus services be actively promoted as a feeder service. At each bus stop or MRT station, there should be a map showing the bus services that serve an area within (say) a radius of up to three kilometres. The services can be colour coded to make it easier for the commuters to pick the right bus to take to their ultimate destination.

It will also encourage commuters to travel to move around their neighbourhood.

If it is easy and convenient to take public transport, more car owners will choose this option. This has been my personal experience.

Tan Kin Lian

Revosave Plan

Several visitors to my blog have criticised the Revosave plan introduced by NTUC Income. Their criticisms are:

* It offers a low return
* It is similar to another plan actively successfully by another insurer
* It is a way to give high commission to the agent

We have to recognise the following facts:

* Some people like this type of plan, that offers several features put together. This is why the other insurer was able to sell the product very successfully. Their customers appear to be willing to accept a lower return.
* The product from NTUC Income probably offer a better return compared to the competitor's product

Lesson:
1. If the customer likes this type of product feature, let them buy it from NTUC Income (instead of the other insurer).
2. If the customer wants a better return, they can buy an plain endowment or ILP.

Suitable plans for a young person

Hi Mr Tan,

I have just bought a Limited Premium Living Policy on $100,000 coverage.

I am wondering what other plans in the market I can purchase to provide a more cost-effective coverage on a lower cost. There are so many plans in the market. I am very confused.

Is there a rule of thumb of how much coverage a person should have? Would buying term insurance be more cost-effective when starting out on a career?

MY REPLY:

I hope that this FAQ will help you to make the right decision.

Discount between Hongkong and Shanghai shares

Two visitors have asked me the list of China shares listed in Hongkong that showed a large discount to the price in Shanghai.

I am not able to share this list, as my stockbroker asked me to keep it uncirculated (as he obtained it from an unofficial source).

If you are interested in the information, ask your stockbroker to get it from his firm. They have the list. It is quite easy for the firm to compile it from their financial terminal.

Allow diverse views

COMMENT POSTED IN MY BLOG

Mr. Tan, more people are visiting your blog because you have an open policy and you are tolerant of views expressed. People like to have diverse views.

Although you are also taking risks of an attack but so far I have seen none except for some strong views.

We've learned a lot from various postings on various subjects and not only on insurance and finance. At least our view of the insurance industry is now widened.

We now know more, example like the posting on the newly launched product, revosave, by Income. We are aware of the features and we will not be taken in by the agents of Income.

Thank you, Mr. Tan, for your stout heartedness and vision. We hope you will continue to open up your blog.

Buy annuity for a useful purpose

COMMENT POSTED IN MY BLOG

Hi,

I think you belong to the group of investment guru who will not buy annuity. For most people, they might not even know how to invest and might not even know about or understand annuity.

MY REPLY:

Annuity serves a useful purpose, for people who need it.

I will buy an annuity to give an annual payment to my children (instead of a lump sum that they can spent away all at once).

I will buy an annuity for my wife, so that she has a steady income for her lifetime.

A view on financial planning

COMMENT POSTED IN MY BLOG (EDITED)

Mr. Tan,

Would you then agree that the government should only make it compulsory for "people who do not have enough money, and need to stretch it for their lifetime" to purchase an annuity?

In view of protecting local citizens, I agree that some form of scheme is neccessary especially for the mid to lower income. However, I do not see how a payout of 400-500 dollars for the rest of a person's life a month can significantly help. For example, 400-500 dollars for today is probably okay. Do you think it would be sufficient in 30 years time? What would 500 dollars buy you in the future?

Singapore should review once again the possibility of gaining higher returns on the CPF or even looking into the main purpose of CPF itself. Is the CPF for you to buy a home? Or for you to have some financial independance when you are unable to work? Why not force more money into the SA since it is already at 4%?

I for one believe that the OA CPF purpose in Singapore is to allow everyone to purchase a home and not something you can fall back on when you retire. Simply put, pay for your home with your CPF. Keep the minimum sum in your SA (because you have no choice but to comply).

Make sure you save at least 30% of your earned salary (WHY? because you don't have to pay the housing loan with your personal cash, so SAVE it!). Invest your savings into low and medium risk money markets or high dividend paying stocks with strong management and fundamentals.

Last but not least, educate your children. If you're stuck in this boat, a wise person once said to me 'one generation must always suffer for the rest to prosper'. How willing are you to give a better life for your children. As Chris Gardner says 'Education is a way out'. Educate, educate, educate.

Good luck.

MY REPLY:

I agree with your views, in particular:

1. Buy an annuity to stretch your limited savings for a lifetime
2. The annuity should increase to cover inflation
3. Save 30% of your earnings (but invest in and invest in a low cost, high return, well diversified fund).
4. Educate your children (but make sure that it has its payback).

A science pioneer and his dilemma

Dr. Lee Kum Tatt has received a few comments on the articles he wrote on how S & T has helped Singapore’s development. Now in his golden years he still encourages the spirit of enquiry through the study of S & T to be stepped up for Singapore’s continued progress. He has received some comments. Read about them in his blog and his replies.