Spread in betting games

What are the spreads in some of the common betting games, such as 4D, Toto, Big Sweep, horse racing, football betting?

Here are the ways to find out:

a) 4D, Big Sweep. Assume that the operator sell all of the tickets. How much money is collected? How much money is paid out, adding up all the prizes of all the winning tickets. This represents the odds. I believe that the total payout is about 60% to 75% of the total bets. The balance goes towards expenses (e.g. salaries, printing, office, sales commission), taxes (i.e. paid to the Government) and profit to the operator.

b) Toto, horse racing, football betting. You are not able to calculate the bets and prizes from the structure of the betting game as there are some variables that cannot be directly calculated. Here, you can look at the accounts and find out the total amount that is collected from the bets and the total paid out as prizes to the winners.

Which game is best for betting? It depends on whether you are a real gambler (in which case, you choose a game with the highest payout ratio, such as roulette or poker), or whether you are a fun gambler (in which case, you choose a game that you enjoyed most, such as horse racing or football betting).

Tip: Always bet with money that you can afford to lose. Treat it as another form of entertainment. If you can spend $500 on a holiday, and you enjoy spending this amount on a betting game, go and bet - but make sure that the money can give you the enjoyment for a few hours or a day (and not in just a few minutes).

Tan Kin Lian

Fax the Benefit Illustration

Hi Mr Tan,
I have heard very good words about you and I really hope that you can spare some time to advise me on an investment issue.

I have just started working for a while so I can be considered as someone who can take high risk. I bought funds on my own and I want to get a savings plan as to diversify my money.

I came across this Savings Investment Plan by X.
Premium: $1,800/annum
Benefit Illustration based on 9% investment return: On the 11th year, should earn around 13k profit on top of accumulated premium.
Break even is expected between 7 to 9 years.

Although it is non-guaranteed, the agent said that the market prices just keep going up, and stocks prices also, so it is definitely a gain in long term of around 10-20 years.

Agent advised me to take out the earnings and capital on the 11th year (eg, when the prices are good), and keep remaining 1K to continue the plan and go another cycle.

I came around another savings endowment plan which gives a lot lower rate, eg. 11K profit after 15 years.

The Savings Investment Plan is Non-guaranteed at all and depends on the unit's bid prices and economy.

I am quite interested in the projected returns but I worry that it might not even give me enough to break even since it is entirely Non-guaranteed. I have heard some people say that some companies can don't give you any non-guaranteed amount and that will be a disaster.

What do you think about non-guaranteed amounts and how often do you see companies do that? Do you think that it is safe for me to take up this Savings Investment? Or should I just take up a savings endowment plan since I can invest on my own and earn more profits?

REPLY
Please fax the Benefit Illustration for this policy to me at 64053100.

You should ask the agent to explain the following matters to you:

1) How much is the distribution cost? This is the amount taken away from your savings to pay commission to the agent and other expenses. It should be not more than 50% of the annual premium.

2) What is the "effect of reduction" compared to the accumulated premium (at 5% and 9%) at the end of 25 years. This effect of deduction should not be more than 15% (to give good value to the customer).

Poor customer service in Financial Firms

This report was published in the Business Times two years ago. It is still relevant today. Consumers should avoid investing their savings in financial products that give a poor yield (due to the high commission paid to agents) and get poor customer service.

FISCA Research

A few new investment products have been introduced. Are they good or bad for consumers? What are the risks and charges?

FISCA has got its experts to do an evaluation of these products. The evaluation report will be published in the FISCA internal website, which is accessible only by members through a member login.

If you are interested to access the research, you have to be a member. The annual subscription is $36. You can join through www.fisca.sg

You will enjoy other useful benefits by being a FISCA member. Most importantly, you can attend the training courses and be educated about financial planning.

Tan Kin Lian

Difficult to make timing decisions

Sir,
I am an avid follower of your blog. It has been a source of enlightment that exposed the misleading practice that has been rampant especially in the last decade.

Currently I am in my mid twenty with stable income of a typical young graduates. I have saved approximately $10,000 so far. I am determinded to invest it wisely.

You has been highlighting the benefits of STI ETF which is now my choice due to its diversification and low charges. However recently the price has been rather high on 2600 - 2700 band. I am not sure whether I should buy it now OR wait for the price to go down?

REPLY
It is difficult to make timing decisions. I am not an expert on this matter.

For my personal investments, I have decided to sell some of my shares, as I expect that the Singapore and global economy has still not solved the underlying problems. I have decided to keep some of my spare money in cash.

Wish you all the best.