TheFinance.sg » Personal Finance

Are your existing insurance plan suitable?

Patrick See — Wed, 23 May 2012 08:47:39 +0000

I had lots of emails and queries regarding suitability. We have talks/seminar on investment suitability, Client Knowledge Assessment, Product Suitability, etc but what is insurance suitability?….

First of all, I am impressed/surprised that most Audience picked up this insurance jargon ‘suitability’. Congrats!

Hence, the common question is what did I mean by the above title?

Take for e.g. Mr. Chan who wants to start off an insurance plan for his daughter Age, 19.

His preference is to cover the child for Sum Assured of S$ 300,000 for

premature death
total & permanent disability (TPD)
terminal illness (TI)
critical illness (CI) or major illness coupled with early stage dread disease benefit
AND cash values of S$ 100,000 at age 64/65 thereabouts.

The operative on (5) is ‘AND’ and this is where the word suitability is in question.

What is the probability for claims one to four?

Death – once
TPD once
TI once
Major illness – more than once
Early stage detection – in addition to more than once, early is earlier!

You be the judge! Is the plan well designed to fulfil the needs of Mr. Tan.? Is the plan suitable for his daughter?

How could the above be avoided?…

I want to be rich but I don’t want to save too much!

Drizzt — Tue, 22 May 2012 23:35:08 +0000

Saving money is hard as you grow older. Getting married, having kids and their expenses, needing a car and taking care of the parents. How the hell do you find large sums of money for investing to grow your wealth?

6 years ago, I came across Richard Russell’s 4 valuable advice to folks all walks of life. The one that left the greatest impression was the difference between an investor who starts investing at 19 years old and stops at 25 years old, versus one that invest the same amount from age 26 all the way to 65.

Their record would have been equal.

Achieving the rate of return is the key, and probably what we discuss more on this site. This week, I cam across an article by Andrew Hallam, who wrote millionaire teacher. The key takeaways are a few things

We know that he does low cost indexing …

Coffeeshop Talk: My CPF and Me

Martin Lee — Tue, 22 May 2012 04:44:10 +0000

The CPF scheme is a scheme that most Singaporeanse do not fully understand.

This is not surprising given the complexity of the numerous rules and the regular changes to them.

The CPF board is organizing an information session on the CPF scheme that seeks to answer some basic questions on the CPF. Questions like:

“How much goes into my CPF accounts?”
“What can I use my CPF savings for?”
“How can my CPF help to achieve my retirement goals?”

Join them for a cup of coffee, and get a better understanding of your CPF savings and how …

Tug of war – Bull vs. Bear Ends. Financial market plunges. What’s next

Patrick See — Tue, 22 May 2012 04:24:21 +0000

Published Singapore Monday 1pm.

The above article commenced mid February with Part 2 in March and Part 3 in April. My benchmark for the tug of war list of events is the DJI ranging from 12800 to 13000. I had picked the above title, then, is because my speculation was that market would trend sideways until the next key events.

Last week, DJI closed below 12,400 together with S&P500 and Nasdaq closing down for the week back to back. Hence, the tug of war or range trading had ended. Leading to the correction were the following list of events:

· GDP were weak then

· Currencies were lower (not USD) signalling higher inflation….

However, having provided all the bad news…. here comes my technical reading.

Technically, RSI and various indicators signal ‘oversold’ levels. The big boys, fund houses may have program buying at key technical support levels. Hence, there’s a strong possibility the market would take a short breather from these oversold positions.

Carry trades

The global sentiment is risk-off. Volatility is high. This leads to unwinding of carry trades in currencies. Hence, safe haven currencies are sought after. The Yen and US dollar rises. Other currencies including commodity currencies weaken. This leads to a fall in commodities – mining, agriculture, etc.

On a separate matter…

Properties. This is probably your biggest and longest investment. Most, if not all would take the longest tenure. Here’s the problem most of you do not see. You’ll be paying the biggest loan and let the bank earn your money. Your principal gets lowered very very slowly…

In search of higher income and better standard of living. What’s missing?

Patrick See — Tue, 22 May 2012 04:10:57 +0000

In my 16 years of practical experience being in the financial industry, I’ve assisted a handful in claims – death and diagnosis of major illness. Fortunately, all claims were processed and approved. Their loved ones and dependants are ‘well’ taken care off.

I am writing to you as I am very concern for most of you – in the area of personal financial risk management.

We complete our education, find a job/career, start a family, buy a house, and pay off our debts while planning for retirement. However, in this search of climbing the corporate ladder, earning a better income while starting a family, many (NOT all) are in search of higher income.

In my opinion, the primary objectives of most family are a higher income and a better standard of living. What I am concerned about is that the improvement in income and a better standard of living does not equate to a proportionate level of savings, investments, retirement funding, protection of future income for future expenses for self, loved ones and dependants.

Why is that so? The common reasons are:

No money, no worry, no hurry. Hence, the issue is that when they reach pre-retirement, the time factor, health factor, insurability factor may be too little too late….

Investment Insights: The importance of knowing your life purposes

Greatsage — Thu, 17 May 2012 07:30:00 +0000

Recently one of my colleagues attended a personal finance workshop arranged by my company. I was very interested to attend because the topics seemed very relevant to me but eventually I was unable to make it due to work commitments. Over lunch, my colleagues updated me that the workshop indeed was very useful as it touched on various money issues in the local context, like CPF, hospitalization shields, life insurance and retirement plans. The instructor also gave tips on investments and the key concept of managing personal finances (budgeting, knowing the difference between “needs” and wants”).OK, I thought to myself. These information and tips seemed rather useful but are actually quite fundamental stuff to me. Probably it could help a person become more financially astute but probably won’t enable him to become a rich person one day. But what set me thinking was a statement that my friend told …

6 Hours workshop on estate planning (9 & 10 May 2012)

Wilfred Ling — Mon, 14 May 2012 17:59:43 +0000

Written by Wilfred Ling Monday, 14 May 2012

On 9 & 10 May 2012, I conducted marathon workshops on estate planning. This is my first time doing so as I was unsure how the response would be. Each workshop lasted 6 hours. Altogether, there were 16 individuals who attended this talk. I consider it to be a well-received workshop. Below were some of the comments made on the feedback forms:

One Night Stand Investment

Ivan Guan — Thu, 10 May 2012 05:29:14 +0000

I stumbled upon this interesting term “One Night Stand Investment” from Investopedia.com today, it means “Buying a security with the intention of holding it for the long term, but subsequently panicking and selling it the following day.”

Investopedia further explains that “An investor sells out the following day typically because of bad news or a sudden change in long-term expectations”.

From my experience, the reality is just the opposite. Many investors buy a security with the intention of selling it the following day for a quick gain, but subsequently hold it for the long term if the stock price drops ever since.

When I do portfolio review for my clients, many of them hold shares from many different companies. Most of them are usually penny stocks which have dropped substantially in value in the past years. It is easy to understand the situation because many of these stocks …

Knowledge is key

Greatsage — Wed, 09 May 2012 15:55:00 +0000

Through interactions with some of my rich friends, I came to realise that no investors become wealthy through herd investing. In order to become a successful investor, we need to equip ourselves with the right knowledge. It is very important that you start your investment or wealth-building journey early on in your life because that will give you a headstart. But before you start splashing out money on various investment schemes, always always remember to build up your knowledge first. If you plan to invest in property, options, options, etc, attend courses and seminars to deepen your understanding on how these investments work. Read up magazines, books and online articles on investment strategies. Talk to people, listen to their tips and learn from their investment mistakes. In short, sharpen your knowledge on investment first before you start investing. Don’t be in a hurry to lose your money. You will realize that the …

How are assets distributed if a person dies without a will

Ivan Guan — Tue, 08 May 2012 01:59:37 +0000

When a person (non-Muslim) dies without leaving a will, he is said to have died intestate. Sometimes, even if a person has a will, the will may not be properly drafted and certain assets are left out of the will. These assets will fall into intestacy.

In Singapore, The Intestate Succession Act (Cap. 146) applies in these situations. According to the law, regardless what the person may have intended, the remaining assets will be distributed as below:

A Person Dies Leaving:	Distributed to:
Spouse (no children, no parent)	> Spouse (whole)
Spouse, children	> Spouse (1/2) > Children (1/2 to be shared equally)
Spouse , parent(s) (no children)	> Spouse (1/2) > Parent(s) (1/2 to be shared equally between surviving parents)
Parents(s), children	> Children (whole to be shared equally)
Parent(s) (no children, no spouse)	> Parent(s) (whole to be shared equally between surviving parents)
Brothers and sisters and …

The Mouse, the Frog, and the Hawk – Beware of who you hang out with

Jared Seah — Mon, 07 May 2012 13:40:59 +0000

A Mouse, by an unlucky chance, formed an intimate acquaintance with a Frog. The Frog one day, intent on mischief, bound the foot of the Mouse tightly to his own. Thus joined together, the Frog led his friend to the pool in which he lived, until he reached the very brink, when suddenly jumping in, he dragged the Mouse in with him.

The Frog enjoyed the water amazingly, and swam croaking about, as if he had done a meritorious action. The unhappy Mouse was soon suffocated with the water, and his dead body floated about on the surface, tied to the foot of the Frog.

A Hawk observed it, and, pouncing upon it, carried it aloft. The Frog, being still fastened to the leg of the Mouse, was also carried off a prisoner, and was eaten by the Hawk.

Moral:
Harm hatch, harm catch.

The above is one of Aesop’s many stories that I’ve “borrowed with pride”.

Most of us can relate to it. I for one can share quite a few personal experiences:

1) Please drop me off right ahead.

I will not take a free ride when I know the driver had a few drinks more than desired. You’ll be surprised how many other people don’t mind…

There was once I politely asked my friend to let me off after a short ride – by giving a white lie that I just remembered that I need to buy something – when I discovered the way he drove made me uncomfortable, and he wasn’t drinking!

I’ve been in 2 “light” car crashes – both driven by friends – to appreciate what Aesop meant.

2) Join me for shopping?

Ever accompanied friends for shopping and you come back with “stuffs” you don’t need? Its already hard to say “no” to good salespersons; why add “peer pressure” on yourself?

If you want to lose weight, what do our “friends” do? Eat lah! Won’t die one! Have more! I treat you!

3) I made money! It’s so simple!

Some friends when they make money – be it gambling at casinos, stocks, futures, forex, property, etc – they like to make it known to the world how “smart” they are…

Skeptical listeners who “capitulate” and join in the fray frequently find themselves buying at market tops or discover belatedly that “simple” does not equate “easy”…

And if it’s “voodoo” alternative investments, and they turned out to be scams… Should we “blame” our Frog friends who reassured us it’s “legit” and they have received real returns promptly as promised?

Or should the Mice reflect why they willingly let themselves be tied to their Frog friends?

4) Excuse me, can you be my guarantor?

Lucky I’ve not been put to the test yet. This one is a real tough one… Especially if the one asking is someone you love, respect, and/or is a blood relation….

The heart says “yes”; but the mind screams “no”!

Singapore Man of Leisure (welcome to my blog; just google it!)

Have you prepared yourself for Retirement?

James Yeo — Sun, 06 May 2012 14:41:00 +0000

Sorry for the absence throughout this week as my work has been busy… I will touch on an issue that many people seldom think about until it suddenly dawns upon them.. Retirement.

This comes to me as I am browsing through the link below and it makes complete sense… With all the costs rising and people living longer than ever (due to good healthcare.. good or bad we don’t know), Retirement becomes one of the biggest financial challenges you’ll ever face.

http://www.fool.com/retirement/general/2012/04/12/this-move-could-rescue-your-retirement.aspx

If you think you have made all the plans for Retirement, go through the link @ IM$avvy here & take the Test: http://www.cpf.gov.sg/imsavvy/ayr_list.asp?catid=4&utm_source=Google&utm_medium=CPC&utm_campaign=Google%2BCPC&gclid=COXHod38vq8CFUx76wod2FzLwA

If not, You can go to this fun and interactive portal to teach you something on Retirement Planning: https://www.cpf.gov.sg/cpf_trans/ssl/rnr/default.asp

~The Golden Retirement~

In my upcoming posts, I will touch on many …

Financing a Local Tertiary Education For Your Child

Martin Lee — Thu, 03 May 2012 04:54:34 +0000

Are you ready to finance your child’s local tertiary education?

If your child is enrolling into a local polytechnic or university soon, you may be wondering about your financing options and whether to take an education loan.

CPF is organising a talk to cover on this topic. You may wish to come with your child who is intending to pursue tertiary education.

Register early (click here) to avoid disappointment. Seats go fast and are available on a first come, first served basis.

Date : 23 May 2012
Time : 07:30PM to 9:00PM (Registration starts from 06:45PM)
Venue : 6 Shenton …

It’s Easier To Learn From The Loser Than From The Winner

Jared Seah — Tue, 01 May 2012 10:19:19 +0000

My first time in a casino was in Austria of all places!

We even got free chips to play a few hands… This was part of the “cultural experience” included in the company course I attended.

It was like in the James Bond movies where the men wore tux and the ladies wore bare-backed evening gowns. I think I spend more time admiring the “numbers” (36, 24, 36) on the ladies than on the roulette tables…

We even got to visit the vineyards to do some wine tasting. I tell you, that’s the best company paid course I’ve ever attended!

That was at a time when the company was “smaller” and there were less rules and policies…

Wait a minute… This post is not about less regulations and more laissez-faire; that’s for another day another time…

Back to casinos.

For those of you who have been to one, have you tried this spot a “loser” and taking the opposite bet against the poor soul tactic?

I know I know… It’s evil; but it usually works right?

Many investors and traders (that includes me) when starting out, will frequently do our best to emulate the strategies and tactics of our favourite investing or trading wizards.

Legendary investors like Warren Buffet, John Templeton, Peter Lynch; and trading maestros like Jesse Livermore, Martin Schwartz, Alexander Elder, to name a few.

Guess what? Memorizing famous quotations may score points during exams or make you look smarter in discussions, but practical application in our investing and/or trading yields another result…

I wrote about it here in this post: Limitations of imitating others beyond our league

But I did not offer any alternatives…

Instead of just learning from “winners”, perhaps we too can profit from the lessons of the “losers”?

No need to look far. Try family members, relatives, friends, school mates, colleagues, etc. What better than to observe and talk to real live people from their first person perspective?

The road to success is paved with a myriad of possibilities; but the road to self-destruction is paved with only a few stones.

All successful people, not just in investing and trading, have their own individual DNA way of achieving it. What if your blood group is different from your favourite maestro?

If you pay attention, the usual culprits of “failure” and “self-destruction” have not changed much since biblical times. They are just written and spoken differently across a diversity of cultures and civilisations.

OK, I give one example. Try greed.

The rest you figure out for yourselves. Self-discovery works better than spoon-feeding.

Successful retail investors and traders have also looked into the mirror for answers.

Sometimes it’s just a simple tactic to do the opposite of what we have been doing in our past investing or trading journey.

Mind you. It’s not as easy as it sounds.

It’s much easier to blame the kitchen knife you are using… Time to buy the new set of knives you just saw on that infomercial…

Singapore Man of Leisure (welcome to my blog; just google it!)

How to use Medisave for maternity expenses

Ivan Guan — Tue, 01 May 2012 07:13:48 +0000

Can I withdraw Medisave to pay maternity expenses?

The Medisave Maternity Package enables you to use your Medisave for the delivery and pre-delivery medical expenses of your first four living children. For the fifth and subsequent child, you and your spouse will need to have a combined Medisave balance of at least $15,000 at the time of delivery in order to use Medisave for delivery and pre-delivery medical expenses.

Click here for a complete list of hospitals participating in the Medisave scheme.

You may wish to use your own Medisave, your spouse’s or your parent’s Medisave for hospitalisation expenses. Multiple Medisave Accounts can be used to co-pay the hospital bill. However, the same Medisave withdrawal limits will still apply for each hospitalisation, regardless of the number of payer. This means that the Medisave withdrawal limits will not increase with the number of Medisave Account holders paying for the bill.

Under …

Higher Gas Bills from Next Month

Martin Lee — Fri, 27 Apr 2012 04:59:39 +0000

City Gas said yesterday that the
gas tariff for households would be increased by 3.3% from 1st May 2012. This translates to an increase from 21.45 cents to 22.16 cents per kilowatt hour (kWh).

While 3% might not sound like a lot, gas rates have actually gone up from 17.99 cents per kWh last year to 22.16 cents per kWh now. This is a whopping 20%+ increase.

Every quarter, gas tariffs are reviewed based on guidelines set by the Energy Market Authority (EMA). At the rate things are going, inflation is going to eat all …

The Sheep That Wants To Be Shepherd

Jared Seah — Wed, 25 Apr 2012 23:08:40 +0000

In a distant parallel universe where sheep rule the planet Htrae, there was 2 young sheep named Rekcus-bmud and Nepo-seye that dreamt about being a shepherd.

You see, there are only 2 kinds of sheep on that planet – shepherd sheep that lead and sheep that follow the shepherds.

Both these two young sheep, who were the best of friends, have no wish to be like the other sheep, always following and doing what the shepherds demanded or have planned for them.

They too wanted to be their own shepherds. To have a flock of their own each!

“Nepo-seye, do you want to join me in this night seminar I read in the papers?” asked Rekcus-bmud excitedly. “This guru is sharing his secret to shepherd success! And It’s free you know?”

“Eh… OK. You sure it’s free?” Seye-nepo asked with a suspicious look.

After some reassuring words upon checking up, both went to this “free” seminar.

Something interesting happened after the seminar that night. Both Rekcus-bmud and Nepo-seye became converts!

From only dreaming and talking about how nice if they can be shepherds – to actively doing something about it. No more TALK, it’s now DO for them.

But the paths each took differ.

Although the seminar was “free”, the “real secret” to shepherdhood was only available if the participants were to sacrifice some of the wool on his body for the complete 3 days package. This Rekcus-bmud did most willingly in an almost religious fervour fashion.

Nepo-seye decided that paying wool to be “told” by shepherds what to do does not make sense when they are already being told by shepherds what to do for free in their everyday lives!?

Nepo-seye was busy researching and observing how this guru shepherd operated:

How many came to this “free” seminar?

How many signed up for the “pay in wool” 3 days package?

How much does the meeting venue cost in wool?

How much did the advertisements in the papers cost?

What trigger words caused the most excitement in the participants? Free is a powerful word Nepo-seye learned!

How the guru used his body language and tone of voice to “sell” beyond the spoken words?

How much roughly did the guru earned in wool that night?

And so on…

Nepo-seye even volunteered to work for free with one of these guru shepherds to complete his research by looking from the inside out, instead of outside in – the path his good friend Rekcus-bmud took.

Several months later, when both friends meet, Nepo-seye had a shock!

“Rekcus-bmud! What happened to you? Where’s all your wool?”

“I’ve given them all to the gurus as payment for their generosity in sharing their secrets with me. I’ve am trained by 4 gurus now!” exclaimed Rekus-bmud triumphantly. “Next week I’ll be going to my 5^th seminar by this guru from overseas!!!”

Nepo-seye peered into his friend’s eyes and offered his most heartfelt advice, “As sheep, the two most important assets we have on our body are our wool and meat.”

“You don’t have any wool left on your body… Do be careful on what you have signed up for next.”

Rekcus-bmud did not listen and he did not hear… And was heard no more…

Nepo-seye became a shepherd after several years of apprenticeship with shepherds.

By listening to what shepherd DO, not what they SAY.

Singapore Man of Leisure (welcome to my blog; just google it!)

Hard up on cash? Do Extreme Couponing!

Drizzt — Wed, 25 Apr 2012 10:59:23 +0000

Finding it hard to feed your family? Couponing have been around a long time for retail shops to make it easier for price conscious shoppers to identify themselves and yet still able to buy the products.

But what I never anticipate is how much effort some people will spend on it. So much so that they got a whole boot load of free products to sustain their living. And I really mean FREE.

This isn’t for everyone but the absolute price conscious. You would have to take a look at the effort they spend to find coupons in dumpster, collecting them, cataloging them (These ladies can be my secretaries really)…