A junior college student asked me to give a talk on financial planning to her school. My points will be quite simple:
1. Save 15% of your earnings.
2. Keep the money in a bank account to earn interest rate at 1% or 2%.
3 Do not invest the money in financial products that offer poor value
4. When you have sufficient savings, invest in a low cost unit trust (after you learn about the principles of long term investments.
5. When you get married and have family responsiblilities, but a term insurance policy to cover you for 3 to 5 years of your income.
Wednesday, July 16, 2008
Business ethics
If you know that the cost of your product is $100, and you decide to add a reasonable margin to cover your expense and profit, you will sell it for $150. This is the ethical way to do business.
If you mislead your customer about the true value of your product, you may be able to sell your product for $500. This is taking advantage of your customer and is unethical.
It is quite sad that the business world now finds it acceptable to take advantage of the customer and sell a product at an exorbitant price to make a big profit margin.
If you mislead your customer about the true value of your product, you may be able to sell your product for $500. This is taking advantage of your customer and is unethical.
It is quite sad that the business world now finds it acceptable to take advantage of the customer and sell a product at an exorbitant price to make a big profit margin.
Joke: Establish the fact
A man met a pretty girl in a holiday resort and asked her, "Will you sleep with me, if I give you $5,000". She smiled and replied, "yes".
The man continued, "Will you do it for $50". The girl got angry. "What do you take me for?"
He replied, "We have already established the fact. We are now negotiating the price."
The man continued, "Will you do it for $50". The girl got angry. "What do you take me for?"
He replied, "We have already established the fact. We are now negotiating the price."
Tuesday, July 15, 2008
Courtesy in use of mobile phone
When I was overseas, I received several calls on my mobile phone from one unidentified caller. As it is expensive to take a roaming call, I rejected these calls. The calls also arrived when I was busy with a meeting.
On my return to Singapore, I returned a call to this number. My call went into a voice mail. There was no clue of the party that made the call to me. I left a voice message for this person to call me back. I learnt later about the identity of the party and the company that made the call to me on a business matter.
I suggest the following telephone courtesy:
1. Do not a person on his mobile phone - unless that person knows you personally and is able to recognise your telephone number.
2. Send a SMS to the recipient to identify yourself and state the purpose and time of your intended call.
3. Make sure that your name is indentified in your voice mail.
On my return to Singapore, I returned a call to this number. My call went into a voice mail. There was no clue of the party that made the call to me. I left a voice message for this person to call me back. I learnt later about the identity of the party and the company that made the call to me on a business matter.
I suggest the following telephone courtesy:
1. Do not a person on his mobile phone - unless that person knows you personally and is able to recognise your telephone number.
2. Send a SMS to the recipient to identify yourself and state the purpose and time of your intended call.
3. Make sure that your name is indentified in your voice mail.
Joke: Telling the truth
The priest told the congregation, "Next week, my sermon will be about truthfulness. When you get home from church, you should read chapter 29 of Leviticus."
The following week, the priest asked, "Can those who have read chapter 29 of Leviticus raise your hands?" Most of the congregation raised their right hands.
The priest said, "Just as I expected. And this is why my sermon is about truthfulness. Leviticus has 27 chapters only!"
I hope that the business world tells the truth to their customers and do not keep changing their stories.
The following week, the priest asked, "Can those who have read chapter 29 of Leviticus raise your hands?" Most of the congregation raised their right hands.
The priest said, "Just as I expected. And this is why my sermon is about truthfulness. Leviticus has 27 chapters only!"
I hope that the business world tells the truth to their customers and do not keep changing their stories.
Weakness of the Global Financial System
During the Asian Financial Crisis, the fund managers created havoc in the Asian financial markets. It caused high volatility and sound companies to be bankrupted, due to a liquidity crisis.
The same situation is now happening in the US financial markets. Many fund managers are short selling the shares of Fannie Mae and Freddie Mac, causing great stress to the financial markets. The Securities Exchange Commission is introducing measures to stop the short selling of these shares.
A report said that the traders are creating rumours on Leyman, so that they shares can be beaten down.
My reading is that this credit crisis reflects a severe weakness of our current global financial system, which is subject to excessive speculation and manipulation. It is not reflective of the real economy. I hope that the lessons can be learnt and that shortcomings can be fixed.
The same situation is now happening in the US financial markets. Many fund managers are short selling the shares of Fannie Mae and Freddie Mac, causing great stress to the financial markets. The Securities Exchange Commission is introducing measures to stop the short selling of these shares.
A report said that the traders are creating rumours on Leyman, so that they shares can be beaten down.
My reading is that this credit crisis reflects a severe weakness of our current global financial system, which is subject to excessive speculation and manipulation. It is not reflective of the real economy. I hope that the lessons can be learnt and that shortcomings can be fixed.
Large profit margin on Shield plan
One large insurance company collected $100 million on its private Shield plan and pays only $20 million in claims. It is making a huge profit margin.
If you pay $500 a year on a Shield policy to this company, you will get back about $100 in claim from this company. If the average claim payout is $100, a fair premium is $150 and not $500.
This company is able to make its Shield plan looks very attractive, but in reality the payout is poor. The consumers are not able to know about the reality until the time of making a claim.
You can buy another medical insurance plan that offers a higher claim to premium ratio, for example basic Medishield. You will pay a much lower premium. You can keep the rest of the premium in Medisave to earn 5% interest. You will need the savings for your future.
If you pay $500 a year on a Shield policy to this company, you will get back about $100 in claim from this company. If the average claim payout is $100, a fair premium is $150 and not $500.
This company is able to make its Shield plan looks very attractive, but in reality the payout is poor. The consumers are not able to know about the reality until the time of making a claim.
You can buy another medical insurance plan that offers a higher claim to premium ratio, for example basic Medishield. You will pay a much lower premium. You can keep the rest of the premium in Medisave to earn 5% interest. You will need the savings for your future.
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