Wednesday, January 26, 2011

Beautiful scenes of Switzerland

Here are some beautiful scenes of Switzerland [Mike Hansford]
http://tankinlian.com/admin/file.aspx?id=378

40% discount on books

Enjoy 40% discount on the 5 book bundle and other discounts at www.tankinlian.com/ishop. You can buy the bundle and share with your friends or present them as a gift.

Bundle of 5 books
http://projects.easyapps.sg/iShop/public/common/File.aspx?file=57

Practical Guide on Financial Planning (enjoy 33% discount)
http://projects.easyapps.sg/iShop/public/common/File.aspx?file=62

Lunar New Year Gift
http://tankinlian.blogspot.com/2011/01/lunar-new-year-gift.html

Plan for retirement at age 65

Mr Tan,
What are your views on the raised retirement age? This would mean that an adult who joined the workforce at 25, has 40 years working. Does it change any traditional assumption that you make when planning, considering the assumption has always been 25 years?

REPLY
In my financial planning tool, I advise people to plan for retiring at age 65. If they start work at 25, they have a working career of 40 years. They have to be prepared to be out of work for a few years during this period, due to voluntary or involuntary termination of employment. They can plan for a few years of further education, if their finances are adequate.

I advise people to buy term insurance for 25 years only, say from age 25 to 50 years. When they reach age 50, they should have adequate savings in the event of premature death or illness. By that time, their children are likely to have grown up. The financial planning tool can be found here. This financial plan is explained here.

Poor yield on Vivo-life

A consumer showed me the benefit illustration for a Vivo-life. He found that the deduction at the end of 25 years appeared to meet my benchmark of 20%. The deduction was 20% based on a gross yield of 3.75% and 32% at the gross yield of 5.25%.

I was surprised at the difference between the two deduction figures of 20% and 32%. The difference is too wide and does not make sense. It suggest to me that there is something wrong with the system of allocation of bonus to produce such wide results. I asked him to get the insurance company to confirm the figures. I am quite worried that as insurance companies introduce complicated and exotic tables of bonus rates, they may end up with mistakes that are quite unfair to certain groups of policyholders. I hope that MAS is paying attention to this feedback.

For the particular policy, the premium was paid for only 5 years. It is not appropriate to use my benchmark which is based on premiums being paid for 25 years. For the Vivo-policy, the calculation should be based on the premium period of 5 years. here are the figures:


A Prem
Years
CV
Gross yld
Net Yld
Deduction
11936
5
53349
3.75%
-5.61%
9.36%
11936
5
53349
5.25%
-5.61%
10.86%


I was shocked that the cash value at the end of the premium payment period is lower than the total premiums. This gives a negative yield. The total deduction is excessive, as shown by the above table.

It does not make sense for a consumer to be paying $59,680 in premium for 5 years to get a cash value of only $53,349. The consumer loses $6,331 for 5 years. The cost of the insurance cover for 5 years should be probably be $500 (in total) and not $6,300. It is such a bad deal for the consumer!

Tan Kin Lian

Act with honor and integrity

I find it despicable for a corporation to impose a charge on an unsuspecting consumer and to waive the charge when the consumer finds out and make a protest. The corporation is behaving like a crook, without honor and integrity.

I was in Suntec Mall. A young man approached me to get me to subscribe for a credit card. He showed me a free gift. The annual fee is waived for the first year.

I asked, "What is the annual fee after the first year? ". He replied "aah, uuh, aah ...... $190". I walked away. He said "nobody pays the renewal fee. If you call the bank, they will waive it". I know that the bank will waive the annual fee for consumers who knows about it and who have the clout. They hope to make the fee on the unsuspecting  consumers who did not notice the charge or do not have the clout. I find this practice to be despicable, just like stealing. I refused to take the credit card.

I am writing with this strong language, knowing that some of my blog visitors are from the banks and are involved in this despicable practice. I hope that they agree with me, and will pass this message to their management. I also know that people from MAS read my blog. I hope that they will pass the message to their management also, so that they can take steps to get our banks and corporations to be more honorable in their dealings - and stop behaving like crooks.

Tan Kin Lian

Deposits with M V Land

This developer ask the owners to pay deposits before giving a permit to start renovation work or to move in the furniture. They may not have the legal right to impose these requirements. It is like asking for a ransom. Read this letter that I wrote to the directors of M V Land. I have to fax the letter to them, because they do not read e-mails sent to their company, even though they give out the e-mail address:
http://tankinlian.com/admin/file.aspx?id=377