Financial Literacy

Each day, I receive a few requests from consumers asking for advice. In many cases, I find the following weaknesses:

• The standard of financial literacy is quite low
• The consumer likes someone to decide for them.

It is risky for consumers to be so dependent on somebody else for advice. They are likely to fall prey to unscrupulous people who can take them for a ride. They can be harmed financially and lose a lot of money that should be earned on their savings.

The consumers do not know what kind of question that can ask or should not ask from another person. For example, it is difficult for anybody to know how high the stock market or gold will go, and when they will reverse. If you are not familiar, do not take this type of investment risk.

The consumer should also be aware about the vested interest of the people that they are asking for advice. If there is a vested interest, the consumer is likely to get bad advice. Your loss becomes the profit of the vested party.

There are some consumers who want me to give advice for free, when they are not even prepared to read the FAQ in my website (which is free anyway) or to buy my Financial Planning book for $12 or attend the FISCA educational talk for $30. This is dangerous. They will fall prey to a dishonest cheat sometime in the future.

Financial planning book can be bought here.

Tan Kin Lian

Damage caused by GRC system

My friend made this observation - the PAP MPs were good in the old days. They became different after the GRC system was adopted. Under the GRC system, they do not need to look after the voters, and only need to please one top man. The gulf between the PAP and the people widened over the years since.

Singapore General Election Portal - the secret on how it is maintained

Dear Mr. Tan,
How do you manage to put up the interesting articles in the General Election Portal? Although I am able to find the same articles by reading all the blog feeds, it is useful to go to your portal as you have made a good summary of the important articles. Saves me the time of reading through so many feeds.

REPLY
I am fortunate to have the assistance of Gerald. He searches all the feeds every morning and extracts the articles that are relevant to my portal and my blog. He also summarizes the articles for me. It is easy for me to post them in the portal. There is another person (CH) who helps me to manage the portal.

Bookmark this to keep abreast of the issues for the general election:
www.easyapps.sg/sgep/latest.aspx

SM Goh and Term Insurance - 3 letters

Read my letter to the Straits Times Forum and two follow up letters here:
www.tankinlian.com/latest.aspx

Amazing numbers

Amaze your friends with these magic cards. Ask your friend to guess a number between 1 to 99. Show him the cards and ask your fiend to pick out the cards that contain the secret number. You can guess the number. The secret is shown in my website. 


www.tankinlian.com/latest.aspx (Search for Amazing Numbers)

Private shield and employer benefits

In an article in the Sunday Times, the editor recommended that the consumer should buy a Private Shield now, even if the consumer is provided with medical benefits by the employer. I find this to be a wasteful practice.

If the private shield cost $300 a year, the total premium, including interest at 4% per annum payable on the Medisave account, will amount to $22,000 at the end of 35 years. This is a lot of money to give away to a cover that is not really needed.

Although the Minister for Health did make a claim of $20,000 on his Private Shield policy, this is not a common case. For each person who makes a claim, there must be 10 other people who did not make the claim. The Minister is not covered for medical benefits by the employer, so a private shield is necessary.

This is not the case for many people in the private sector who are provided with medical benefits by the employer. Do not waste your money.

The consumer is told by the insurer or the agent that if they buy the private shield at a young age, they are guaranteed with the cover when they grow old. This is only partly true. The cost of private shield above age 65 is so costly (maybe $2,000 or more a year) that many retirees cannot afford it. They are likely to downgrade to Medisheld at that time. So, the consumer will be wasting $22,000, but it will be a lot of commission and profits for the agent and the insurer.

Read my articles in www.tankinlian.com/ask.aspx. Search for "Shield". Remember - even if you pay the premium, you will not find it easy to make a claim under some situations.

Tan Kin Lian