Contact person for Kirby McInerney

Dear Mr. Tan,

Of late, I have received calls from a few investors (who have read your blog about me) that they have been approached by an unknown person  saying that he also represents Kirby McInerney interests and that he could also help to facilitate.  

For all intent and purpose, perhaps you could inform all investors in your blog to direct their queries and address their concerns only to me.  They should not be talking to anyone else in Singapore who may mislead them.   Thank you

Teo Guan Hock

email: tguanhoc@singnet.com.sg 

Earthquakes are now quite frequent

I saw these news reports in Channel News Asia:

a. Taiwan quake causes millions of dollars in damage. A powerful earthquake that rocked southern Taiwan caused millions of dollars in damage to infrastructure and business operations, officials and companies said Friday.

b. Strong earthquake strikes off Indonesia. A 6.5-magnitude quake struck late Friday off the coast of Sumatra in Indonesia, seismologists said, but no tsunami alert was issued and there were no reports of damage or injuries.

We seem to have many earthquakes in recent years - starting form the earthquake that caused the Asian Tsunami in 2005 followed the big earthquakes in Sichuan, Haiti and Chile.

Any comments?

More grads join jobless queues

Read this article by Seah Cheang Nee published in The Star, Malaysia.

Investment tips for retirees

I write this article to help retirees, who are not savvy in investing, to decide on how to invest their savings to get a monthly income for a lifetime and leave behind some balance for their children and grand children. Should they buy a life annuity? If not, how should they invest their money?

Calculate the total amount of your assets, excluding the flat or house that you now live in. Estimate the monthly income that you need to live comfortably. If your total assets is more than 300 times of your monthly income, you are quite comfortable. For example, if you need $1,000 a month, you need more than $300,000 in savings (i.e. personal savings and CPF).

Another way to look at this matter is to take your total assets and divide by 300 to get the monthly income. Will this be sufficient to meet your living expenses?

If you have more than this ratio of assets that can be invested, you can manage your own investments. The best choice is to invest in a low cost investment fund, such as the STI exchange traded fund that is available from the Singapore Exchange (SGX). This fund is invested in the top 30 shares listed in SGX. It is well diversified and has a low expense ratio of less than 0.5% per annum.  It will earn a market rate of return, which is likely to average more than 5% over the long term, net of expenses.

If you invest all of your savings in the ETF, you can sell 1,000 shares to realize money to spend at regular intervals. If you need $1,500 a month, the sale of 1,000 shares will provide about $2,800 which can last nearly two months.

If your  ratio of assets to monthly income is less than 300 times, you may have to consider investing in a life annuity. The best annuity is provided by CPF Life. It provides an investment yield of about 4% and has low expense ratio. It operates on a mutual basis and shares the actual experience of the fund fairly among all the annuitants, i.e. it is not taken away as profits for shareholders.

Some people are uncertain about the choice of the four options. Look at the amount that you will get under each option and choose the option that suits your need. Do not try to calculate which option gives you the best value, as you really do not know how long your future lifespan is.

If your health is poor, relative to your age, you should avoid CPF Life and keep your money under the Retirement Account to be withdrawn monthly.  If you are in fairly good health for your age,  you can choose any of the option under CPF Life and leave the worry about future life expectancy and investments to CPF, instead of trying to manage the money yourself.

If you have to buy a life annuity from an insurance company, you have to consider the following - how much of the annuity payout is guaranteed and how much is variable? What is the amount taken away by the insurance company to pay its expenses, distribution cost and profit for shareholders?  If the answers to these questions are vague, or if the amount that is taken away is more than 0.2% per annum of your invested sum,  the annuity is likely to give poor value.

There is a chapter on selecting a life annuity in my book, Practical Guide on Financial Planning. It is available in the major bookstores and can be ordered online here.

Tan Kin Lian

China must reverse inequalities

By Michael Bristow

BBC News, Beijing


Chinese Premier Wen Jiabao has said China must reverse its widening income gap between rich and poor.
He said benefits of a growing economy - expected to expand by 8% this year - should be distributed more fairly.
In a major speech at the start of China's annual parliamentary session, the premier also said the economy needed restructuring.
He wants Chinese firms to improve their ability to innovate, producing high-tech and high-quality products.

The premier's comments came in a wide-ranging speech delivered in Beijing's Great Hall of the People, where the largely ceremonial parliamentary session is being held.
In the keynote speech, Mr Wen reviewed the government's work over the past 12 months and set out its policy goals for the coming year.


Registration reform
The speech touched on many issues, but on a number of occasions the premier spoke about the need to make China a fairer society.
"We will not only make the 'pie' of social wealth bigger by developing the economy, but also distribute it well," Mr Wen told about 3,000 delegates, returning to a theme that he has often spoken about during his premiership.
"[We will] resolutely reverse the widening income gap," he added later, in a speech that lasted more than two hours.
As part of that project, the premier said China would reform the household registration system that classifies people as either city or rural dwellers.
This controversial system means many migrant workers - farmers who travel to towns and cities to find better-paid work - are unable to get proper services.
"[We will] gradually ensure that they receive the same treatment as urban residents in areas such as pay, children's education, healthcare, housing and social security," he said.
But Mr Wen did not outline what policies would be introduced to achieve that aim, and when they would come into force.
And, importantly, he said reforms would only be carried out in towns and smaller cities, suggesting the system would remain in place in big urban centres such as Beijing and Shanghai.
Mr Wen also addressed what he called a "complex situation" facing the economy, which he said should expand by 8% this year.


Fuelled by innovation
Last year China was desperate to keep the economy growing following a global downturn that left many Chinese people without jobs.
But now, having weathered the worst of that crisis, Premier Wen said China needed to concentrate on restructuring the economy.
"This is a crucial year for…accelerating the transformation of the pattern of economic development," he said.
He wants future growth to be fuelled by innovation.
China should also expand consumer demand by getting people to spend on such things as tourism, fitness and other services.
Delegates to the Chinese parliament are selected, not elected, but in his speech Premier Wen indicated that he does listen to those outside the government.
Many people across China are currently concerned about rising house prices that mean many cannot afford a home.Mr Wen said China would do something about it.

eGovernment adds to stress and cost

As a director of a small company, I am required to submit application forms for Ministry of Manpower, Inland Revenue and other agencies. They expect me to log into their website using my Sing Pass, and to enter the details in the application form.

In the real world, the paper forms are completed by an office staff and submitted to a director for signature. In the e-Government, they expect the director to complete the form by entering all the details, just like an office staff. This is a big waste of time for the director and is likely to lead to many mistakes.

The e-Government environment should follow the real world and allow a staff to complete the details in the form and then submit it electronically to a director to "e-sign" the form, which can be done by entering the Sing Pass ID and password.

I have given this suggestion to the Infocomm Development Authority (IDA) but was told that these specific applications are under the control of the agency and is outside of the influence of IDA. This is typical of the "turf" mentality of Singapore organisations.

I know that for some applications, it is possible for the director to authorise a staff to submit the forms on behalf of the director. However, this is not practical in many situations and is tentamount to giving the check book and check signing authority to the staff!

The private sector has to work under stress and waste a lot of valuable time complying with the requirements of government agencies. With this type of waste, it is no wonder that the cost of doing business is so high and life is so stressful in Singapore!

Tan Kin Lian

Books by Tan Kin Lian

My books on financial planning and intelligence quiz are sold at the following bookstores:

1. Harris

2. MPH

3. Kinokuniya 

4. Times bookstores

5. Popular

They can also be ordered from my internet shop.