Sunday, October 18, 2009
CPF Life
Please refer to the explanatory booklets on CPF Life that can be downloaded from the CPF website. It explains how the various options work. If you have any detailed questions, please ask the CPF Board. I can only give general advice about the merits and disadvantages of this scheme.
Wider duty of a lawyer
My friend, who is now attempting the final part of his training to be a lawyer, made this statement, "The duty of a lawyer is to protect the best interest of his client".
I asked him if the lawyer has a duty to uphold the integrity of the legal process. For example, is it all right for a lawyer to act for the client in the following actions?
a) writing a prospectus that is confusing to the public?
b) arranging an investment scheme that defrauds the public?
c) intimidating the public with defamatory action without sufficient grounds?
d) helping the client to draft untrue statements?
I asked him if the lawyer has a duty to uphold the integrity of the legal process. For example, is it all right for a lawyer to act for the client in the following actions?
a) writing a prospectus that is confusing to the public?
b) arranging an investment scheme that defrauds the public?
c) intimidating the public with defamatory action without sufficient grounds?
d) helping the client to draft untrue statements?
e) drafting legal contracts that are unfair to the customers (i.e. possible contravention of the fair trading act)?
My friend found it difficult to answer my questions. The law is not clear on these matters. There are insufficient case history to rely on.
I will be asking the Law Society on these ethical questions. I hope that they can provide some guidance to their members who are practicing lawyers.
Tan Kin Lian
My friend found it difficult to answer my questions. The law is not clear on these matters. There are insufficient case history to rely on.
I will be asking the Law Society on these ethical questions. I hope that they can provide some guidance to their members who are practicing lawyers.
Tan Kin Lian
Capital Protected Product - sold in 2002
A customer invested $25,000 in the structured product sold by a local bank in early 2002. After waiting for 5 years, the customer received a return of $25,528. The gain is $528 (i.e 2.1% for 5 years, or 0.4% per year).
The formula used to compute this return is:
(a) 5% for 5 years or
(b) 45% of the smallest absolute performance of 1 stock out of 15 selected stocks.
Among the 15 selected stocks, at least 1 of them showed an absolute loss for the 5 years. So, formula (b) produced nothing.
The investor gets 5% for 5 years under formula (a), but after deducting the sales charge, the net return is only 2.1% for 5 years.
During these 5 years, the return from the 15 stocks is probably 30% or more. The customer gets 2.1%. If the customer had invested directly in the 15 stocks and taken the risk, the return would have been very attractive.
What is the logic of formula (b)? I cannot understand its logic. It seems to me, that it is designed to take advantage of the naive customers.
I cannot understand how the regulators can allow the unsavvy customers from buying into this type of product.
Tan Kin Lian
The formula used to compute this return is:
(a) 5% for 5 years or
(b) 45% of the smallest absolute performance of 1 stock out of 15 selected stocks.
Among the 15 selected stocks, at least 1 of them showed an absolute loss for the 5 years. So, formula (b) produced nothing.
The investor gets 5% for 5 years under formula (a), but after deducting the sales charge, the net return is only 2.1% for 5 years.
During these 5 years, the return from the 15 stocks is probably 30% or more. The customer gets 2.1%. If the customer had invested directly in the 15 stocks and taken the risk, the return would have been very attractive.
What is the logic of formula (b)? I cannot understand its logic. It seems to me, that it is designed to take advantage of the naive customers.
I cannot understand how the regulators can allow the unsavvy customers from buying into this type of product.
Tan Kin Lian
How the product works
| The bank invest about 85% of the money in a low risk bond that will give 100% of the capital guaranteed at the end of 5 years. It uses the remaining 15% for its marketing, purchase an option to give the 45% payout and for its profits. I have no clue how much is the option money, but it is likely to be less than 5%. At least 10% of the invested sum is wasted in expenses and profit for the bank. The chance of striking formula (b) is probably less than 5% anyway. |
RED Portal (20)
Click on the label "RED Portal" on the right to get a list of all the articles on the Real Estate Data. Do your research of the property market before you decide to buy, sell or rent any private property.
Public Forum on CPF Life
Venue: Park Mall, Meeting Room level 13 (opposite Dholby Ghaut MRT)
Date: 24 Oct 09 (Sat)
Time: 230 - 530 pm
Interested participants may register at clubs.ntu.edu.sg/rms
RED Portal (19) - Latest Transctions
How is the property market moving?
The RED Portal has a new feature. It shows the latest 100 transactions compared with the benchmark price (BMP). It gives an idea on the trend of prices in recent transactions for specific projects.
The transaction date shows the lodging of the caveat which can be between 1 to 3 months from the actual date of the initial negotiation.
Latest transactions.
The RED Portal has a new feature. It shows the latest 100 transactions compared with the benchmark price (BMP). It gives an idea on the trend of prices in recent transactions for specific projects.
The transaction date shows the lodging of the caveat which can be between 1 to 3 months from the actual date of the initial negotiation.
Latest transactions.
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