Hi Mr. Tan,
What is single premiun endownmwnt insurance plan? Should I invest in this policy? Is it safe to invest my retirement fund in The Big-e plan paying 2.75%, better than CPF board rate of 2.5%.
Interest rate is dropping everywhere, despite of the high inlation rate this year (estimated 6%)
Recently, I lost money in the stock market, so I had decided to park my emergency fund in a safe investment.
REPLY
A single premium endowment gives you a return of about 3% to 4%, but your money has to be invested (i.e. locked in) for the entire duration of 10 to 15 years. If you withdraw early, you are likely to suffer a penalty. It also offers some modest life insurance cover.
The difference between BIGe and CPF is only 0.25%, it is better to keep your money in CPF. If possible, transfer your savings from ordinary account (0.25%) to the special acount (4% + 1%) to earn a higher interest rate.
If you wish to have a better return, you can invest for the long term. Read this FAQ:
http://www.tankinlian.com/faq/savings.html
Sunday, February 3, 2008
Questionable sales practices
Over the years, and in many countries, they have been lots of consumer complaints on the sales practices of:
a) used car dealers
b) insurance agents
c) property agents
Here are the underlying causes of this problem:
a) the sales person is paid a commission on the sale
b) if they do not make any sale, they do not earn any commission
c) it is difficult to make a sale in a competitive market
d) some have to resort to questionable practices to close the sale
e) the products are non-standard
f) there is lack of consumer information
Some organisations try to solve this problem by setting standards of professional practices. But, this is difficult to achieve, due to the inherent conflict, and the need to close a sale in a competitive market.
Here are tips for consumers:
a) Do not buy from a sales person who approach you
b) Do some research to understand the product
c) Get price comparison of similar products
d) Ask questions to get answers that can be compared easily
e) Get an independent person to help you to make the decision.
All the best.
a) used car dealers
b) insurance agents
c) property agents
Here are the underlying causes of this problem:
a) the sales person is paid a commission on the sale
b) if they do not make any sale, they do not earn any commission
c) it is difficult to make a sale in a competitive market
d) some have to resort to questionable practices to close the sale
e) the products are non-standard
f) there is lack of consumer information
Some organisations try to solve this problem by setting standards of professional practices. But, this is difficult to achieve, due to the inherent conflict, and the need to close a sale in a competitive market.
Here are tips for consumers:
a) Do not buy from a sales person who approach you
b) Do some research to understand the product
c) Get price comparison of similar products
d) Ask questions to get answers that can be compared easily
e) Get an independent person to help you to make the decision.
All the best.
Save in a period of inflation
A young person made this argument, "What is the point of saving when prices will increase next year. It is better to spend now."
Here are my views:
1. Do not spend on unnecessary and expensive things.
2. If more people curtail their spending, prices will come down
3. You can invest your savings in equities and properties, to earn a return that beats inflation
4. Invest in a low-cost fund to achieve diversification. It also allow you invest in small amounts.
Inflation is caused by too many people spending too much in the fear of increasing prices in the future.
Read this FAQ:
http://www.tankinlian.com/faq/savings.html
Here are my views:
1. Do not spend on unnecessary and expensive things.
2. If more people curtail their spending, prices will come down
3. You can invest your savings in equities and properties, to earn a return that beats inflation
4. Invest in a low-cost fund to achieve diversification. It also allow you invest in small amounts.
Inflation is caused by too many people spending too much in the fear of increasing prices in the future.
Read this FAQ:
http://www.tankinlian.com/faq/savings.html
MediShield
Medishield is a medical insurance scheme operated by Central Provident Fund. It pays 80% to 90% of hospital bills above $1,000/ $1,500. It covers daily charges up to $250 per day ($500 for intensive care) and up to certain limits for surgery, implants, radiosurgery and outpatients.
There is an option for you to buy a private Shield plan (instead of MediShield) to get higher coverage. You have to pay a higher premium.
There is an option for you to buy a private Shield plan (instead of MediShield) to get higher coverage. You have to pay a higher premium.
Medisave
Medisave is a sub-account in your CPF account. Workers up to 35 years contribute 6.5% of their wages into the Medisave account (subject to a limit). Older workers contribute a higher porportion of their wages. The balance in the Medisave account earns interest at 4% (plus 1% bonus, subject to a cap).
The Medisave account can be used for paying hospital bills, certain outpatient expenses and for medical insurance.
The Medisave account can be used for paying hospital bills, certain outpatient expenses and for medical insurance.
Use Medisave sparingly
Many people like to use their Medisave savings, whenever they have the opportunity, e.g. to pay the hospital bills or buy expensive medical insurance.
I wish to make this suggestion: if you can afford to pay your hospital bill by cash, it is better to pay cash and keep your Medisave intact.
Why?
Your money in the Medisave account will earn interest at 4% plus 1% (for the first $20,000). This is much higher than the interest that you can earn on fixed deposit. It is better to keep your money in Medisave to earn a higher rate of interest.
When your Medisave exceeds the cap, it will be transferred into your special and ordinary account. It can be withdrawn when you reach age 55, if you wish to use the money. If not, you can keep it in the retirement account and earn 4% plus 1%.
Lesson: Keep your money in Medisave to earn a higher rate of interest. Do not withdraw it, unless you have no other way to pay your hospital bills. Do not overspend on your medical insurance.
I wish to make this suggestion: if you can afford to pay your hospital bill by cash, it is better to pay cash and keep your Medisave intact.
Why?
Your money in the Medisave account will earn interest at 4% plus 1% (for the first $20,000). This is much higher than the interest that you can earn on fixed deposit. It is better to keep your money in Medisave to earn a higher rate of interest.
When your Medisave exceeds the cap, it will be transferred into your special and ordinary account. It can be withdrawn when you reach age 55, if you wish to use the money. If not, you can keep it in the retirement account and earn 4% plus 1%.
Lesson: Keep your money in Medisave to earn a higher rate of interest. Do not withdraw it, unless you have no other way to pay your hospital bills. Do not overspend on your medical insurance.
Medishield and Eldershield
Dear Mr. Tan,
What is the difference between MediShield and Eldershield? For an individual at the age of 50, does it make sense to insure to the maximum in these two plan?
REPLY
Medishield pays for most of the hospital expenses above a certain sum.
Eldershield pays a monthly income of $400 for a period of up to 72 months, if the insured is incapacited to an extent that he or she is not able to carry out several activities that are needed for daily living. This benefits helps to pay part of the cost of nursing care.
It is better to insure for the basic coverage. Do not over-insure, as you will be paying a higher premium. You need to keep some of your savings to meet the higher premiums when you grow older.
What is the difference between MediShield and Eldershield? For an individual at the age of 50, does it make sense to insure to the maximum in these two plan?
REPLY
Medishield pays for most of the hospital expenses above a certain sum.
Eldershield pays a monthly income of $400 for a period of up to 72 months, if the insured is incapacited to an extent that he or she is not able to carry out several activities that are needed for daily living. This benefits helps to pay part of the cost of nursing care.
It is better to insure for the basic coverage. Do not over-insure, as you will be paying a higher premium. You need to keep some of your savings to meet the higher premiums when you grow older.
Savings for the short term and long term
From your monthly income, you have to pay the expenses. You should keep the remainder as savings for the future.
For the short term savings, you have to keep in a savings or current account. You may have to make certain large payments during the year, for example, expenses for the start of the school year, payment of taxes, etc. This can come out of your bank account.
You can set aside a part of your savings for the long term. This should be invested to earn a high rate of return, e.g. in an investment fund. As the flow of your future savings is uncertain, you should avoid investing in an inflexible financial contract that have a large upfront charge or imposes a penalty on early termination.
Read this FAQ:
http://www.tankinlian.com/faq/savings.html
For the short term savings, you have to keep in a savings or current account. You may have to make certain large payments during the year, for example, expenses for the start of the school year, payment of taxes, etc. This can come out of your bank account.
You can set aside a part of your savings for the long term. This should be invested to earn a high rate of return, e.g. in an investment fund. As the flow of your future savings is uncertain, you should avoid investing in an inflexible financial contract that have a large upfront charge or imposes a penalty on early termination.
Read this FAQ:
http://www.tankinlian.com/faq/savings.html
Impressions of Kuala Lumpur
I visited Kuala Lumpur on 1 February on the inaugural flight of Jetstar Asia. I was surprised that there is no need to complete any immigration and customs form. The authorities have recently dispensed with this requirement. It was quite easy to clear through the formalities. Wow!
I hope that more countries will make life more enjoyable and simpler for the traveller.
I stayed one night at Genting Highlands and another night in Kuala Lumpur (at Bukit Bintang). This area is like Orchard Road in Singapore. It is busy and exciting. Several of the five star hotels in the area belong to the Starhill Group. (I wonder if Starhill is the translation of Bukit Bintang?)
Traffic is bad in Bukit Bintang, but I was told that this was due to the festive season. Otherwise, my stay in Kuala Lumpur is enjoyable.
I hope that more countries will make life more enjoyable and simpler for the traveller.
I stayed one night at Genting Highlands and another night in Kuala Lumpur (at Bukit Bintang). This area is like Orchard Road in Singapore. It is busy and exciting. Several of the five star hotels in the area belong to the Starhill Group. (I wonder if Starhill is the translation of Bukit Bintang?)
Traffic is bad in Bukit Bintang, but I was told that this was due to the festive season. Otherwise, my stay in Kuala Lumpur is enjoyable.
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