Tuesday, October 26, 2010
What needs to be insured?
Know what needs to be insured and avoid paying premium for insurance that is not really needed or takes away too much of your money that should go into personal saving. Use this knowledge to test if your insurance agent is looking after your interest or his own commission.
Why mortgage insurance is so important
A mortgage insurance ensures that the owners or occupiers of the property
can continue owning the house despite the occurrence of a catastrophic event.
Why insurers, agents may turn a deaf ear to SM Goh's appeal
If an insurer or its agent can earn so much by selling a whole-life or investment-linked policy,
why should they want to sell term insurance?
If MAS wishes to give better protection to consumers,
it should carry out a survey to find out
if the consumers are being given the proper advice and being charged fairly
on the life insurance products.
Tan Kin Lian
http://www.straitstimes.com/
If MAS wishes to give better protection to consumers,
it should carry out a survey to find out
if the consumers are being given the proper advice and being charged fairly
on the life insurance products.
Tan Kin Lian
http://www.straitstimes.com/
Higher inflation and higher interest rate
This article explains that the prospect of higher inflation and higher interest rate in the near future. With higher interest rate, you will have to pay more for your mortgage installments. Be careful.
http://www.bloomberg.com/news/print/2010-10-26/bernanke-s-next-round-of-asset-purchases-risks-jimmy-carter-like-inflation.html
http://www.bloomberg.com/news/print/2010-10-26/bernanke-s-next-round-of-asset-purchases-risks-jimmy-carter-like-inflation.html
Getting Revenge Against Your Insurance Company
A new Accenture survey suggests that insurance fraud may be how some consumers
retaliate against poor service from insurance companies.
Insurers' barriers to health protection
I TOTALLY agree with Senior Minister Goh Chok Tong's call to insurers
("Keep insurance affordable: SM Goh"; last Saturday),
so that Singaporeans are not under-insured.
Insurers have put many obstacles for Singaporeans to be sufficiently insured,
especially those with less than a clean bill of health.
I have been insured with NTUC Income under the Basic Medishield plan, but realise that...
Victor Goh
http://www.straitstimes.com/
("Keep insurance affordable: SM Goh"; last Saturday),
so that Singaporeans are not under-insured.
Insurers have put many obstacles for Singaporeans to be sufficiently insured,
especially those with less than a clean bill of health.
I have been insured with NTUC Income under the Basic Medishield plan, but realise that...
Victor Goh
http://www.straitstimes.com/
Big banks and Europe
Too big to fail? Europe is facing problems with some big banks.
http://www.bloomberg.com/news/2010-10-25/four-banks-should-plan-to-bail-out-of-europe-commentary-by-matthew-lynn.html
http://www.bloomberg.com/news/2010-10-25/four-banks-should-plan-to-bail-out-of-europe-commentary-by-matthew-lynn.html
Benchmark for deduction - life insurance policy
I advise consumers to look at the benefit illustration for a whole life or investment-linked policy and check that the effect of deduction does not exceed 20% of the accumulated premium at the end of 25 years. This article explains why I chose 25 years as a gauge and how I derive the benchmark of 20%. It also give the benchmark for other durations. It is the SECRET that many consumers are looking for.
Pain of higher interest rate
Suppose you took a loan of $400,000 to buy a HDB flat and pay over 25 years at 2.6% interest. Your monthly installment is $1,780. If your family income (net of CPF contribution) is $4,500, the monthly installment takes away 40% of your income. You may think that it is still manageable.
Many people are paying 40% (or more) of their family income towards the mortgage payment. They use their CPF contributions and top it with their cash contribution.
What will happen if interest rate start to rise? Thirty years ago, borrowers were paying interest at 8% on their mortgage loan.
Let us just look at the impact of interest rate at 5% per annum. Your monthly would change to $2,250. This would represents 50% of your family income. The increase in interest rate will take away 10% of their net income. Can you afford this higher payment?
What happens when interest rate goes up to 7%? The monthly payment will jump to $$2,650. This will represent 60% of your income. The jump in interest rate from 2.6% to 7% will take away 20% of your income.
Will interest rate increase to 5%? Quite likely. Will it increase to 7%. Maybe. Some countries have interest rate at 10% or higher in recent years. Who says that this may not happen?
Lesson: avoid paying a high price for your property. make sure that the price does not exceed 5 years of your income. If your income is $4,500 a month, do not pay more than $270,000 for your property. Certainly, $400,000 is too much, and too dangerous!
Tan Kin Lian
Many people are paying 40% (or more) of their family income towards the mortgage payment. They use their CPF contributions and top it with their cash contribution.
What will happen if interest rate start to rise? Thirty years ago, borrowers were paying interest at 8% on their mortgage loan.
Let us just look at the impact of interest rate at 5% per annum. Your monthly would change to $2,250. This would represents 50% of your family income. The increase in interest rate will take away 10% of their net income. Can you afford this higher payment?
What happens when interest rate goes up to 7%? The monthly payment will jump to $$2,650. This will represent 60% of your income. The jump in interest rate from 2.6% to 7% will take away 20% of your income.
Will interest rate increase to 5%? Quite likely. Will it increase to 7%. Maybe. Some countries have interest rate at 10% or higher in recent years. Who says that this may not happen?
Lesson: avoid paying a high price for your property. make sure that the price does not exceed 5 years of your income. If your income is $4,500 a month, do not pay more than $270,000 for your property. Certainly, $400,000 is too much, and too dangerous!
Tan Kin Lian
The less you know about finance the better
Everywhere you turn these days, some bigwig policymaker is talking about
the importance of financial literacy education.
The only problem is, there’s a fair amount of evidence that a lot of what we do
to teach better financial habits, like courses in high school, doesn't work.
Maybe we should ignore real-world complexity altogether
and just teach people financial rules of thumb.
http://blogs.reuters.com/
The soft or confrontational approach?
A place for both the considered and the confrontational
Securities Investors Association (Singapore) with its softer approach
can rightly claim credit for its more recent achievements.
But it would be unfair to deny due recognition to those early trailblazers
whose style was more "confrontational" .
Narayana Narayana
Dealing with Wall Street
15 Inviolable Rules for Dealing with Wall Street
Those of you who have to interact with the sharks should learn the following rules:
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