FISCA course - Investing for the Long Term

www.fisca.sg

FISCA will be organising a course, "Investing for the Long Term" from August (tentative). It will cover the following topics:

• Principles of long term investing, compounding and dollar cost averaging
• Earn a better yield by investing in equities
• Reduce risk by investing for the long term in a low cost, diversified fund
• How to access information from the SGX website
• How to get information about ETFs, REITS and  blue chip shares (with high dividend yield)
• How to open an account with a stockbroker (using a remisier or an online account)
• Expenses of investing

There will be practical exercises and a question & answer session.

More details will be available soon in the FISCA website. If you are interested, please register your particulars in this survey now.

No retirement age

Mr. Lee Kuan Yew said that old people should continue to work. He quoted himself as an example.

My view
If old people in Singapore can earn $3 million a year, they would not mind working until they are 100 years old!

Here is another person's view.

Discharge of Personal Guarantee

Read this story about the trouble given to a consumer to get a discharge of a personal guarantee given to a bank.

My view
Many financial institutions are so engrossed in making profits that they forget about the hassle faced by their customers when they neglect to take steps to relief the customers of the liability under a personal guarantee.

Pyramid scheme

Read this story.

My view
The authority in Malaysia is more active in taking early action to prevent investment fraud and scams. In Singapore, we face shortage of manpower in the law enforcement agencies - and some people say that they are focusing on the wrong priorities.

A bloated financial sector

I heard a discussion over CNBC. A guest commentator remarked that 25% of the US economy is in the financial sector that does not produce anything. This explains why the economic situation is so bad in the USA.

My view
Actually, the situation is bad in many countries, including Singapore. The finance sector is too big, and is distorting the rest of the economy. Who wants to do the real work, when it is easy to make money by inflating the price of shares and properties? This is similar to operating a bad casino - easy to make money by pandering to the greed and gambling habits of the people. The biggest winners are the operators of the casino - i.e. the big tycoons in the financial sector.

Theft of motor vehicles

The situation is quite bad in Malaysia with almost 9,000 vehicles stolen in 2009. Read this report.

Slow response to an accident

Read this letter. The ambulance took 30 minutes and the police took 45 minutes to arrive at the scene of the accident.

My view
There is a shortage of manpower in the Police and the emergency services. Too many people want to join the banking and financial sector (for the high pay) and too few wants to do the ground work. The traffic congestion in Singapore adds to this situation.

Singapore is now heading in the wrong direction and things will get worse, unless the top people wake up and listen to the people on the ground.

Car Pools

I am developing a service to help people to car pool. It will be placed in the Easysearch portal, i.e. www.easysearch.sg. Are there already existing car pooling sites in Singapore that are well used? What do you like to see in this new website? Please give your comments here or send your views to kinlian@gmail.com.

Update
I checked Google and and saw many car pool sites in Singapore. See
http://www.google.com/search?q=car+pools+singapore&rls=com.microsoft:en-US:{referrer:source?}&ie=UTF-8&oe=UTF-8&sourceid=ie7&rlz=1I7ADBR

However, they do not seem to organise the car pooling by sector. I will use postal code to identify people who live or work close to each other. This will help them to search each other person better.

Motor insurance - get lower premium

Mr. Tan,
I just got my renewal for my motor policy. You know what - the premium increased by more than 15% and I did not even make any claim. I called the insurance company and they were arrogant - like take it or leave it. Where can I get a lower premium rate? Motoring cost keeps increasing - petrol, ERP and now insurance!

REPLY
Go to my website, www.tankinlian.com and click on "Ask Mr. Tan". Type "motor" in the search box. You will find a FAQ on motor insurance. Click on "view" to read the document. You will find the link to some insurance companies that can give you an online quote on motor insurance. You may be able to get a cheaper premium.

An alternative is for you to buy non-comprehensive insurance and enjoy a reduction of about 35% in the premium - but you have to pay for the repair cost of your own car. If you have a regular workshop, you can use them for minor repairs. And drive carefully.

Invest for the Long Term

I have given some tips on how you can choose suitable shares or funds to invest for the long term, when you decide to handle your own investment, instead of getting a low yield for your savings in an insurance policy.

Go to www.tankinlian.com, click on "Ask Mr. Tan" and search for "Invest for the Long Term".

Warren Buffett's Philantrophic Pledge

Read this pledge.

My view
This is what makes America great! While Singapore leaders want to follow the free market practice of America, we should also follow their examples in philantrophy and in protecting the rights and welfare of consumers.

Unjustified billings

Here are two letters on the invoices sent out by Singapore Information Services to businesses that did not subscribe for their services:

http://www.straitstimes.com/STForum/OnlineStory/STIStory_558527.html
http://www.businesstimes.com.sg/sub/news/story/0,4574,396946,00.html

Based on my common sense understanding of the law, a business that send out an invoice without justification could be considered as cheating. They do  not have the power to impose a service on another party without the other party's consent and to bill the party for that service.  I hope that our attorney general's office will study this issue to see if any criminal offence has been committed.

I hope that they are not too busy studying how to frame a charge for illegal hawking against some people who sell the newsletters of political parties.

Tan Kin Lian

Trading in financial products

Hi Mr Tan

What are your thougths about all these "trading expert" that we see everyday in the newspaper advertsing their courses and claiming to make returns of 100% -1000% easily?


They are many PMET that turn to such course hoping to find a way out of their financial challenges only to find that after spending $3k to $5k, they are nowhere near being financially free but some ended up losing even more money trading FX, derivatives  (options & futures) and stock market.


Why isn't the authorities like MAS putting a stop to this kind of nonsense? If the trainers are so good, they should be working for Temasek of GIC and helping them recover our billions of dollars lost!
Santi

My view

This is very sad.  However, it is difficult for MAS to put a stop to this type of training activity. It is better for the PMETs to realise that trading in financial products is likely to lead to losses over the long term.  

Being ignorant of the financial market, the novice traders are likely to be beaten by the full time professionals. It is like playing poker against a card shark. This is worse than gambling in a casino. 

Poor yield from Vivolife policy

A policyholder in mid 30s showed me a benefit illustration of a Vivolife policy (whole life policy with premiums payable for 25 years).

The net yield to the policyholder is between 1% to 2% and the reduction from the gross yield is almost 3%. I find this policy to be too expensive and gives a poor yield to the policyholder. The cash value comprise of a guaranteed portion and a non-guaranteed portion. If the bonus is reduced in the future, i.e. the non-guaranteed portion, the net yield will be even lower.  It is better to buy a term insurance and invest the difference in a low cost fund. See Practical Guide on Financial Planning.

Year  Premium  Cash Value  Gross Yield   Net Yield   Reduction
 25     2727     77021        3.75%        0.93%       2.82%

 25     2727     90419        5.25%        2.11%       3.14%