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Thursday, January 31, 2008
Keep your savings in your personal insurance policy
A mother bought an endowement policy in the name of her son. The policy matured recently and a cheque was delivered to the home. The son was under custody for drug rehabilation.
The mother was worried that if the maturity money is credited into the son's account, he will use it to buy drugs.
But she is stuck. The money legally belonged to the son, even though she paid the premium over the years. The mother is poor, and actually need the money for her own use.
Lesson: It is better to keep savings in your own name, and not in the name of your children. You can use the money for their education or other suitable purchase at a future date. If you buy the policy in the name of your child, you will lose control of the money.
The mother was worried that if the maturity money is credited into the son's account, he will use it to buy drugs.
But she is stuck. The money legally belonged to the son, even though she paid the premium over the years. The mother is poor, and actually need the money for her own use.
Lesson: It is better to keep savings in your own name, and not in the name of your children. You can use the money for their education or other suitable purchase at a future date. If you buy the policy in the name of your child, you will lose control of the money.
Invest on your own
If you invest on your own in the stock exchange, you can reduce your expenses considerably. If you buy shares or the exchange traded fund, you pay a brokerage of 0.3%. There is no annual fee.
If you are not sure about the shares to select, invest in the STI exchange traded fund. It is invested mainly in about 30 Singapore blue chips that make up the ST index. This gives you diversification.
1,000 STI ETF will cost you abotu $3,200 now. If you are investing your monthly savings, you may have to wait for 1 year to accumulate sufficient savings to buy 1,000 shares.
You can offer a price between the buy and sell price quoted on the exchange. Your order will stand in the queue, waiting for someone to sell to you. If you are keen to buy immediately, you can pay a higher price to match the sell price on the board.
If you have a large sum to invest (say $100,000 or more), you can select 5 to 10 blue chips and invest $10,000 to $20,000 in each share. This will give you some degree of diversification. It is like creating your own portfolio.
You will need to open an account with a stockbroker and a CDP account.
If you are not sure about the shares to select, invest in the STI exchange traded fund. It is invested mainly in about 30 Singapore blue chips that make up the ST index. This gives you diversification.
1,000 STI ETF will cost you abotu $3,200 now. If you are investing your monthly savings, you may have to wait for 1 year to accumulate sufficient savings to buy 1,000 shares.
You can offer a price between the buy and sell price quoted on the exchange. Your order will stand in the queue, waiting for someone to sell to you. If you are keen to buy immediately, you can pay a higher price to match the sell price on the board.
If you have a large sum to invest (say $100,000 or more), you can select 5 to 10 blue chips and invest $10,000 to $20,000 in each share. This will give you some degree of diversification. It is like creating your own portfolio.
You will need to open an account with a stockbroker and a CDP account.
Real Estate Investment Trust (REIT)
The share prices of the Real Estate Investment Trusts (REIT) are now about 20% below its recent peaks. The yields on many REITS now range from an an attractive level, from 5% to 8%. Rentals on the properties owned by the REITS are expected to remain strong over the next few years, giving support to the high yield. This is an attractive class of investment.
Tribute to Mohideen Gany
My dear friend, Mohideen Gany, passed away peacefully this afternoon. He was among the top sales producers of NTUC Income during the initial years.
At that time, the commission paid on the sale of life insurance policies was extremely low (less than one fifth of the level today). He and several dedicated union officials worked hard during their spare time to promote the business of NTUC Income.
I have known Mohideen Gany as a very close friend for the past 30 years. I called him Anneh (elder brother).
I visited Mohideen Gany in hospital last week. I visited him in his home yesterday after his discharge. Although he was very sick and in pain, he was still alert and gave me a happy smile when he know of my visit.
I shall miss a great friend.
At that time, the commission paid on the sale of life insurance policies was extremely low (less than one fifth of the level today). He and several dedicated union officials worked hard during their spare time to promote the business of NTUC Income.
I have known Mohideen Gany as a very close friend for the past 30 years. I called him Anneh (elder brother).
I visited Mohideen Gany in hospital last week. I visited him in his home yesterday after his discharge. Although he was very sick and in pain, he was still alert and gave me a happy smile when he know of my visit.
I shall miss a great friend.
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