My target is to get 1,000 visitors a day. I am still stuck at 750 visitors. Please help me to promote my blog to your friends.
Gong Xi Fa Cai. Wish you prosperity and happiness in the Year of the Rat. (I was borned in the year of the RAT, and will be 60 years old).
Monday, February 4, 2008
Invest CPF ordinary account in STI ETF
Mr. Tan,
What is an easy way to invest CPF ordinary account in the STI ETF?
REPLY
From CPF website: The CPF Investment Scheme (CPFIS) gives members the opportunity to invest their CPF savings to enhance their retirement funds. Members may invest all available balance in their Ordinary Account (OA) and Special Account (SA) in professionally-managed products such as fixed deposits (FDs), Singapore Government bonds and treasury bills, Statutory Board bonds, annuities, endowment insurance policies, investment-linked insurance products (ILPs), unit trusts, and exchange traded funds (ETFs).
How to invest?
1) Open a CPF Investment account with any Major 4 Banks (Bring CPFstatement & IC)
2) Check CPF the amount can be invested.
3) Open an acct with the Broking House ( If you do not have one )
4) Instruct Remisier/Dealer to Buy under CPF
You can also refer to this website to see the service provided by UOB:
http://www.uob.com.sg/pages/personal/investments/finplanning/cpfinvestment.html
And DollarDex
http://www.dollardex.com/sg/index.cfm?current=../contents/cpfisoa&contentID=1020
What is an easy way to invest CPF ordinary account in the STI ETF?
REPLY
From CPF website: The CPF Investment Scheme (CPFIS) gives members the opportunity to invest their CPF savings to enhance their retirement funds. Members may invest all available balance in their Ordinary Account (OA) and Special Account (SA) in professionally-managed products such as fixed deposits (FDs), Singapore Government bonds and treasury bills, Statutory Board bonds, annuities, endowment insurance policies, investment-linked insurance products (ILPs), unit trusts, and exchange traded funds (ETFs).
How to invest?
1) Open a CPF Investment account with any Major 4 Banks (Bring CPFstatement & IC)
2) Check CPF the amount can be invested.
3) Open an acct with the Broking House ( If you do not have one )
4) Instruct Remisier/Dealer to Buy under CPF
You can also refer to this website to see the service provided by UOB:
http://www.uob.com.sg/pages/personal/investments/finplanning/cpfinvestment.html
And DollarDex
http://www.dollardex.com/sg/index.cfm?current=../contents/cpfisoa&contentID=1020
Travel by BMW
Singaporeans travel by BMW using “bus, MRT, walk”. To promote, the Government plans to:
a) Build more MRT lines over the nexlt 15 years in Singapore.
b) Introduce more feeder services
I wish to suggest a further leg to this strategy:
c) Make it practical for people to walk to and from the MRT station.
My proposal is:
d) Build elevated, shaded walkways from MRT stations to cover a distance of approximately 1 km to reach different neighbourhoods.
e) Make it possible for people to climb once and use the walkway to reach the MRT station, crossing many roads.
f) It will be comfortable to walk on the elevated walkway as it is shaded from the sun and rain.
g) This will also encourage people to walk to the nearby town center, market, school or bus terminus.
In Taipei, there is an elevated walkway (the local called it the Skywalk) that crosses many roads in the Taipei City Government disrict. It is well used.
It may be costly to build the elevated walkways, but if can be considered as being part of the total cost of the MRT line. The incremental cost of the walkway is probably less than 5%. It can be justified, if it encourages more people living in the nearby areas to use the MRT system.
Perhaps, a pilot project can be done to build this elevated walkway in one town, e.g. Ang Mo Kio, to test its feasibility? If successful, it can be implemented in the other towns.
a) Build more MRT lines over the nexlt 15 years in Singapore.
b) Introduce more feeder services
I wish to suggest a further leg to this strategy:
c) Make it practical for people to walk to and from the MRT station.
My proposal is:
d) Build elevated, shaded walkways from MRT stations to cover a distance of approximately 1 km to reach different neighbourhoods.
e) Make it possible for people to climb once and use the walkway to reach the MRT station, crossing many roads.
f) It will be comfortable to walk on the elevated walkway as it is shaded from the sun and rain.
g) This will also encourage people to walk to the nearby town center, market, school or bus terminus.
In Taipei, there is an elevated walkway (the local called it the Skywalk) that crosses many roads in the Taipei City Government disrict. It is well used.
It may be costly to build the elevated walkways, but if can be considered as being part of the total cost of the MRT line. The incremental cost of the walkway is probably less than 5%. It can be justified, if it encourages more people living in the nearby areas to use the MRT system.
Perhaps, a pilot project can be done to build this elevated walkway in one town, e.g. Ang Mo Kio, to test its feasibility? If successful, it can be implemented in the other towns.
Useful information
Hi Mr Tan,
Thank you for providing such informative information on your blog. I really do appreciate your kindness with all my heart.
I wish I have such knowledge since the day I started working. It is not too late as usually but one is not able to turn back the clock on those lost time.
I just want to wish you and your loved ones a very Happy, Healthy and Wealthy Rat Year! All the best for the forthcoming new year!
V
Thank you for providing such informative information on your blog. I really do appreciate your kindness with all my heart.
I wish I have such knowledge since the day I started working. It is not too late as usually but one is not able to turn back the clock on those lost time.
I just want to wish you and your loved ones a very Happy, Healthy and Wealthy Rat Year! All the best for the forthcoming new year!
V
High cost Endowment Policy
If you save $500 a month over 20 years, and earn an average yield of 5%, you should get a maturity sum of $198,000.
If you put this money in an endowment policy (or a variation of this policy), you get suffer a loss of 20% or more, depending on the expense and other charges taken away by the insurance company. These charges can reduce your yield by 2% or 2.5%.
Here are the figures:
Where did the 23% (ie $45,000) go? They are used to pay the following:
a) Commission to the agent
b) Advertising
c) Expenses and profit of the insurance company
d) Mortality charges
How much does the mortality charge cost, if you buy Decreasing Term insurance to provide the same amount of protection?
The mortality charge should cost less than 2%. The remaining 21% is spent on high expenses and charges.
Lesson: An endowment policy provides good value if the mortality and expense charges is not more than 10% of the premium.
If you put this money in an endowment policy (or a variation of this policy), you get suffer a loss of 20% or more, depending on the expense and other charges taken away by the insurance company. These charges can reduce your yield by 2% or 2.5%.
Here are the figures:
Net Maturity Total
Yield charges
5.0% $198,000 Nil 0%
4.0% $179,000 $19,000 10%
3.0% $161,000 $37,000 19%
2.5% $153,000 $45,000 23%
Where did the 23% (ie $45,000) go? They are used to pay the following:
a) Commission to the agent
b) Advertising
c) Expenses and profit of the insurance company
d) Mortality charges
How much does the mortality charge cost, if you buy Decreasing Term insurance to provide the same amount of protection?
The mortality charge should cost less than 2%. The remaining 21% is spent on high expenses and charges.
Lesson: An endowment policy provides good value if the mortality and expense charges is not more than 10% of the premium.
Dual currency investment (or deposit)
Dear Mr. Tan,
Recently, I wanted to invest in Australian deposit (to enjoy a higher interest rate). The relationship manager recommended a Dual Currency deposit to me. It gives me a higher interest rate, but on maturity I am given my money back in Singapore dollars or Australian dollars, depending on the exchange rate at that time. Is this a good investment?
REPLY
I advise against this type of structured product. Although you get a slightly higher interest rate, you are exposed to the risk of a loss (in case the Australian currency depreciates). You do not get the benefit of any gain in this currency.
This is explained in more detail in this FAQ:
http://www.tankinlian.com/faq/duali.html
It is better to invest in a straight forward foreign currency deposit:
http://www.tankinlian.com/faq/foreign.html
Recently, I wanted to invest in Australian deposit (to enjoy a higher interest rate). The relationship manager recommended a Dual Currency deposit to me. It gives me a higher interest rate, but on maturity I am given my money back in Singapore dollars or Australian dollars, depending on the exchange rate at that time. Is this a good investment?
REPLY
I advise against this type of structured product. Although you get a slightly higher interest rate, you are exposed to the risk of a loss (in case the Australian currency depreciates). You do not get the benefit of any gain in this currency.
This is explained in more detail in this FAQ:
http://www.tankinlian.com/faq/duali.html
It is better to invest in a straight forward foreign currency deposit:
http://www.tankinlian.com/faq/foreign.html
Another perspective
Why did NTUC Income sell endowment and whole life policies during my time as CEO? Here is a view expressed in another blog:
http://www.indextown.com/archives/2007/12/08/mr-tan-kin-lians-blog/
http://www.indextown.com/archives/2007/12/08/mr-tan-kin-lians-blog/
Lower upfront cost
Earlier this week, I wanted to put additional investment in the Combined Fund of NTUC Income. through my Flexi-link policy. I was told that the upfront spread for new investment was 3%.
I decided to look for an alternative investment. I finally made my additional investment in the following:
a) Buy 8 blue chip shares and REIT in the stockmarket (for some diversification)
b) Invest in the STI exchange traded fund
The upfront cost of my investment is only 0.3% (in brokerage fee). This is one-tenth of the cost of investing in the Combined Fund.
A comparison of the annual fees is:
a) Combined Fund - 0.9%
b) STI ETF - 0.3%
c) Blue chip shares - Nil
Lesson: If you have a large amount to invest, you can buy a few shares directly. If you have a smaller sum, you can invest in the STI exchange traded fund (for diversification and low cost).
I decided to look for an alternative investment. I finally made my additional investment in the following:
a) Buy 8 blue chip shares and REIT in the stockmarket (for some diversification)
b) Invest in the STI exchange traded fund
The upfront cost of my investment is only 0.3% (in brokerage fee). This is one-tenth of the cost of investing in the Combined Fund.
A comparison of the annual fees is:
a) Combined Fund - 0.9%
b) STI ETF - 0.3%
c) Blue chip shares - Nil
Lesson: If you have a large amount to invest, you can buy a few shares directly. If you have a smaller sum, you can invest in the STI exchange traded fund (for diversification and low cost).
Minibond Series 35
Dear Mr. Tan,
Please give your advice about minibond series 35, issuer Pacific International limited. The notes have a AAA rate, it means the lowest risk to invest ?
REPLY:
Sorry, I am not able to advice you on this investment.
You have to be careful about the AAA rating. Some CDO (collaterised debt obligations comprising of subprime mortgages) have AAA rating and are found to be of poor quality. I am not sure if the investments of this fund fall in this category.
My general views about structured products (not specifically related to this product) are set out in this FAQ:
http://www.tankinlian.com/faq/sinvest.html
Please give your advice about minibond series 35, issuer Pacific International limited. The notes have a AAA rate, it means the lowest risk to invest ?
REPLY:
Sorry, I am not able to advice you on this investment.
You have to be careful about the AAA rating. Some CDO (collaterised debt obligations comprising of subprime mortgages) have AAA rating and are found to be of poor quality. I am not sure if the investments of this fund fall in this category.
My general views about structured products (not specifically related to this product) are set out in this FAQ:
http://www.tankinlian.com/faq/sinvest.html
REITS with good yield and low price
Here are some REITS with good yields and low price to book ratio:
A P/BR ratio less than 1.0 means that the price is lower than the book value of the assets. Some of the prices have moved over the past few days. (Note: I have personally invested or plan to invest in some of these REITS).
Price Dividend P/BR
31/1 yield
Allco REIT 0.67 11.7% 0.42
Mapletree REIT 0.93 7.9% 1.10
McQuarie Prime 1.05 7.0% 0.91
Suntec REIT 1.50 6.7% 0.73
K-REIT 1.46 6.5% 0.73
A P/BR ratio less than 1.0 means that the price is lower than the book value of the assets. Some of the prices have moved over the past few days. (Note: I have personally invested or plan to invest in some of these REITS).
Buying a Shield plan
Dear Mr. Tan,
Do you have any advice on how to choose between the various Medishield plans offered by CPF and the insurance companies? Which is better choice?
REPLY
You can read my general tips in this FAQ:
http://www.tankinlian.com/faq/shield.html
Do you have any advice on how to choose between the various Medishield plans offered by CPF and the insurance companies? Which is better choice?
REPLY
You can read my general tips in this FAQ:
http://www.tankinlian.com/faq/shield.html
Higher productivity in insurance sales
Mr. Tan,
It seems from your postings, that you are against insurance agents. If there are no insurance agents, how will the insurance company get its sales?
REPLY
I am in favour of insurance agents who play a useful role by offering good value products to customers for a fair rate of commission.
I am against insurance agents who explot consumers by offering poor value products, so that they can earn a high rate of commission. They are trained to find ways of pushing these products to a unsuspecting consumer.
I hope that the selling of insurance can achieve the same level of productivity as the selling of shares. The commission rate earned by stockbrokers has reduced by 70% in recent years. The stockbrokers are able to make an adequate income on a reduced rate of commission by working more efficiently and by handling a larger volume of sales. They are able to bring down the transaction cost for consumers.
It is possible for insurance agents to find a more efficient way of marketing and similar value to consumers.
If insurance companies offer good value products, consumers will buy the insurance products willingly. There is no need for insurance agents to spend a lot of time to push these products to them.
It seems from your postings, that you are against insurance agents. If there are no insurance agents, how will the insurance company get its sales?
REPLY
I am in favour of insurance agents who play a useful role by offering good value products to customers for a fair rate of commission.
I am against insurance agents who explot consumers by offering poor value products, so that they can earn a high rate of commission. They are trained to find ways of pushing these products to a unsuspecting consumer.
I hope that the selling of insurance can achieve the same level of productivity as the selling of shares. The commission rate earned by stockbrokers has reduced by 70% in recent years. The stockbrokers are able to make an adequate income on a reduced rate of commission by working more efficiently and by handling a larger volume of sales. They are able to bring down the transaction cost for consumers.
It is possible for insurance agents to find a more efficient way of marketing and similar value to consumers.
If insurance companies offer good value products, consumers will buy the insurance products willingly. There is no need for insurance agents to spend a lot of time to push these products to them.
Selecting Blue Chips
Dear Mr. Tan,
In your blog, you mentioned to select 5 to 10 blue chips and invest $10,000 to $20,000 in each share. I wish to ask which are the 5 companies you feel has greatest value and potential? I understand this is in your perosnal capacity and that you are actually doing me a favour if you reply.
REPLY
I assume that, in a perfect market, the prices of each share reflects its future profitability. You only need to be concerned with:
a) Buying blue chip shares - as they are more stable
b) Have a certain degree of diversification.
I do not have any insight into which of the 30 shares in the STI index that I should invest it. I just chose one from each sector, say bank, property, conglomerate, media, transport.
In your blog, you mentioned to select 5 to 10 blue chips and invest $10,000 to $20,000 in each share. I wish to ask which are the 5 companies you feel has greatest value and potential? I understand this is in your perosnal capacity and that you are actually doing me a favour if you reply.
REPLY
I assume that, in a perfect market, the prices of each share reflects its future profitability. You only need to be concerned with:
a) Buying blue chip shares - as they are more stable
b) Have a certain degree of diversification.
I do not have any insight into which of the 30 shares in the STI index that I should invest it. I just chose one from each sector, say bank, property, conglomerate, media, transport.
Divident yield on STI Exchange Traded Fund
Dear Mr. Tan,
Does the STI Exchange Traded Fund pay out a dividend? Is the dividend yield good?
REPLY
My stockbroker has confirmed that the STI ETF gives a dividend every six months. The total dividend for the past year is 10 cents, representing about a 3% yield on the current share price of $3.20.
Apart from the dividend yield, you should be able to enjoy an appreciation in the share price, as it tracks the STI index.
Does the STI Exchange Traded Fund pay out a dividend? Is the dividend yield good?
REPLY
My stockbroker has confirmed that the STI ETF gives a dividend every six months. The total dividend for the past year is 10 cents, representing about a 3% yield on the current share price of $3.20.
Apart from the dividend yield, you should be able to enjoy an appreciation in the share price, as it tracks the STI index.
Redeem whole life policy?
Hi Mr. Tan,
I had bought a whole life policy in 2000 covering sum assured OF $50,000. I'm paying about $850 per annum. It going to break even in about 1 year's time. Is it advisable to redemn the policy and buy a term policy instead?
REPLY
Read this FAQ and see if it answer your question:
http://www.tankinlian.com/faq/exist.html
I had bought a whole life policy in 2000 covering sum assured OF $50,000. I'm paying about $850 per annum. It going to break even in about 1 year's time. Is it advisable to redemn the policy and buy a term policy instead?
REPLY
Read this FAQ and see if it answer your question:
http://www.tankinlian.com/faq/exist.html
Call and Put Options
Dear Mr. Tan,
I need your advise on how to purchase Options (ETF) for STI index. If I buy OPTIONS, is it subjected to PUT/CALL ? If I invest regularly for 20-30 years, can I buy OPTIONS that do not expire? Is there any difference between buying Options thru broker & via ONLINE website?
REPLY
I am not able to advise on short term investments, such as options. Generally, options are costly and are intended for short term speculation or hedging. All options have an expiry date that is usually three months. It is not suitable as a long term investment.
Generally, you should avoid investing in financial products that you are not familiar with.
I need your advise on how to purchase Options (ETF) for STI index. If I buy OPTIONS, is it subjected to PUT/CALL ? If I invest regularly for 20-30 years, can I buy OPTIONS that do not expire? Is there any difference between buying Options thru broker & via ONLINE website?
REPLY
I am not able to advise on short term investments, such as options. Generally, options are costly and are intended for short term speculation or hedging. All options have an expiry date that is usually three months. It is not suitable as a long term investment.
Generally, you should avoid investing in financial products that you are not familiar with.
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