Thursday, September 24, 2009
Survey: New HDB flats
Should new HDB flat be sold at the market price (less a subsidy) or at cost of land, building plus a small margin? Give your views.
Free market (3) - A fair price
A free market is supposed to increase efficiency and to bring down the cost of products through competition. It requires the price to be fairly determined, so as to benefit the buyers and also make a profit for the seller.
To following conditions are necessary to get a fair price:
a) the product is standard
b) the quality can be measured
c) all parties have information about the market prices of these products
The price may differ according to the difference in cost. For example, an expensive shop can charge a higher price for a product, due to higher rent and greater convenience to the buyer. The buyer has the choice of paying more for the convenience and ambience.
The convenience store, which is opened 24 hours a day, has to charge a higher price compared to the supermarket for the same product. Customers are willing to pay the higher price charged at the convenience store.
It is possible for the seller to charge an inflated price, that is unfair to the buyer, under the following situations:
a) the buyer does not get the relevant information about the product
b) the seller gives misleading information about the product
c) the seller applies pressure selling methods
If the seller "cheats" the customer, the seller will get a bad reputation and will not get future business from the customer. However, there are many other customers that the seller can "cheat" and the seller finds that it is more profitable to "cheat" customers, unless these are treated as criminal offences. If it is quite common for people to "cheat" other people under the guise of "buyer beware", the society will become dishonest and people will learn to distrust other people.
It is better to encourage a society that is more honest and ethical.
Tan Kin Lian
To following conditions are necessary to get a fair price:
a) the product is standard
b) the quality can be measured
c) all parties have information about the market prices of these products
The price may differ according to the difference in cost. For example, an expensive shop can charge a higher price for a product, due to higher rent and greater convenience to the buyer. The buyer has the choice of paying more for the convenience and ambience.
The convenience store, which is opened 24 hours a day, has to charge a higher price compared to the supermarket for the same product. Customers are willing to pay the higher price charged at the convenience store.
It is possible for the seller to charge an inflated price, that is unfair to the buyer, under the following situations:
a) the buyer does not get the relevant information about the product
b) the seller gives misleading information about the product
c) the seller applies pressure selling methods
If the seller "cheats" the customer, the seller will get a bad reputation and will not get future business from the customer. However, there are many other customers that the seller can "cheat" and the seller finds that it is more profitable to "cheat" customers, unless these are treated as criminal offences. If it is quite common for people to "cheat" other people under the guise of "buyer beware", the society will become dishonest and people will learn to distrust other people.
It is better to encourage a society that is more honest and ethical.
Tan Kin Lian
Lost trust in insurance companies and bank
Dear Mr Tan,
When I started work, I was introduced to an insurance agent. The insurance agent told me that I should buy a life insurance – one that can protect me and my family financially if anything should happen to me and if nothing happens, it served as a forced saving with good returns.
I was concerned about the non-guarantee return portion and was assured that in the history of the company; they have NEVER reduced the non-guarantee portion. It was divided into guaranteed and non-guaranteed portion to meet MAS guideline. I asked several insurance companies to quote me the same type of policy with the same coverage and bought one with the highest monetary return.
Throughout the years that followed, I started accumulating insurance policies for my husband, my children and myself from different insurance companies. At one time, I was paying $1,000 per month for my whole family’s insurance policies. I told myself that I am saving for my future, my children education, my retirement.
In 2003, I started receiving numerous letters from my insurance companies announcing that they would adjust the non-guaranteed returns. Some insurance companies even adjust their returns (downwards) every 6 months. The amount I thought I could accumulate for my retirement was substantially reduced by 30% to 40%. I had NEVER once default my monthly payment but the insurance companies did not fulfill what was promised to me at the point of sales. I was disheartened and felt cheated.
I told myself to hold on until the ‘break-even’ point. But within 3 years, the break-even point for most if not all my policies were pushed from the 12th year to the 15th year then to the 18th year.
I decided to terminate ALL my insurance policies for my family to cut my losses. By doing so, I lost more than 60% of what I had paid for those policies. I took back $20,000 and lost more than $30,000 for those policies that have not reach the 'break-even' point.
The insurance companies ask my reason for termination. When I told them about the reduced return, they told me that insurance was for protection and not for returns (saving). I had to remind them that returns (saving) was my consideration for taking the policies.
Later, I was persuaded into purchasing Mini Bond by the relationship manager of a major bank, who claimed that it was a high return and safe product. I bought the product. When Lehman Brothers collapse in 2008, I lost all the money. I was once again dubbed and conned, now by the bank!
I have learned my lesson. I do not trust anyone - insurance company or bank. I have lost my family and my life saving for being too trustful. I am so traumatised by all these that I now keep all my cash at home; as I will never know which bank will go bankrupt next. I just hope, from the start someone had told me not to buy insurance policies with saving element which was mentioned in Mr. Tan’s book.
When I started work, I was introduced to an insurance agent. The insurance agent told me that I should buy a life insurance – one that can protect me and my family financially if anything should happen to me and if nothing happens, it served as a forced saving with good returns.
I was concerned about the non-guarantee return portion and was assured that in the history of the company; they have NEVER reduced the non-guarantee portion. It was divided into guaranteed and non-guaranteed portion to meet MAS guideline. I asked several insurance companies to quote me the same type of policy with the same coverage and bought one with the highest monetary return.
Throughout the years that followed, I started accumulating insurance policies for my husband, my children and myself from different insurance companies. At one time, I was paying $1,000 per month for my whole family’s insurance policies. I told myself that I am saving for my future, my children education, my retirement.
In 2003, I started receiving numerous letters from my insurance companies announcing that they would adjust the non-guaranteed returns. Some insurance companies even adjust their returns (downwards) every 6 months. The amount I thought I could accumulate for my retirement was substantially reduced by 30% to 40%. I had NEVER once default my monthly payment but the insurance companies did not fulfill what was promised to me at the point of sales. I was disheartened and felt cheated.
I told myself to hold on until the ‘break-even’ point. But within 3 years, the break-even point for most if not all my policies were pushed from the 12th year to the 15th year then to the 18th year.
I decided to terminate ALL my insurance policies for my family to cut my losses. By doing so, I lost more than 60% of what I had paid for those policies. I took back $20,000 and lost more than $30,000 for those policies that have not reach the 'break-even' point.
The insurance companies ask my reason for termination. When I told them about the reduced return, they told me that insurance was for protection and not for returns (saving). I had to remind them that returns (saving) was my consideration for taking the policies.
Later, I was persuaded into purchasing Mini Bond by the relationship manager of a major bank, who claimed that it was a high return and safe product. I bought the product. When Lehman Brothers collapse in 2008, I lost all the money. I was once again dubbed and conned, now by the bank!
I have learned my lesson. I do not trust anyone - insurance company or bank. I have lost my family and my life saving for being too trustful. I am so traumatised by all these that I now keep all my cash at home; as I will never know which bank will go bankrupt next. I just hope, from the start someone had told me not to buy insurance policies with saving element which was mentioned in Mr. Tan’s book.
Unfair treatment of consumers
I receive many requests for advice on insurance and investment products every week. I learned about the terms of these products from the facts and perspective presented by the consumers.
I am shocked at how the consumers are being badly treated and advised. In many cases, they were given promises that turned out to be unjustified.
Although some of the poor outcome could be due to the economic climate, a significant part is due to unfair dealings, e.g. large charges taken away from the consumer, inadequate distribution of bonus, misleading advice, predatory product design, and other bad practices.
How long can the regulators keep their head in the sand?
Tan Kin Lian
I am shocked at how the consumers are being badly treated and advised. In many cases, they were given promises that turned out to be unjustified.
Although some of the poor outcome could be due to the economic climate, a significant part is due to unfair dealings, e.g. large charges taken away from the consumer, inadequate distribution of bonus, misleading advice, predatory product design, and other bad practices.
How long can the regulators keep their head in the sand?
Tan Kin Lian
As a first step, I advise consumers to join FISCA (www.fisca.sg) The fee is only $36. Join now and build a strong FISCA to educate and help consumers. Do not wait until you are "cheated", as it will too late.
Survey: HDB Resale Flat
Were you recently involved in the sale or purchase of a HDB resale flat. How was your experience? Do you have any suggestion to have a better system? Reduce the cost of transaction? Give your views here.
RED Portal (12) - Rent your property
If you are the owner of a rented property, you will find the RED portal to be useful. You can view the details of your particular condo or housing project. You can use the benchmark price of the property to get an indication of the rental rate. If the recently transacted price has increased, it is likely that the rental rate will increase correspondingly. (We will be posting a report by URA showing the average rental rates for various condos).
You can click on the "Offer" tab to provide details of your property that is available for rental. You should offer the property a few months before the expiry of the current lease. The RED Property Agency staff will contact you to verify the details and approve the offer for listing.
Two owners have expressed interest to rent and sell their property.
www.easysearch.sg (Real Estate Data)
You can click on the "Offer" tab to provide details of your property that is available for rental. You should offer the property a few months before the expiry of the current lease. The RED Property Agency staff will contact you to verify the details and approve the offer for listing.
Two owners have expressed interest to rent and sell their property.
www.easysearch.sg (Real Estate Data)
Banks' usury practices
Some of the large banks have adopted usurious overdraft policies aimed at catching debit card users unaware and wringing as much money out of them as possible. Read this report.
Financial regulation in UK
The top financial regulator takes on the banks. Lord Adair Turner ask if banks are too big for the role that they play and take away too much profit from the economy? Read this report.
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