TheFinance.sg » Wilfred Ling

Watch Video Presentation on "Investment Market Update for July 2011"

Wilfred Ling — Fri, 03 Feb 2012 23:00:00 +0000

Watch Video Presentation on “Investment Market Update for July 2011″

Written by Wilfred Ling Saturday, 04 February 2012

Where the economy is going? How should one invest? While there are market news that you can get from the Internet, newspapers and friends, it is too easy to be overwhelmed by the large amount of information. It does not help that many of these information contradicts each other.

In a video presentation I made on July 2011 this year for investment clients, the following topics were covered:

Monetary policies across the globe;
Inflationary trend across the globe;
Jobless rate across the globe;
Systemic risks; and
Conclusions and recommendations on existing portfolios.

Although time sensitive information are no longer useful, the educational value remains timeless.

This video is now available for all who are on my mailing list. To sign up for my mailing list, fill up the form below. You …

Bogle, Volcker Discuss State of U.S. Financial System

Wilfred Ling — Thu, 02 Feb 2012 20:34:10 +0000

Written by Wilfred Ling Thursday, 02 February 2012

John Bogle, the founder of mutual fund company Vanguard Group Inc. who popularized index investing, and former Federal Reserve Chairman Paul Volcker discuss the U.S. financial system and investor confidence:

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The Risk Factors and Economic Impact behind Commercial and Sovereign Debt

Wilfred Ling — Tue, 31 Jan 2012 14:43:02 +0000

Written by Wilfred Ling

Tuesday, 31 January 2012

This video discusses commercial bank leverage, calculating risk weightings, and the long-term effects of excessive sovereign debt: HERE (login required, for clients only)

How to calculate bonuses for participating life policies

Wilfred Ling — Sat, 31 Dec 2011 08:04:47 +0000

Someone asked me how to calculate bonuses for participating life policies. I asked the individual to provide me with the latest benefit illustration. The policy was already in-force for some time already. I will use this policy as an example on how to calculate bonuses. Unfortunately, there was insufficient information to calculate bonuses for surrender values. So the illustration below is only for bonuses due to death claims.

The relevant information provided by the benefit illustration is shown below:

First, the benefit illustration clearly shows that the guaranteed death benefit at the end of year X is $87,420.17. This consists of two components, the sum assured of $50,000 and the accumulated attaching bonuses that were already previously declared amounting to $37,420.17. Sanctity check: 50000+37420.17 = $87,420.17.

To calculate the non-guaranteed death benefit at the end of year X, the following steps are required to be taken:

…

The Shadow Market ends up in retail investments

Wilfred Ling — Mon, 26 Dec 2011 23:00:00 +0000

Written by Wilfred Ling

Tuesday, 27 December 2011

Complicated but largely unregulated derivatives like mortgage-backed securities (MBS), Credit Default Swaps etc had found its way to ordinary investments such as unit trusts. I recalled in 2008, even money market funds had MBS inside it. Because Investments-linked policies (ILPs) basically invest in underlying unit trusts, even ILPs can be considered complicated. To make things worse, the plain vanilla and simple to understand Exchange traded funds (ETFs) have become complex because a very large number of ETFs these days are synthetic (swap based) with no real underlying securities.

In Singapore, investors who wish to invest in ‘complex’ products are required to undergo the Customer Assessment Knowledge (CKA). The CKA aims to protect investors in the light of these complicated products. However, those who wish to buy stocks need not go through the CKA because shares are ‘less complicated.’ I disagree …

S73 insurance policies in dispute

Wilfred Ling — Fri, 23 Dec 2011 12:59:40 +0000

The case “Lim Lina v Estate of Quick Cheng Gee, deceased” dated 19 Dec 2011 shows that insurance nominations made under Section 73(1) of the Conveyancing and Law of Property Act does not form part of the life assured’s estate. To me it is a straight forward case but nevertheless it was still disputed. The plaintiff had to bring it to the High Court to confirm that the insurance proceeds form a separate estate.

But what troubles me are the existing countless number of insurance nominations not made under any statutory law. For example, prior to 1 September 2009 there was no statutory law allowing insurance nomination for parents and siblings other than that under the section 45 of the Cooperative Societies Act. I am still seeing large number of clients who had not revoked such non-statutory law type of nomination.

High-Frequency Trading, Flow Toxicity, and the Flash Crash

Wilfred Ling — Thu, 22 Dec 2011 23:00:00 +0000

Written by Wilfred Ling Friday, 23 December 2011

Since high frequency trading has become a norm, it is important to further understand this. Although the retail investors cannot gain access to this type of trading, it is important to understand the impact of it. Investment has become more complex these days. Here is a short video on the topic:

What is high speed trading, algorithmic trading, quantitative trading and high frequency trading?

Wilfred Ling — Tue, 20 Dec 2011 23:00:00 +0000

Written by Wilfred Ling Wednesday, 21 December 2011

High speed trading. It is also known as algorithmic trading, quantitative trading and high frequency trading. Much of such algorithmic trading is proprietary. Very little is known how it works. It was estimated that high frequency trading account for 56% of the equity trades in the US. In other words, 1 out of 2 trades (by value) were done by a robot! Below is a CBS documentary on high speed trading.

Advisers fear of not able to pass new exams

Wilfred Ling — Mon, 19 Dec 2011 09:13:00 +0000

In the Straits Times today entitled Agents fear they can’t measure up, many financial advisers expressed fear that they may not be able to pass the two new exams required by the regulator. For those who are advising on collective investment schemes (CIS), they are required to pass “M8A – Collective Investment Schemes II” while those who are also advising on life insurance policies are required to pass “M9A – Life Insurance And Investment-Linked Policies II”.

These two new exams covers derivatives and structured products at the introductory level. Those exempted from these exams are those who already have a degree or higher qualification in finance, financial engineering, computational finance or is awarded the Chartered Financial Analyst (CFA) designation by the CFA Institute.

Like all matters in life, the only thing that is constant is change. In the financial industry, the only thing that remains the same is the …

Runner who died after StanChart Marathon was ‘man of steel’

Wilfred Ling — Tue, 06 Dec 2011 08:13:29 +0000

Written by Wilfred Ling Tuesday, 06 December 2011

It was reported that the 22-year-old student who collapsed and died after completing a 21.1km half-marathon on Sunday, was regarded by his friends as a ‘man of steel’. My sincere condolences to his friends and relatives. It is indeed shocking how such a young and healthy individual could collapse and die in this manner. Once again, this incident is a reminder that it is a myth that the young and healthy do not need any form of risk management planning. In fact, the following are common myths that people hold:

“The young do not need insurance because they are healthy.”
“The best insurance products come from the same insurer.”
“All insurance products are the same in pricing and benefits.”
“My company’s medical benefit is sufficient.”
“Good insurance is too expensive.”
“I will buy insurance when …

15 financial institutions fined by MAS

Wilfred Ling — Tue, 06 Dec 2011 06:51:15 +0000

[unable to retrieve full-text content]During the launch of the Representative Notification System (RNS) on 26 Nov 2010, several financial institutions failed to ensure that the relevant regulated activities were reflected against their representatives’ names in the public register before their representatives engaged in regulated activities. As a result, their representatives conducted regulated activities before they were duly appointed. See:
MAS TAKES REGULATORY ACTION AGAINST…

Question on hefty tax on death

Wilfred Ling — Mon, 05 Dec 2011 21:56:53 +0000

[unable to retrieve full-text content]Question: My father died recently. My mother was shocked that she needs to pay $12,600 in tax to have my father’s property transfer to herself. I thought estate duty was already abolished. Why my mother need to pay so much in estate duty? Answer: Related posts: Question on Will and Testament [...]
Related posts:

CPF Nomination ends up with Official Assignee due to poor financial planning

Wilfred Ling — Mon, 21 Nov 2011 23:00:00 +0000

Central Provident Fund (CPF) monies bequeathed to a bankrupt by a deceased member stands to be seized by the Official Assignee (OA). This is the verdict by the Court of Appeal in the case of Lim Lye Hiang v Official Assignee (Singapore Law Watch). The Straits Times carried the same story available from CPF’s IM$avvy link: HERE.

Last year, I wrote a blog on this sad story (available from this link: CPF monies and bankrupt nominees). The case was about Madam Lim Lye Kiang who was a bankrupt when her sister Lye Keow died of cancer in March 2008. Madam Lim, 52, a kitchen helper, had been a bankrupt for 11 years, owing $1.18 million to 13 creditors. The case was unfortunate because the CPF Member had 11 years to change nomination to someone else.

This story reminded me of the many scenarios where things can go wrong. …

What is the ISO 22222:2005?

Wilfred Ling — Thu, 20 Oct 2011 23:00:00 +0000

[unable to retrieve full-text content]Currently, clients who wish to engage the services of a financial planner often face the following problems:

With so many financial planners to choose from, how can clients know who to trust?
How should clients compare the different schemes offered by financial planners?
How can clients be assured that the financial planner actually follow the best industry practice?

The ISO…

Four mentally incapacitated adults found abused in dungeon

Wilfred Ling — Wed, 19 Oct 2011 07:39:23 +0000

The Philadelphia Police arrested three suspects for kidnapping, aggravated assault, false imprisonment and unlawful restraint after four mentally incapacitated adults were discovered in a dungeon. The adult victims were said to have only the mental capacity of 10-year olds. It was reported that these victims were falsely imprisoned so as to be robbed of their social security disability cheques.

This story highlights the fact that mentally challenged individuals are extremely vulnerable to abuse. They could easily be cheated out of their money. Mental disability may arise from birth or evolve over time such as dementia.

In Singapore’s context, there are various financial planning tools used by professional financial planners in relation to this namely:

Lasting Power of Attorney (LPA);
Wills;
Testamentary trusts;
Inter vivo trust like Special Needs Trust Company;
Insurance nomination;
CPF Enhanced Nomination System (ENS);and
CPF Special Needs Saving Scheme (currently debated in Parliament).

It is important to …

Question on Will and Testament

Wilfred Ling — Mon, 17 Oct 2011 15:39:15 +0000

Question: “I am the only child of my mother and my father is no longer with us. My mother is currently bedridden. I am married with no children. I intend to write a will to give all my property to my mother and my wife in equal shares. However, in the event that my mother shall predecease my wife, I would like the remaining of my given shares to be given to my wife. How shall I articulate the will? – Max”

(The above question was posted by someone on this website HERE but it did not receive a proper reply because it was thought that the question is a legal question. Actually, it is a financial planning question. Here is my two cents’ worth reply.)

Answer:

Dear Max,

A few considerations are required here. As your mother is bedridden, she may not have the mental capacity to manage …

Policy Owners’ Protection Scheme (PPF Scheme) and implications for consumers

Wilfred Ling — Mon, 03 Oct 2011 07:45:11 +0000

The PPF scheme aims to offer protection to policyholders in the event of the insurer failing. The protection is 100% subjected to caps. For individual life and voluntary group life policies (with the exception of annuities), the cap is S$500,000 for the aggregated guaranteed sum assured and S$100,000 for aggregated guaranteed surrender value per life assured per insurer. My comments:

When consumers buy life insurance policies, they have to be mindful of this cap. It is quite common for individuals to buy their policies from one insurer if the adviser is a representative of one insurer. It will be unwise to make all purchases from one insurer. It is better to buy from multiple insurers.
The cap is easily breached whenever one buys a mortgage reducing term (MRTA). It is common for individuals to borrow large amounts of money for their housing purchase. It is common for the borrower to …

Learning from the Michael Jackson Family Trust

Wilfred Ling — Tue, 27 Sep 2011 23:00:00 +0000

While the late pop star Michael Jackson will be remembered as a well-loved celebrity, estate planner like me will remember him as an individual who did his estate plan down right to the finest detail. I was most curious to find out how Michael Jackson wrote his Will and what he left behind. Did he give all monies to his children? How much did he give to his mother and siblings? The answer to that question lies in his Will which can be downloaded from the Internet: HERE (talk about privacy… Sigh).

His Will is quite straightforward written in simple English. It appears he gave everything to the … Michael Jackson Family Trust. So how much did his children, mother and siblings get? The answer now lies in the content of the Michael Jackson Family Trust. The issue is that nobody knows the contents of the trust other than the …