Monday, March 8, 2010

Personal budget

I need some real life examples from Singaporeans who are able to save at least 15% of their earnings, in addition to contributing to CPF: Please send your details to kinlian@gmail.com

Single
1. Your monthly income
2. Contribution to parents
3. Essential personal expenses - e.g. travel, food, clothes
4. Repayment of loans - type and amount
5. Monthly savings
6. Balance available for holidays and other discretionary items

Family

1. Your monthly income incluidng spouse 
2. Number of children
3. Essential personal expenses - e.g. travel, food, clothes, mobilephone
4. Repayment of loans - type and amount, e.g. house, car
5. Household expenses
6. Car or transport expenses
7. Expenses of children
8. Monthly savings
9. Balance available for holidays and other discretionary items

Cost of owning a car

I need your assistance to give some real life examples of the cost of owning a car. Please send your case study to me at kinlian@gmail.com.

1. Cost of buying your car - new/ used?
2. Initial payment
3. Loan taken, repayment period, interest, monthly payment
4. Cost of petrol per month
5. Cost of insurance (yearly)
6. Cost of parking, ERP per month (on average)
7. Cost of repairs

Advertising and impact on policy bonus

When a business spends a lot of money to advertise its products or improve its corporate image, the money comes from the shareholders. They hope to attract more customers and earn the profit to cover the advertising cost.

The situation is different when it comes to large advertising by life insurance companies. The marketing expenses comes from the existing policyholders. The large amount that is spent will have a big impact on the bonuses that the policyholders can expect to receive on their savings. The more that is spent, the lower is the bonus.

In recent years, many life insurance companies have reduced their bonus rates significantly, but they continue to spend a lot of money on their advertisements. If the insurance company is truly looking after the interest of its policyholders, they should be increasing the bonus rates, rather than spending money on advertisements and marketing that do not benefit the existing policyholders.

If you find that you insurance company has big advertisements, you should ask this question. Are they spending my money? Is this affecting my policy bonus? Can I continue to trust this insurance company to look after my interest?

I have decided to terminate most of my life insurance policies, as I do not like the large sums that are being spent on advertising, marketing and image building (at the expense of existing policyholders) and the lower rates of bonuses that are now being given to the policyholders.

Tan Kin Lian

Difficulty in submitting Income Tax statements

I just submitted my income tax statement to IRAS through e-filing. Like in previous years, I had a difficult time. The technology used is good for IRAS  but is troublesome for the tax payer.

Here are my difficulties:

a) I received consultancy income from two sources and I do not know if the client is auto-filing my income. To find out, I had to search through a long PDF document. Rather than search this document, I prefer to enter the amount myself. But the form does not allow me to state the name of the client. If they enter the amount separately through auto-filing, I would have to pay tax twice on the same source.

b) There are a few places where I missed a entire section because IRAS hide the details under a button, e.g. rental income and relief. I was reminded by the IRAS prompt, but why hide them in the first place?

c) After entering the details of my tax returns, I click on one button my mistake (as it was not clear) and found, to my horror, that all my entries were deleted. I had to painfully enter all the fields again.

d) I managed to get to the submission form on my second attempt. I found, to my surprise, that the claim for life insurance premium was not shown. I was quite sure that I had entered the figures. I search the form twice and managed to find a button called "Amend".  After several clicks and doing my best to avoid any mistake, I managed to get to the life insurance form. I found that my earlier entry was recorded - but why did IRAS mislead me with a blank amount in the final submission form?

IRAS should realise the stress and trouble their technology is giving to the tax payer. As we submit the form only once a year, we should not be expected to learn the technical features of e-filing.  IRAS seems to forget that the taxpayer has other responsibilities, such as keeping records of all items of income and payments, and it is unfair for IRAS to add the hassle of e-filing on the tax payer.

Tan Kin Lian

Mortgage Protector from Aviva

Dear Mr Tan
I would appreciate if you can review the above insurance plan for me. (Attached are two benefit illustrations for the Morgage Protector plans from Aviva).

REPLY
I compared the monthly premium with the benchmark premium (for decreasing term insurance) shown in my book, Practical Guide on Practical Insurance. I find the premium rate charged for Aviva for the Mortgage Protector policy to be reasonable.

However, if I were in your shoes, I would probably buy the Mortgage Protector only, without the Critical Illness Accelerator, as the additional premium of 80% does not seem to be worth paying.

You can buy my book here.

Appreciation to Minister Mah Bow Tan


William Tay
'National Development Minister Mah Bow Tan's remarkable story about his childhood years is a lesson for the younger generation. Despite his humble beginnings, he was able to uplift himself to become a government minister. This is testimony to our system of meritocracy which has enabled talented young people from humble backgrounds to rise up and serve the nation.'
Low Lee Siang
I AM a 58-year-old Singaporean who shed tears on reading last Saturday's article, 'Mah's own upgrading story', in which National Development Minister Mah Bow Tan recounted his difficult childhood years growing up in various housing types. Today, I live in an HDB maisonette. Thank you, Singapore.