Read this article.
My view
Big cities face the problem of coping with downpour and drainage. Many people do not have the expertise and experience on such matters. These matters are usually left unattended, until a big disaster occurs.
Tuesday, July 20, 2010
Financial planning - tips for young people
First posted in December 2009. Re-posted in July 2010
The most important advice in financial planning is to save 15% to 25% of your earnings, in addition to CPF. This personal savings can be used for emergencies and for your retirement. If you draw down on your savings, you pay 0% interest. If you have to borrow from a bank for your urgent cash needs, you have to pay up to 24% interest.
Keep your savings in liquid form. It is all right to keep in a bank to earn 1% interest. When you have accumulated sufficient savings, you can invest in the an exchange traded fund, e.g. STI ETF, to enjoy diversification and professional management, or in a low cost unit trust (look for one with annual charge of less than 1%).
When you have started a family, you can buy term insurance for 5 to 10 years of your income. Do not pay more than 1% of your income in this insurance premium. If you are not able to get term insurance at a low cost or it is too troublesome to get it, you can buy personal accident insurance for this amount. At a young age, the biggest risk is due to accident which can be covered under this policy. You can change to a term insurance when it is readily available.
Do not worry about the other types of insurance. An insurance agent may tell you that they are necessary, but for most young people, you can live without them. It is more important that you have savings that can be withdrawn easily to meet unexpected cash needs. Even if you have invested in an ETF, you can withdraw it by paying only a small charge (i.e without paying the high penalty in a life insurance policy).
Join FISCA and attend the educational classes on financial planning. You can also read my financial planning book, which will be given to all FISCA members. This will be available in January.
Tan Kin Lian
The most important advice in financial planning is to save 15% to 25% of your earnings, in addition to CPF. This personal savings can be used for emergencies and for your retirement. If you draw down on your savings, you pay 0% interest. If you have to borrow from a bank for your urgent cash needs, you have to pay up to 24% interest.
Keep your savings in liquid form. It is all right to keep in a bank to earn 1% interest. When you have accumulated sufficient savings, you can invest in the an exchange traded fund, e.g. STI ETF, to enjoy diversification and professional management, or in a low cost unit trust (look for one with annual charge of less than 1%).
When you have started a family, you can buy term insurance for 5 to 10 years of your income. Do not pay more than 1% of your income in this insurance premium. If you are not able to get term insurance at a low cost or it is too troublesome to get it, you can buy personal accident insurance for this amount. At a young age, the biggest risk is due to accident which can be covered under this policy. You can change to a term insurance when it is readily available.
Do not worry about the other types of insurance. An insurance agent may tell you that they are necessary, but for most young people, you can live without them. It is more important that you have savings that can be withdrawn easily to meet unexpected cash needs. Even if you have invested in an ETF, you can withdraw it by paying only a small charge (i.e without paying the high penalty in a life insurance policy).
Join FISCA and attend the educational classes on financial planning. You can also read my financial planning book, which will be given to all FISCA members. This will be available in January.
Tan Kin Lian
Financial planning - preparing for redundancy
First posted in January 2010. Re-posted in July 2010
Redundancy is defined as retrenchment and premature termination of contract. It represent loss of employment that is initiated by the employer. There were 16,000 redundancies in 2008 and has already reached this fugure for the first 9 months of 2009, representing 0.8% of the employed population.
This figure does not represent involuntary loss due to "difficulty of working with management" or "asked to leave". If the other reasons are included, the redundancy rate is likely to be much higher, maybe 2% a year or higher. The risk of being terminated during a working life could be more than 50%.
Many workers who are lost their jobs involuntarily will face difficulty in getting another job that pays equally well. There are many mature workers who have been unemployed for several years.
It is important to be financially prepared for involuntary loss of job. Here are the necessary steps:
a) Have liquid savings representing 6 months of earnings
b) Reduce your fixed commitments, especially on life insurance savings
c) Buy a property that represents not more than 4 or 5 years of the family income (after deducting cost of employing a maid)
You should avoid savings in a life insurance policy, as the regular premiums will be a financial burden when you are unemployed, and you will suffer a large loss, or penalty, if the policy is terminated early. If it is terminated within the first five years, you may lose up to 50% of your savings. You can only break even if you pay the premium for more than 15 years, in most cases.
It is better to save in a savings account or save-as-you-earn account (which pays slightly higher interest) and invest in an exchange traded fund, money market fund or a unit trust that has low initial and annual charges. If you have to withdraw your savings, you do not suffer a penalty, but you do have to take the market risk.
These concepts are explained in my book "Practical Guide on Financial Planning", which will be available in the bookstores in March 2010. It is important for young people to be educated about these principles before they start work, and to avoid locking up their savings in an inflexible, high cost, life insurance policy.
You only need to worry about medical insurance (e.g. Medishield) at the start. You do not have to worry about life insurance until you are married. After marriage, you can have Term Insurance or Family Income benefit at a low premium (say, 1% of your annual income). You can check this website for an indication of the premium for Term Insurance.
Tan Kin Lian
Redundancy is defined as retrenchment and premature termination of contract. It represent loss of employment that is initiated by the employer. There were 16,000 redundancies in 2008 and has already reached this fugure for the first 9 months of 2009, representing 0.8% of the employed population.
This figure does not represent involuntary loss due to "difficulty of working with management" or "asked to leave". If the other reasons are included, the redundancy rate is likely to be much higher, maybe 2% a year or higher. The risk of being terminated during a working life could be more than 50%.
Many workers who are lost their jobs involuntarily will face difficulty in getting another job that pays equally well. There are many mature workers who have been unemployed for several years.
It is important to be financially prepared for involuntary loss of job. Here are the necessary steps:
a) Have liquid savings representing 6 months of earnings
b) Reduce your fixed commitments, especially on life insurance savings
c) Buy a property that represents not more than 4 or 5 years of the family income (after deducting cost of employing a maid)
You should avoid savings in a life insurance policy, as the regular premiums will be a financial burden when you are unemployed, and you will suffer a large loss, or penalty, if the policy is terminated early. If it is terminated within the first five years, you may lose up to 50% of your savings. You can only break even if you pay the premium for more than 15 years, in most cases.
It is better to save in a savings account or save-as-you-earn account (which pays slightly higher interest) and invest in an exchange traded fund, money market fund or a unit trust that has low initial and annual charges. If you have to withdraw your savings, you do not suffer a penalty, but you do have to take the market risk.
These concepts are explained in my book "Practical Guide on Financial Planning", which will be available in the bookstores in March 2010. It is important for young people to be educated about these principles before they start work, and to avoid locking up their savings in an inflexible, high cost, life insurance policy.
You only need to worry about medical insurance (e.g. Medishield) at the start. You do not have to worry about life insurance until you are married. After marriage, you can have Term Insurance or Family Income benefit at a low premium (say, 1% of your annual income). You can check this website for an indication of the premium for Term Insurance.
Tan Kin Lian
A remarkable man
Read this article and learn about a remarkable man who could have made a big difference in the history of Singapore.
New website for Tan Kin Lian.com [2]
Here are two comments about the new website, www.tankinlian.com
What are your views? Take part in this survey and win three book prizes
Note: some changes have been made to improve the home page and create some links.
What are your views? Take part in this survey and win three book prizes
The website is excellent. It's not only user friendly but doesnt have unnecessary graphics and flashing ads. You can give a try to use http://www.websiteoptimization.com/services/analyze/ to see the sample report on some optimization. This is only to make the website much better and may not be necessary. Thanks for providing valuable insights on financial matters and yes, I strongly recommend to purchase and read your book on Practical Guide on Financial Planning. |
Website is not intuitive. Design is amateurish looking. Design is not consistent across pages. Links found on different pages bring you to the same page. (e.g. Information > Ask Mr Tan, Ask Mr Tan). Dead link - Guide > Ask Mr Tan So much text on the first page and what are those on the left? Intuitively, I thought they are links but they are not. In addition, the text on the left should have prominent heading for each section. Contact, Enquiry, Ask Mr Tan - They all seem to suggest the same thing. Poor choice of words. Overall, a rather poor effort and does not seem to be created by a person well-versed with user interface design. Use one of the established CMS to better managed your website. What is a traditional website anyway? Any example? I remember in one of your articles you mentioned some particular gov website? I don't know why you seem to think that gov websites are considered traditional websites. I do find gov websites rather confusing with many links but they are more professionally done and comes with user site search. |
The law and justice
Read this article.
My view
It is important that the law should be administered impartially and fairly, and be seen to be so by ordinary, right thinking citizens.
My view
It is important that the law should be administered impartially and fairly, and be seen to be so by ordinary, right thinking citizens.
Risk profiling
The so-called investment profiling test offered by banks to customers appears to be nothing more than a marketing tool that allows people to feel good about investing in some products.
The tests are supposed to establish whether a certain investor has the experience, ability and knowledge to invest in riskier products such as the infamous Lehman minibonds.
But from White Collar's experience such profiling is next to useless. When I visited one bank a few years ago to organise a time deposit, I was asked to consider an alternative that could give me a higher return - I was being pushed down the road of riskier investments.
I was also asked to do a profiling test. White Collar did the test - which asked you how many times you have traded stocks, as well as where you go for holidays. On the basis of that I was labelled as a medium risk taker - and they attempted to sell me a type of structured product that just happened to be the bank's promotional sale of the month.
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