Monday, November 15, 2010
FISCA Talk on Financial Planning
I have changed the powerpoint for my talk on Financial Planning. The new outline is set out here. The next talk will be held on Saturday 4 December at 3 to 6 pm. Register here. This talk may still be of interest to FISCA members who attended the talk previously, as there is new content.http://tankinlian.com/admin/file.aspx?id=282
Costly rider to cover critical illness
A consumer bought an investment linked policy with an annual premium of $1,200. He insured for critical illness rider for $50,000. He found that the cost of the rider increases as he grows older and will exceed the premium at age 60. The cash value will start to decrease.
I advised the consumer to consider if he needs the critical illness rider at age 60, as his accumulated saving may be more than the sum assured. He can terminate the rider and save on the high cost that is deducted from his savings. He decided to terminate the policy and buy a private Shield to cover the cost of the critical illness.
I advised the consumer to consider if he needs the critical illness rider at age 60, as his accumulated saving may be more than the sum assured. He can terminate the rider and save on the high cost that is deducted from his savings. He decided to terminate the policy and buy a private Shield to cover the cost of the critical illness.
Financial Calcuation with Excel
The Excel spreadsheet has excellent formulas to make financial calculations. They are available under the Formula tab >> Financial.
You can use the following formulas
FV - future value
PV - present value
NPER - number of period
RATE- interest rate
PMT - amount of yearly payment
Type - 1 (pay at beginning of year), 0 (pay at end of year) and 0.5 (may monthly throughout the year).
It allows you to find out the FV or PV of a single payment or a stream of regular payments, or to calculate the yield or number of periods.
When you attend my talk on financial planning or insuring your financial secruity, I will demonstrate how to use these formulas (for people who are not familiar).
Tan Kin Lian
You can use the following formulas
FV - future value
PV - present value
NPER - number of period
RATE- interest rate
PMT - amount of yearly payment
Type - 1 (pay at beginning of year), 0 (pay at end of year) and 0.5 (may monthly throughout the year).
It allows you to find out the FV or PV of a single payment or a stream of regular payments, or to calculate the yield or number of periods.
When you attend my talk on financial planning or insuring your financial secruity, I will demonstrate how to use these formulas (for people who are not familiar).
Tan Kin Lian
Choose a good life insurance company
You can recognize a good life insurance company as follows:
Be educated - so that you can recognize a good company and a bad one, a good policy and a bad one, a good adviser and a bad one.
- Provides a service to you to manage your long term investment and risk
- Charge you a fair fee for the service
- Gives you a fair return, after deducting the fee
- Helps you to achieve your goal, i.e. better yield and risk management
A bad insurance company takes advantage of your ignorance and takes away a large amount of your accumulated savings, i.e. fleece the consumer.
Be educated - so that you can recognize a good company and a bad one, a good policy and a bad one, a good adviser and a bad one.
Educational Talks
If you remain trusting and ignorant, you will be ripped off, sooner or later. And you deserve it (sorry to be blunt)!
If you remain trusting and ignorant, you will be ripped off, sooner or later. And you deserve it (sorry to be blunt)!
Tan Kin Lian
Living on your accumulated savings
In my book, Practical Guide on Financial Planning, I educate consumer on the option to keep their accumulated savings in a low cost investment fund and withdraw the money regularly to meet their living expenses. Although the market value of the fund may be volatile, it does not matter to a long term investor, as long as the underlying shares are in good quality companies.
The investor can just earn the dividend on the shares (which is about 3% per annum). If the dividend is not sufficient, the investor can sell some units every few months to supplement the dividends. If this is managed well, the fund should be able to last the lifetime and leave a balance to be beneficiaries.
Assume that the accumulated saving at retirement is $500,000 and the retiree needs to $2,000 a month to spend. Here is the balance of the accumulated savings at the end of 25 years (by which time, the retiree will be 90 years old), assuming that the fund earns a net yield of 4%, 5% and 6% (inclusive of dividend):
Balance after 25 years
Yield
4% $293,436
5% $490,455
6% $750,182
You can do the same calculation with an Excel spreadsheet.
There is no need to invest in a life annuity, if you have sufficient savings to last for your lifetime. The advantage of a low cost investment fund are:
The investor can just earn the dividend on the shares (which is about 3% per annum). If the dividend is not sufficient, the investor can sell some units every few months to supplement the dividends. If this is managed well, the fund should be able to last the lifetime and leave a balance to be beneficiaries.
Assume that the accumulated saving at retirement is $500,000 and the retiree needs to $2,000 a month to spend. Here is the balance of the accumulated savings at the end of 25 years (by which time, the retiree will be 90 years old), assuming that the fund earns a net yield of 4%, 5% and 6% (inclusive of dividend):
Balance after 25 years
Yield
4% $293,436
5% $490,455
6% $750,182
You can do the same calculation with an Excel spreadsheet.
There is no need to invest in a life annuity, if you have sufficient savings to last for your lifetime. The advantage of a low cost investment fund are:
- Avoid the high deduction taken away by the insurance company (a lot of money!!)
- Earn a higher yield (better than a life annuity)
- Greater flexibility - to meet unexpected needs
The disadvantage is the perceived investment risk. You can manage it by diversification (e.g. in an indexed fund), investing for the long term (to average out the good and bad years) and by being educated (e.g. buy my book and attend the educational talks by FISCA).
Tan Kin Lian
Suzy Orman - Cash value and Term Life Insurance
Suzy Orman talks about whole life and term life insurance. She explain why a whole life policy is not suitable for children. Watch this video.
Poor deal from a life annuity
A consumer was given a proposal to pay a large annual premium for 5 years, keep the money until age 65 and withdraw an annual payment for life. The benefit illustration was confusing, even to me. I was not sure if this is a life annuity or withdrawal from an accumulation account.
I asked the consumer to use Excel and do the same projection, if he invested the money on his own to earn 3%, 4% and 5% in a low cost investment fund. He found that the DIY option gave him a large balance at age 91 - which is significantly higher than shown in the benefit illustration. The simple calculation gave an obvious answer to him - he should invest on his own.
He asked, "where do I get a low cost investment fund?" I recommended the STI ETF available on the Singapore Exchange (SGX). The investment risk can be managed by diversification (in this single fund) and investing for the long term to average out the good and bad year. This is explained in my book on financial planning (available at www.tankinlian.com/ishop).
This simple advice could save the consumer several hundred thousand dollars! Do not buy a bad financial product (or life insurance policy) that can take away so much of your accumulated savings. You can DIY.
Tan Kin Lian
I asked the consumer to use Excel and do the same projection, if he invested the money on his own to earn 3%, 4% and 5% in a low cost investment fund. He found that the DIY option gave him a large balance at age 91 - which is significantly higher than shown in the benefit illustration. The simple calculation gave an obvious answer to him - he should invest on his own.
He asked, "where do I get a low cost investment fund?" I recommended the STI ETF available on the Singapore Exchange (SGX). The investment risk can be managed by diversification (in this single fund) and investing for the long term to average out the good and bad year. This is explained in my book on financial planning (available at www.tankinlian.com/ishop).
This simple advice could save the consumer several hundred thousand dollars! Do not buy a bad financial product (or life insurance policy) that can take away so much of your accumulated savings. You can DIY.
Tan Kin Lian
Economic Growth and Equity
Should we pursue economic growth or equity? These are not conflicting goals. They are complementary. We can achieve sustainable economic growth through equitable distribution of the economic output. Read my views in this article.
Donation to FISCA
Several people have approached me for advice and guidance. I have to spend time to educate them. In some cases, my guidance is able to save them several tens or hundred of thousand dollars.
I like to ask these people to make a donation to FISCA in return for the guidance, if you find it to be valuable. Make any amount that you feel to be appropriate. Read this FAQ: http://tankinlian.com/admin/file.aspx?id=182
Your donation will help to pay volunteers who have to spend time to educate consumers in avoiding bad investment decisions. Do be generous and fair.
Tan Kin Lian
I like to ask these people to make a donation to FISCA in return for the guidance, if you find it to be valuable. Make any amount that you feel to be appropriate. Read this FAQ: http://tankinlian.com/admin/file.aspx?id=182
Your donation will help to pay volunteers who have to spend time to educate consumers in avoiding bad investment decisions. Do be generous and fair.
Tan Kin Lian
Making Niche Websites-Keyword Research Part 2 | BusinessAndLegal.ie
You may need to read Keyword research part 1 for this piece to make sense.
Keyword research is basically finding out what searchers are looking for and then creating content for your site in such a way that the Google search engine will choose to put your site in front of the searcher in the first page of Google’s search engine results as a good match for what the searcher is looking for.
When creating websites you need to structure your site with content in such a way that your chances of being well ranked in the search engines is exponentially improved and your site/article is served up to the searcher as a good result for the searcher.
Criminal Justice Jobs | Jobs in Criminal Justice | Careers In Law
Criminal justice jobs offer great opportunities to engage in a constructive and fulfilling career helping the community and indeed criminals sometimes to get their lives back on track. Criminal justice jobs cover a wide range of activity including court administration, law enforcement, homeland security and corrections. This article looks at the job of police officer/detective.
via careersinlaw.org
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