Dear Mr. Tan,
From April 1, 2008, CPF requires a member to keep a minimum of $20,000 in the ordinary account. I am surprised to find out that this applies also to existing policies with regular recurring premiums using CPFOA.
Now we have 2 choices:
1. Keep the minimum in OA and use the excess to fund our investments
2. Terminate plans to avoid agent bank charges
I invested my CPF savings by recurring regular premium on dollar cost averging. With the market down, I am now forced to terminate my plan. I have to stop investing even if I am making losses now.
Is this a fair practice to investors? Who regulates CPF Board? Can MAS look into this matter?
What is your opinion?
REPLY
I believe that this is decided at the highest level of Government. There are good reasons for the Government to implement this requirement to keep a minimum of $20,000 in OA.
I agree that the timing is unfortunate, as it deprive you of the chance to average down on your investment. I hope that you can have some other savings to do this averaging down (and not depend on the CPF savings). Wish you all the best.
Wednesday, March 19, 2008
Low cost insurance and funds
Hi Mr. Tan,
I read from your blog that there are a few NTUC Income advisers who have agreed to offer only the low cost insurance and funds. I would like to get the email addresses and contact nos. of them.
REPLY
If you wish to buy low cost insurace, I suggest that you contact NTUC Income's business center
http://www.income.com.sg/businesscentre/
I read from your blog that there are a few NTUC Income advisers who have agreed to offer only the low cost insurance and funds. I would like to get the email addresses and contact nos. of them.
REPLY
If you wish to buy low cost insurace, I suggest that you contact NTUC Income's business center
http://www.income.com.sg/businesscentre/
Lyxor ETFs
Dear Mr. Tan,
I want so seek your advice on Lyxor ETF. It seems to track the index in several Asian countries. Can I buy it directly through stock broker like purchasing of STI ETF?
REPLY
I am not familiar with the Lyxor ETFs but I guess that they should be quite well diversified and low cost. You buy them through a stockbroker, like a share. (Note: my earlier comment about buying through an internet platform was wrong).
I want so seek your advice on Lyxor ETF. It seems to track the index in several Asian countries. Can I buy it directly through stock broker like purchasing of STI ETF?
REPLY
I am not familiar with the Lyxor ETFs but I guess that they should be quite well diversified and low cost. You buy them through a stockbroker, like a share. (Note: my earlier comment about buying through an internet platform was wrong).
The world will learn from the financial crisis in USA
Dear Mr. Tan,
With the Global uncertainties in finance, is it risky to invest in STI ETF now? It seems America is in a hot soup in managaing their monetary assets. What precautions you could advise our singaporeans, young and old not to fall into this mess in the next 5 or 10 years? Where should I go to invest the 1000 shares with STI ETF?
Pardon me, I am learning more about investments from your blog. I want to thank you that I truly enjoy reading your blog daily because I believe theory without practical approach is of no value.
REPLY
You buy the ETF through a stockbroker, just like you buy a share. If you are investing for the next 10 years, it is all right to invest in the ETF, as the financial mess will be cleared up by that time.
I believe that America will learn the lesson from this financial mess, and will sort them out to avoid similar problems in the future. The rest of the world, including Singapore, will learn from it as well. In the future, the world will be much less leveraged on debts.
--
With the Global uncertainties in finance, is it risky to invest in STI ETF now? It seems America is in a hot soup in managaing their monetary assets. What precautions you could advise our singaporeans, young and old not to fall into this mess in the next 5 or 10 years? Where should I go to invest the 1000 shares with STI ETF?
Pardon me, I am learning more about investments from your blog. I want to thank you that I truly enjoy reading your blog daily because I believe theory without practical approach is of no value.
REPLY
You buy the ETF through a stockbroker, just like you buy a share. If you are investing for the next 10 years, it is all right to invest in the ETF, as the financial mess will be cleared up by that time.
I believe that America will learn the lesson from this financial mess, and will sort them out to avoid similar problems in the future. The rest of the world, including Singapore, will learn from it as well. In the future, the world will be much less leveraged on debts.
--
Cost of Living: Lessons from the Malaysian election
FIRST POSTED ON 10 MARCH 2008
The election result in Malaysia is a big surprise, not only to the ruling Barisan National but to the opposition parties and the voters as well.
A key issue appears to be the high cost of living. It is not sufficient for a Government to say that they are due to external factors. The people expect the Government to find effective ways to deal with this challenge. This is what they elect the Government to do.
This election result has lessons for Singapore. What can the Government do about the high cost of living in Singapore?
Contributors
I wish to identify factors that make it difficult for many people to cope with the cost of living in Singapore:
1. Financial Products. Many people earn a low rate of interest on bank deposits. It is insufficient to cover the rate of inflation. If they invest in other financial products, they have to pay high charges and get a poor yield. They buy unnecessary and high cost insurance. They pay high interest charges on their borrowing. Financial institutions and intermediaries make good profits and earnings at the expense of consumers.
2. Transportation. They pay high cost for their transportation due to inefficiency of the system. One obvious example is our taxi service.
3. Commuting. Many people take one hour or more to get to their place of work and incur quite high travellng cost. The journey is uncomfortable and over-crowded.
4. High Government charges, such as ERP, GST, etc.
5. Business tie-ups. There are many tie-ups that work to the disadvantage of consumers. An example is the tie-up between motor dealers, banks and insurance companies on the purchase of a car.
Suggestions
Here are my suggestions on how to reduce the wastage, improve efficiency and help people to cope with the cost of living in Singapore.
1. Financial Products. We have to give people a fair return on their investments. Financial and insurance products that have excessive charges and offer unfair terms to consumers should be disallowed. They should not be allowed to design complex products that skim off the consumers. Financial institutions can compete to provide products to consumers on the basis of their efficiency and quality of service.
2. Transportation. We should bring down the cost of public transportation. They are a necessity for daily living, similar to fresh air. People do not consumer transportation unnecessary. The transportation cost can be reduced to the marginal operating cost. ERP charges, road tax and other levies on public transport can be waived.
3. Commuting. We should reduce the need for commuting. People should be encouraged to find work near their homes, or to move their homes to their place of work. Students should attend a school near their homes. Apart from reducing the transportation cost, it saves travelling time and improves the quality of life. This can be achieved by reducing the transaction cost in selling and buying a property to live in. Stamp duty can be abolished. Lawyers and broker fees can be reduced by simplifying the work and creating a more efficient system.
4. Consumer Education. We need a more active body to educate the consumers and protect their interest. This body should be given a stronger voice. It is necessary to balance the interest of consumers with the interest of business. We have to strike a fair balance. This body should also acti vigilently against tie-ups between businesses that restrict the choice and fair dealing for consumers.
5. Adequate wages. Workers in the lower income groups need adequate wages to meet the cost of living and save for their retirement. The current wages are depressed due to the available supply of foreign workers from low cost countries. If it is not possible to raise the wages of the local workers earning below the adequate level, they should be given a supplement through an adequate top-up to their CPF accounts.
Conclusion
There are already many existing measures taken to address these issues. We need to simplify the existing measures and make them more impactful to help the people.
We have to consider additional measures to help people to cope with the cost of living in Singapore.
Tan Kin Lian
The election result in Malaysia is a big surprise, not only to the ruling Barisan National but to the opposition parties and the voters as well.
A key issue appears to be the high cost of living. It is not sufficient for a Government to say that they are due to external factors. The people expect the Government to find effective ways to deal with this challenge. This is what they elect the Government to do.
This election result has lessons for Singapore. What can the Government do about the high cost of living in Singapore?
Contributors
I wish to identify factors that make it difficult for many people to cope with the cost of living in Singapore:
1. Financial Products. Many people earn a low rate of interest on bank deposits. It is insufficient to cover the rate of inflation. If they invest in other financial products, they have to pay high charges and get a poor yield. They buy unnecessary and high cost insurance. They pay high interest charges on their borrowing. Financial institutions and intermediaries make good profits and earnings at the expense of consumers.
2. Transportation. They pay high cost for their transportation due to inefficiency of the system. One obvious example is our taxi service.
3. Commuting. Many people take one hour or more to get to their place of work and incur quite high travellng cost. The journey is uncomfortable and over-crowded.
4. High Government charges, such as ERP, GST, etc.
5. Business tie-ups. There are many tie-ups that work to the disadvantage of consumers. An example is the tie-up between motor dealers, banks and insurance companies on the purchase of a car.
Suggestions
Here are my suggestions on how to reduce the wastage, improve efficiency and help people to cope with the cost of living in Singapore.
1. Financial Products. We have to give people a fair return on their investments. Financial and insurance products that have excessive charges and offer unfair terms to consumers should be disallowed. They should not be allowed to design complex products that skim off the consumers. Financial institutions can compete to provide products to consumers on the basis of their efficiency and quality of service.
2. Transportation. We should bring down the cost of public transportation. They are a necessity for daily living, similar to fresh air. People do not consumer transportation unnecessary. The transportation cost can be reduced to the marginal operating cost. ERP charges, road tax and other levies on public transport can be waived.
3. Commuting. We should reduce the need for commuting. People should be encouraged to find work near their homes, or to move their homes to their place of work. Students should attend a school near their homes. Apart from reducing the transportation cost, it saves travelling time and improves the quality of life. This can be achieved by reducing the transaction cost in selling and buying a property to live in. Stamp duty can be abolished. Lawyers and broker fees can be reduced by simplifying the work and creating a more efficient system.
4. Consumer Education. We need a more active body to educate the consumers and protect their interest. This body should be given a stronger voice. It is necessary to balance the interest of consumers with the interest of business. We have to strike a fair balance. This body should also acti vigilently against tie-ups between businesses that restrict the choice and fair dealing for consumers.
5. Adequate wages. Workers in the lower income groups need adequate wages to meet the cost of living and save for their retirement. The current wages are depressed due to the available supply of foreign workers from low cost countries. If it is not possible to raise the wages of the local workers earning below the adequate level, they should be given a supplement through an adequate top-up to their CPF accounts.
Conclusion
There are already many existing measures taken to address these issues. We need to simplify the existing measures and make them more impactful to help the people.
We have to consider additional measures to help people to cope with the cost of living in Singapore.
Tan Kin Lian
Mid Valley Mall in Malaysia
I am now staying in a hotel in Mid Valley, outside of Kuala Lumpur in Malaysia. It has a large shopping mall and several hotels in the complex. I shall be updating my blog less frequently for the next three days.
Subscribe to:
Posts (Atom)