Tommy Wong's book, Wisdom to Live your Life, is relevant to the people who have lost money on the mini-bonds and other credit-linked notes.
Tommy talked about the greed in the materialistic world where the following people make a lot of money (and in the process made other people poorer):
a) politicians
b) top CEOs
c) bankers
He also talked about how to find happiness in the spiritual world by living on certain principles. This came give some comfort to those who have been made poorer by the greedy financial institutions.
His book has relevance to the situation in Singapore. It is easy to read. You can buy his book online here.
Tan Kin Lian
Sunday, May 30, 2010
Low cost investment funds
Dear Mr Tan,
I've read your blog regularly and you're an advocate of low cost index fund as the primary tool for investments. While the idea it's great in principle, I find the lack of index fund products in Singapore to be somewhat inconvenient. Based on my analysis, we only have the following products locally, either through unit trust or traded at SGX:
Singapore Stock
There is only StreetTracks STI ETF and DBS STI ETF. Both track the same index. In my opinion the STI Index is not that well diversified, it only has 30 companies (compare it to S&P 500) and it comprises only of large cap stocks. There is no index fund or ETF that tracks a Singapore small cap index, or even an index that has more companies making up the index (e.g. a Singapore total market index that has small + large cap companies).
Singapore Bond
There is only the ABF Singapore Bond ETF, which is to my knowledge the only passively-managed bond fund in this country. However, the ETF suffers from problems like liquidity, large bid-ask spread and trading prices not tracking its NAV properly. It behaves more like a stock than a bond index fund at times. Considering that it invests only in SGD-denominated government bonds, that shouldn't be the case. As for bond unit trust, most do not invest in local bonds and is subjected to currency risk. Bond unit trust also have expense ratios like ~1% which makes extremely unattractive. The last way is to invest in SGS bonds direct, but regularly saving into SGS bonds is difficult as they have fixed issuance dates. To complicate the matter, SGS bonds cannot be bought online (unless you consider FSM secondary SGS bond market).
International Stock
Many of the Lyxor series of ETF which do cover international stocks are usually single country fund and are not a good form of diversification. There are some regional/global ETFs, but the whole range of Lyxor ETFs suffer from liquidity problems too. There is only 3 unit trust that are passively managed, and those are the Lion Capital Infinity series that are feeder funds into Vanguard index funds. However, Lion Capital slaps a 1% management fee just for feeding money into Vanguard index funds... real easy money for Lion Capital for just doing almost zero work!
I was hoping if you could comment on this in your blog one day. It certainly would help if we had more good index fund based products in Singapore.
Garrett
My comment
Read my book, Practical Guide on Financial Planning available at www.easysearch.sg/ishop
Some people commented about the lack of liquidity of the STI ETF. This should not be of concern to the long term investor. The ETF manager will create more units to meet demand. The ETF is not suitable for short term trading, but is suitable for long term investing. Just place your order at the price indicated by the index and wait for someone to sell the units to you. Be patient.
I've read your blog regularly and you're an advocate of low cost index fund as the primary tool for investments. While the idea it's great in principle, I find the lack of index fund products in Singapore to be somewhat inconvenient. Based on my analysis, we only have the following products locally, either through unit trust or traded at SGX:
Singapore Stock
There is only StreetTracks STI ETF and DBS STI ETF. Both track the same index. In my opinion the STI Index is not that well diversified, it only has 30 companies (compare it to S&P 500) and it comprises only of large cap stocks. There is no index fund or ETF that tracks a Singapore small cap index, or even an index that has more companies making up the index (e.g. a Singapore total market index that has small + large cap companies).
Singapore Bond
There is only the ABF Singapore Bond ETF, which is to my knowledge the only passively-managed bond fund in this country. However, the ETF suffers from problems like liquidity, large bid-ask spread and trading prices not tracking its NAV properly. It behaves more like a stock than a bond index fund at times. Considering that it invests only in SGD-denominated government bonds, that shouldn't be the case. As for bond unit trust, most do not invest in local bonds and is subjected to currency risk. Bond unit trust also have expense ratios like ~1% which makes extremely unattractive. The last way is to invest in SGS bonds direct, but regularly saving into SGS bonds is difficult as they have fixed issuance dates. To complicate the matter, SGS bonds cannot be bought online (unless you consider FSM secondary SGS bond market).
International Stock
Many of the Lyxor series of ETF which do cover international stocks are usually single country fund and are not a good form of diversification. There are some regional/global ETFs, but the whole range of Lyxor ETFs suffer from liquidity problems too. There is only 3 unit trust that are passively managed, and those are the Lion Capital Infinity series that are feeder funds into Vanguard index funds. However, Lion Capital slaps a 1% management fee just for feeding money into Vanguard index funds... real easy money for Lion Capital for just doing almost zero work!
I was hoping if you could comment on this in your blog one day. It certainly would help if we had more good index fund based products in Singapore.
Garrett
My comment
Read my book, Practical Guide on Financial Planning available at www.easysearch.sg/ishop
Some people commented about the lack of liquidity of the STI ETF. This should not be of concern to the long term investor. The ETF manager will create more units to meet demand. The ETF is not suitable for short term trading, but is suitable for long term investing. Just place your order at the price indicated by the index and wait for someone to sell the units to you. Be patient.
Survey on Orphaned Policies
Dear Mr Tan,
Thank you for referring your readers to my "Orphaned Insurance Policy" poll. The 2-minute-only poll is still open and they can help out if they haven't. The updated results, charts, and comments are available at:
http://cliftonphua.blogspot.com/2010/05/updated-results-from-orphaned-insurance.html
Below is my take on results from the first 40 respondents.
(1) Respondents are mostly over 35 years old with 3-8 policies.
(2) More than 4 out of 5 Singaporeans have at least 1-2 orphaned policies.
(3) Most orphaned policies came from AIA, Prudential, and NTUC Income - the most established insurance companies in Singapore.
(4) Original financial advisor usually left without giving reason, joined another insurance company, changed career or retired - fair enough, this happens in any company and industry.
(5) Out of those Singaporeans with orphaned policies, only about 1 out of 4 of their new financial advisors have contacted them. 1 out of 8 have assisted them before and to very little satisfaction. In my opinion, this is an unacceptable service level. Policy holders don't seem to care… only until something rare but dramatic happens…
(6) Usefulness of financial advisors is questionable
"It's good to know about what you bought. I've no problem living without an adviser as I have find out more than enough information / procedures should I need any form of service or claims. It makes no difference with or without an insurance adviser."
"This is to be expected. No stepmother will treat you better than your real mother. It is wishful thinking that the orphaned policies will get better treatment from the new agent since the bulk of the commission is already given to the original agent. It is time that a separate channel be made available for people to buy policies without going through agents since they do not add value anyway nowadays."
(7) Commission-only incentives for financial advisors are evil
"It is a shield (medical) plan, the company could have assigned a new advisor but didn't. probably because the premium is small and the new advisor will not get renewal commission."
"The new financial advisor is only interested to generate new sales for herself."
"Commission-based selling is the culprit!"
Clifton Phua
Thank you for referring your readers to my "Orphaned Insurance Policy" poll. The 2-minute-only poll is still open and they can help out if they haven't. The updated results, charts, and comments are available at:
http://cliftonphua.blogspot.com/2010/05/updated-results-from-orphaned-insurance.html
Below is my take on results from the first 40 respondents.
(1) Respondents are mostly over 35 years old with 3-8 policies.
(2) More than 4 out of 5 Singaporeans have at least 1-2 orphaned policies.
(3) Most orphaned policies came from AIA, Prudential, and NTUC Income - the most established insurance companies in Singapore.
(4) Original financial advisor usually left without giving reason, joined another insurance company, changed career or retired - fair enough, this happens in any company and industry.
(5) Out of those Singaporeans with orphaned policies, only about 1 out of 4 of their new financial advisors have contacted them. 1 out of 8 have assisted them before and to very little satisfaction. In my opinion, this is an unacceptable service level. Policy holders don't seem to care… only until something rare but dramatic happens…
(6) Usefulness of financial advisors is questionable
"It's good to know about what you bought. I've no problem living without an adviser as I have find out more than enough information / procedures should I need any form of service or claims. It makes no difference with or without an insurance adviser."
"This is to be expected. No stepmother will treat you better than your real mother. It is wishful thinking that the orphaned policies will get better treatment from the new agent since the bulk of the commission is already given to the original agent. It is time that a separate channel be made available for people to buy policies without going through agents since they do not add value anyway nowadays."
(7) Commission-only incentives for financial advisors are evil
"It is a shield (medical) plan, the company could have assigned a new advisor but didn't. probably because the premium is small and the new advisor will not get renewal commission."
"The new financial advisor is only interested to generate new sales for herself."
"Commission-based selling is the culprit!"
Clifton Phua
Ranking of cities by Quality of Life
Here is another ranking by Mercer
http://www.mercer.com/qualityoflivingpr
My comments (revised):
Each survey uses its own criteria, as explained in the report.
The top 5 cities are:
1 Vienna
2. Zurich
3. Geneva
4. Vancouver
4. Auckland
Singapore ranked 28 but is highest in Asia.
http://www.mercer.com/qualityoflivingpr
My comments (revised):
Each survey uses its own criteria, as explained in the report.
The top 5 cities are:
1 Vienna
2. Zurich
3. Geneva
4. Vancouver
4. Auckland
Singapore ranked 28 but is highest in Asia.
Investing savings for a debt free family
Dear Mr Tan
We wish to seek your opinion on what we should do with our savings. Currently, we have paid off our HDB loan, car loan, and we are practically debt free. We are in our 30s and we have 2 sons from age 5 to 10. We have some investments and they are doing well fetching us dividend yields of 5 to 9% per annum. We have sufficient insurance coverage should we report early to heaven and have also been buying education plans for our children since they were 1. We have learnt to live beneath our means and have saved a bit of money through the years.
You see, we have some savings and we would like to accumulate our wealth but we do not know what to do now. In addition, we did think about investing in a private property but prices are rocket high now. In your opinion do you think it is right to purchase a private property for investment purposes in Singapore? Do you think properties prices will go down soon?
TO
REPLY
Invest in a low cost investment fund as suggested in my book, Practical Guide on financial planning. It can be bought online. Visit www.easysearch.sg/ishop
We wish to seek your opinion on what we should do with our savings. Currently, we have paid off our HDB loan, car loan, and we are practically debt free. We are in our 30s and we have 2 sons from age 5 to 10. We have some investments and they are doing well fetching us dividend yields of 5 to 9% per annum. We have sufficient insurance coverage should we report early to heaven and have also been buying education plans for our children since they were 1. We have learnt to live beneath our means and have saved a bit of money through the years.
You see, we have some savings and we would like to accumulate our wealth but we do not know what to do now. In addition, we did think about investing in a private property but prices are rocket high now. In your opinion do you think it is right to purchase a private property for investment purposes in Singapore? Do you think properties prices will go down soon?
TO
REPLY
Invest in a low cost investment fund as suggested in my book, Practical Guide on financial planning. It can be bought online. Visit www.easysearch.sg/ishop
Land banking - in the news
Hi Mr. Tan
Here are two newspaper reports on land banking:
http://www.straitstimes.com/BreakingNews/Singapore/Story/STIStory_526464.html
http://tnp.sg/news/story/0,4136,241645,00.html?
NL
Here are two newspaper reports on land banking:
http://www.straitstimes.com/BreakingNews/Singapore/Story/STIStory_526464.html
http://tnp.sg/news/story/0,4136,241645,00.html?
NL
What is the "worth" of anything in life?
THE SOLDIER
Horror gripped the heart of a World War-I soldier, as he saw his lifelong friend fall in battle. The soldier asked his Lieutenant if he could go out to bring his fallen comrade back.
"You can go," said the Lieutenant," but don't think it will be worth it.Your friend is probably dead and you may throw your life away."
"The Lieutenant's words didn't matter, and the soldier went anyway. Miraculously, he managed to reach his friend, hoisted him onto his shoulder and brought him back to their company's trench.
The officer checked the wounded soldier, then looked kindly at his friend. "I told you it wouldn't be worth it," he said. "Your friend is dead and you are mortally wounded."
"It was worth it, Sir," said the soldier.
"What do you mean by worth it?" responded the Lieutenant. "Your friend is dead."
"Yes Sir," the soldier answered,"but it was worth it because when I got to him, he was still alive and I had the satisfaction of hearing him say.... "Jim...I knew you'd come."
REFLECTION
Many times in life, whether a thing is worth doing or not, really depends on how you look at it. Enjoy the little things, for one day you may look back and realise they were the big things. Fhe way to love anything is to realise its worth and that it might be lost. Also, relationships are like crystals, you dont realize how much it's worth until it breaks.
Take up all your courage and do something your heart tells you to do, so that you may not regret not doing it later in your life!!
Horror gripped the heart of a World War-I soldier, as he saw his lifelong friend fall in battle. The soldier asked his Lieutenant if he could go out to bring his fallen comrade back.
"You can go," said the Lieutenant," but don't think it will be worth it.Your friend is probably dead and you may throw your life away."
"The Lieutenant's words didn't matter, and the soldier went anyway. Miraculously, he managed to reach his friend, hoisted him onto his shoulder and brought him back to their company's trench.
The officer checked the wounded soldier, then looked kindly at his friend. "I told you it wouldn't be worth it," he said. "Your friend is dead and you are mortally wounded."
"It was worth it, Sir," said the soldier.
"What do you mean by worth it?" responded the Lieutenant. "Your friend is dead."
"Yes Sir," the soldier answered,"but it was worth it because when I got to him, he was still alive and I had the satisfaction of hearing him say.... "Jim...I knew you'd come."
REFLECTION
Many times in life, whether a thing is worth doing or not, really depends on how you look at it. Enjoy the little things, for one day you may look back and realise they were the big things. Fhe way to love anything is to realise its worth and that it might be lost. Also, relationships are like crystals, you dont realize how much it's worth until it breaks.
Take up all your courage and do something your heart tells you to do, so that you may not regret not doing it later in your life!!
Land banking
Hello Mr Tan
See this report from the UK on the site at Cherry Tree grove.
While it may have seemed that they were actively chasing this the reality is that the planning and appeals process is just filling in a few forms and paying small fees. So they have kept this site alive for three years with a very small investment while telling investors they are actively getting planning permission. Anyway this is the last round of appeal so now they have to tell investors it has failed. If you look on their website they are still talking about getting planning approval for this site.
http://www.chelmsfordweeklynews.co.uk/news/colchester/8189096.Green_gateway_hotel_plan_turned_down
http://www.profitablegroup.com/plots-ctg.aspx
Here is a report on the commotion at the office of a land banking company:http://www.todayonline.com/Singapore/EDC100529-0000082/Profitable-Group-slams-irate-investors
SF
See this report from the UK on the site at Cherry Tree grove.
While it may have seemed that they were actively chasing this the reality is that the planning and appeals process is just filling in a few forms and paying small fees. So they have kept this site alive for three years with a very small investment while telling investors they are actively getting planning permission. Anyway this is the last round of appeal so now they have to tell investors it has failed. If you look on their website they are still talking about getting planning approval for this site.
http://www.chelmsfordweeklynews.co.uk/news/colchester/8189096.Green_gateway_hotel_plan_turned_down
http://www.profitablegroup.com/plots-ctg.aspx
Here is a report on the commotion at the office of a land banking company:http://www.todayonline.com/Singapore/EDC100529-0000082/Profitable-Group-slams-irate-investors
SF
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