I saw a few estimates that put the subprime losses as USD 400 billion.
Here is my guess about how this number is arrived:
number of houses in USA - 100 million
proportion that are subprime, say 20%
number of subprime mortgages: 20 million
proportion in default: 50%
defaulted mortgages: 10 million
average loss per default: USD 40,000
total subprime losses: USD 400 million
My guess could be wrong. For example, it may be fewer mortgages with a larger average loss, or more mortgages with a smaller average loss.
The large financial institutions have reported losses under subprime mortges in the magnitude of USD 10 million. If this is the average loss, a total of 40 financial institutions would make up the total of USD 400 billion.
Thursday, March 6, 2008
High charges
Dear Mr. Tan,
In my foolishness, I bought an ILP from company X. After paying premiums for a few years, I was surprised to find out that my investment is still way below the invested amount.
I asked the agent for an explanation. He pointed out to me, from the policy contract, that the percentage of my premiums that was invested during the first few years, only a certain percentage was invested (starting at 20% for the first year). This was not explained to me when I bought the policy.
Why should the insurance company take away so much of my premiums? I wish to get out of this policy, but I will have to lose more nearly two years of my savings. What is your advice? Should I cancel the policy?
REPLY
If you have not been property informed about the charges, you can make a complaint to this organisation,
http://www.fidrec.com.sg/website/faq.html
The insurance adviser is required to explain to you about the key points of the contract and to recommend a financial product that suits your needs. If he or she has failed in this duty, you should make a complaint.
If more consumers are willing to come forward, this will help other consumers from being misled.
In my foolishness, I bought an ILP from company X. After paying premiums for a few years, I was surprised to find out that my investment is still way below the invested amount.
I asked the agent for an explanation. He pointed out to me, from the policy contract, that the percentage of my premiums that was invested during the first few years, only a certain percentage was invested (starting at 20% for the first year). This was not explained to me when I bought the policy.
Why should the insurance company take away so much of my premiums? I wish to get out of this policy, but I will have to lose more nearly two years of my savings. What is your advice? Should I cancel the policy?
REPLY
If you have not been property informed about the charges, you can make a complaint to this organisation,
http://www.fidrec.com.sg/website/faq.html
The insurance adviser is required to explain to you about the key points of the contract and to recommend a financial product that suits your needs. If he or she has failed in this duty, you should make a complaint.
If more consumers are willing to come forward, this will help other consumers from being misled.
Credit card debt
Dear Mr Tan,
I have huge credit card debts of up to $55k. I am facing a lot of stress and have made my parents very upset. Right now, I am waiting to file for bankruptcy. Is this the right way?
REPLY
I suggest that you approach this non-profit organisation to seek their advice and assistance:
http://www.ccs.org.sg/ccs.html
I have huge credit card debts of up to $55k. I am facing a lot of stress and have made my parents very upset. Right now, I am waiting to file for bankruptcy. Is this the right way?
REPLY
I suggest that you approach this non-profit organisation to seek their advice and assistance:
http://www.ccs.org.sg/ccs.html
Earnings of Global Insurers
From Economist Magazine
There were more poor earnings from the insurance industry. Swiss Re's quarterly net profit fell by 87%, compared with a year ago, because of subprime losses. And AIG posted a $5.3 billion quarterly loss on the back of write-downs it flagged last month. It was the biggest-ever such loss at AIG, which traces its history back to 1919.
There were more poor earnings from the insurance industry. Swiss Re's quarterly net profit fell by 87%, compared with a year ago, because of subprime losses. And AIG posted a $5.3 billion quarterly loss on the back of write-downs it flagged last month. It was the biggest-ever such loss at AIG, which traces its history back to 1919.
Growth Policy
Dear Mr Tan,
Should I invest in the NTUC growth policy using my CPF special account?
REPLY
CPF special account pays interest of 4% plus 1% bonus. It does not have any risk. The Growth policy gives a return of 3% to 4% (not guaranteed) and has to be invested for 10 years or more. It is better to keep your money in the CPF special account.
Should I invest in the NTUC growth policy using my CPF special account?
REPLY
CPF special account pays interest of 4% plus 1% bonus. It does not have any risk. The Growth policy gives a return of 3% to 4% (not guaranteed) and has to be invested for 10 years or more. It is better to keep your money in the CPF special account.
Selamat Datang
My friend visited Johore. He was sure that Mas Selamat is in Johore. He saw a sign all over Johore that says "Selamat Datang". "Datang" means "come" in Malay.
Term insurance with income benefit
Dear Mr. Tan,
I am 32 years old (male) and have 2 children aged 2 and 5. I like your suggestion to have a term insurance, combined with a monthly income of $2,000, in the event of premature death. How much do I have to pay?
REPLY
I suggest that you insure for 25 years. The annual premium is:
Term insurance for $50,000 for 25 years: $154
Family income benefit of $2,000 monthly for 25 years: $606
Total $760 or approx $65 per month
These are my benchmark rates. They do not represent the actual rates charged in the market.
You can calculate the benchmark rates for other ages by referring to this FAQ. In your case, I have to work out the premium for age 32 by estimating from the rates for 30 and 35.
http://www.tankinlian.com/faq/benchmark.html
If you reduce the cover to 20 years, your cost will be reduced by about 30%.
I am 32 years old (male) and have 2 children aged 2 and 5. I like your suggestion to have a term insurance, combined with a monthly income of $2,000, in the event of premature death. How much do I have to pay?
REPLY
I suggest that you insure for 25 years. The annual premium is:
Term insurance for $50,000 for 25 years: $154
Family income benefit of $2,000 monthly for 25 years: $606
Total $760 or approx $65 per month
These are my benchmark rates. They do not represent the actual rates charged in the market.
You can calculate the benchmark rates for other ages by referring to this FAQ. In your case, I have to work out the premium for age 32 by estimating from the rates for 30 and 35.
http://www.tankinlian.com/faq/benchmark.html
If you reduce the cover to 20 years, your cost will be reduced by about 30%.
Taxis Stands in Central Business District
There were several complaints by taxi drivers and commuters on the new rules regarding taxi stands in the Central Business District. The taxis are required to pick up commuters only at the designated stands. The taxi drivers complained that the stands do not have sufficient space for waiting taxis.
The underlying problem is the imbalance between the supply and demand of taxis. At some times, there are too many taxis waiting for commuters. At other times, commuters could not catch a taxi (during which time, the taxis are hiding somewhere waiting for a telephone booking).
The solution? Improve the feeder services to take commuters to the MRT stations. If the feeder services are convenient clearly marked at bus stops, more people will be willing to take these services, instead of relying on taxis during the busy hours.
I hope that the Land Transport Authority will take early steps to make it convenient for commuters to use the feeder services. The current bus services can perform this function, if people understand how to use them.
Any views?
The underlying problem is the imbalance between the supply and demand of taxis. At some times, there are too many taxis waiting for commuters. At other times, commuters could not catch a taxi (during which time, the taxis are hiding somewhere waiting for a telephone booking).
The solution? Improve the feeder services to take commuters to the MRT stations. If the feeder services are convenient clearly marked at bus stops, more people will be willing to take these services, instead of relying on taxis during the busy hours.
I hope that the Land Transport Authority will take early steps to make it convenient for commuters to use the feeder services. The current bus services can perform this function, if people understand how to use them.
Any views?
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