There are two letters in the Straits Times on the need for a liberal arts education in Singapore. One writer said that it helps people to think out of the box and to have the confidence to be different.
I agree with the observations. I found that, in general, most Singaporeans are not willing to think for themselves. They like to have instructions given to them in detail and will follow them specifically to the letter.
We need people who are more flexible, more independent in their thinking and more willing to take the responsibility to decide.
Tan Kin Lian
Links to letters in Straits Times Forum
http://www.straitstimes.com/STForum/Story/STIStory_513369.html
Sunday, April 11, 2010
Licenced moneylenders
There are a few letters in the Straits Times Forum about the high interest rate charged by licenced money lenders. The writers argued that the public needs to be protected against these unconscionable interest rate, that the free market does not work and desperate borrowers will accept the money on any terms. One writer is the president of Credit Counselling of Singapore, a non-profit body that helps borrowers to manage their debt.
This is another example of the failure of the market to give fair treatment of consumers. There are countless other examples. I hope that the Government realise this weakness and start to regulate the market more actively.
Tan Kin Lian
Links to the letters in the Straits Times Forum
http://www.straitstimes.com/STForum/Story/STIStory_513364.html
http://www.straitstimes.com/STForum/Story/STIStory_513366.html
This is another example of the failure of the market to give fair treatment of consumers. There are countless other examples. I hope that the Government realise this weakness and start to regulate the market more actively.
Tan Kin Lian
Links to the letters in the Straits Times Forum
http://www.straitstimes.com/STForum/Story/STIStory_513364.html
http://www.straitstimes.com/STForum/Story/STIStory_513366.html
Escalating property prices
The root cause is the low interest rate. It gave the impression that the high property prices are still affordable. At an interest rate of 2% on a property of $500,000 payable over 30 years, the monthly installment looks affordable at $1,966 a month. If interest rate increases to 5%, which is a more realistic level, the monthly installment increases by 31% to $2,581. Many people cannot afford this type of increase on a tight budget. But, it will come. Low interest rate cannot continue forever.
Look at it from another angle. The property prices should have been 30% lower, to be realistic based on the affordability of the population. During a period of low interest rate, the property developers increase the price and their marketing approach was to convince the buyer that it is affordable. It took a while for the buyers to buy into this thinking. The foreign buyers enter into the picture and started to move the property market.
This is followed by the speculators who see the chance to make a big profit. They buy the properties at the prevailing prices and expect to make a big profit by flipping over the properties on resale. Their demand pushes up the price. More people jump into the fray. This is called the "greed" factor.
The next batch of buyers are from the genuine end users who buy the prices at inflated value because they were afraid that they would increase further and be out of their financial reach. They jumped in and accept the high prices. This is called the "fear" factor. This is how the low interest rate could increase the property prices by 30%.
The next level of increase comes from stretching the repayment period from the prudent level of 20 years to a more risky level of 30 years. It accounts for another 23% of increase. So, it is possible for the property prices to be 60% higher than the affordable level. The high property prices mean that most households are spending too much of their money on their homes, leaving less money for other types of spending and for their retirement.
Are high property prices sustainable? Just look at what happened to Japan 20 years ago. The crash of the property market put the economy in the doldrums for 20 years. Look at what is happening in America and UK today. They will suffer the same fate. Do you think that Singapore will be any diffferent?
Tan Kin Lian
Look at it from another angle. The property prices should have been 30% lower, to be realistic based on the affordability of the population. During a period of low interest rate, the property developers increase the price and their marketing approach was to convince the buyer that it is affordable. It took a while for the buyers to buy into this thinking. The foreign buyers enter into the picture and started to move the property market.
This is followed by the speculators who see the chance to make a big profit. They buy the properties at the prevailing prices and expect to make a big profit by flipping over the properties on resale. Their demand pushes up the price. More people jump into the fray. This is called the "greed" factor.
The next batch of buyers are from the genuine end users who buy the prices at inflated value because they were afraid that they would increase further and be out of their financial reach. They jumped in and accept the high prices. This is called the "fear" factor. This is how the low interest rate could increase the property prices by 30%.
The next level of increase comes from stretching the repayment period from the prudent level of 20 years to a more risky level of 30 years. It accounts for another 23% of increase. So, it is possible for the property prices to be 60% higher than the affordable level. The high property prices mean that most households are spending too much of their money on their homes, leaving less money for other types of spending and for their retirement.
Are high property prices sustainable? Just look at what happened to Japan 20 years ago. The crash of the property market put the economy in the doldrums for 20 years. Look at what is happening in America and UK today. They will suffer the same fate. Do you think that Singapore will be any diffferent?
Tan Kin Lian
Avoid all land banking products
Dear Mr Tan,
I really hope to get a reply from you as I respect your experience in many areas.
There is a Singapore company called X and they sells plots of land in UK. We are genuine investor and like to have your advice if you heard about them and whether there is any issue on reputation or scam which we should be aware of. There will be risk as we understand but it is a scam, we should be to think carefully.
REPLY
You should avoid all land banking schemes It is not worth the risk. You cannot make a judgement of their reputation or rely on it.
There is a chapter in my book, Practical Guide on Financial Planning, that deal with unregulated products such as land banking and other get rick quick schemes. You can buy the book ($12) here.
I really hope to get a reply from you as I respect your experience in many areas.
There is a Singapore company called X and they sells plots of land in UK. We are genuine investor and like to have your advice if you heard about them and whether there is any issue on reputation or scam which we should be aware of. There will be risk as we understand but it is a scam, we should be to think carefully.
REPLY
You should avoid all land banking schemes It is not worth the risk. You cannot make a judgement of their reputation or rely on it.
There is a chapter in my book, Practical Guide on Financial Planning, that deal with unregulated products such as land banking and other get rick quick schemes. You can buy the book ($12) here.
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