Some readers argued that certain products are not inherently bad. They are suitable for certain people, according to their needs. This is only partly true.
Here are my points:
> A product is bad, if it is designed to "cheat" people. This type of product has high charges that are hidden from the consumer.
> These products are "pushed" by agents or marketeers, who mislead the consumer through their "marketing techniques".
Most life insurance "savings" products and structured financial products fall in this category.
The good products are those that do not need to be marketed. They are bought by the consumer, usually over the counter. They include:
> bank deposits
> government bonds
> low cost unit trust
> term insurance products
Monday, September 8, 2008
Advice on Vivolife
Hi Mr. Tan,
You must be familiar with NTUC Vivolive. An agent tried to sell it to me...Is it of any good value? It seems to be a whole life policy.
REPLY
You should ask the agent to explain the following figures to you:
1. What is the value of the premium accumulated at 3.75% and 5.25% after 20 years or at age 65 ?
2. What is the projected cash value of the prolicy after 20 years or at age 65
3. What is the percentage reduction from the value of the premium represented by the cash value?
4. If the percentage reduction is more than 30%, the policy is expensive.
5. What is the amount deducted from your policy as distribution cost (mainly to pay commission to the agent)
Read this FAQ:
http://www.tankinlian.com/faq/true.html- Hide quoted text -
You must be familiar with NTUC Vivolive. An agent tried to sell it to me...Is it of any good value? It seems to be a whole life policy.
REPLY
You should ask the agent to explain the following figures to you:
1. What is the value of the premium accumulated at 3.75% and 5.25% after 20 years or at age 65 ?
2. What is the projected cash value of the prolicy after 20 years or at age 65
3. What is the percentage reduction from the value of the premium represented by the cash value?
4. If the percentage reduction is more than 30%, the policy is expensive.
5. What is the amount deducted from your policy as distribution cost (mainly to pay commission to the agent)
Read this FAQ:
http://www.tankinlian.com/faq/true.html- Hide quoted text -
Big exchange loss in a Dual Currency Investment
Hi Mr. Tan,
I invested in a Dual Currency Investment two years ago and made a good return. Recently, the AUD depreciated against the USD. All of my investments got converted to AUD at 0.90. The exchange rate has now dropped further to 0.816, which makes the unrealized forex loss to US$50K.
What strategy should I take to minimized the loss? Right now, while waiting for the AUD to do better against USD, I have placed my money into a weekly time deposit earning almost 6%p.a.
REPLY
It is all right to keep the AUD in fixed deposit and earn 6% interest. There is a chance that it will recover, as it has dropped by more than 10%.
If you had invested in the AUD directly, instead of a DCI investment during the past two years, you would have made an exchange gain that is more than the loss that you suffer now. But, if you invested in the DCI, your gain would have been much lower.
I usually advise people to avoid DCI, as the investor is taking the risk of a loss (like you did), it was not able to enjoy the full appreciation (if the currency goes up).
Read this FAQ:
http://www.tankinlian.com/faq/duali.html
I invested in a Dual Currency Investment two years ago and made a good return. Recently, the AUD depreciated against the USD. All of my investments got converted to AUD at 0.90. The exchange rate has now dropped further to 0.816, which makes the unrealized forex loss to US$50K.
What strategy should I take to minimized the loss? Right now, while waiting for the AUD to do better against USD, I have placed my money into a weekly time deposit earning almost 6%p.a.
REPLY
It is all right to keep the AUD in fixed deposit and earn 6% interest. There is a chance that it will recover, as it has dropped by more than 10%.
If you had invested in the AUD directly, instead of a DCI investment during the past two years, you would have made an exchange gain that is more than the loss that you suffer now. But, if you invested in the DCI, your gain would have been much lower.
I usually advise people to avoid DCI, as the investor is taking the risk of a loss (like you did), it was not able to enjoy the full appreciation (if the currency goes up).
Read this FAQ:
http://www.tankinlian.com/faq/duali.html
Choice of term or personal accident insurance
Dear Mr. Tan,
I have read your blog and website. Your articles are really helpful to individual investors at the grassroots.
I have term life and personal accident policy. You mentioned that it's reasonable to have sum assumed 5 to 10 times of annual income. Does this ceiling apply to life and personal accident respectively or separately? Should the aggregate sum assumed be taken to make up the ceiling?
REPLY
If you can afford the premium, you should buy term insurance for the target sum of 5 to 10 years of salary. Term insurance covers death from accidents and illness.
If you with to reduce the cost, you can insure the target sum partly by term insurance and partly by accident.
You should get the quotation of the cost and make your decision based on the figures.
I have read your blog and website. Your articles are really helpful to individual investors at the grassroots.
I have term life and personal accident policy. You mentioned that it's reasonable to have sum assumed 5 to 10 times of annual income. Does this ceiling apply to life and personal accident respectively or separately? Should the aggregate sum assumed be taken to make up the ceiling?
REPLY
If you can afford the premium, you should buy term insurance for the target sum of 5 to 10 years of salary. Term insurance covers death from accidents and illness.
If you with to reduce the cost, you can insure the target sum partly by term insurance and partly by accident.
You should get the quotation of the cost and make your decision based on the figures.
Sunday, September 7, 2008
Investing in NZD
Dear Mr Tan
What is your opinion of investing in the NZD at this point of time? What are the risks and rewards involved?
REPLY
Read this FAQ
http://www.tankinlian.com/faq/foreign.html
The NZD has corrected a lot from its high level. This seems to be an attractive level for a new investment.
What is your opinion of investing in the NZD at this point of time? What are the risks and rewards involved?
REPLY
Read this FAQ
http://www.tankinlian.com/faq/foreign.html
The NZD has corrected a lot from its high level. This seems to be an attractive level for a new investment.
Saturday, September 6, 2008
Another scam: Beware of Push Pockets ...
I RECEIVED THIS E-MAIL
While the scams are happening in Malaysia , it's a lesson worth noting for anyone of you who loves to travel. Be alert!!
I am sure you all have heard of 'pick pocket'. Now there is a new trend, 'push pocket'.
A few days ago a new type of crime has surfaced in town. It goes something like this:-
Somebody slips a hand-phone into your pocket, sometimes it could be just a wallet with an identity card and a few Ringgit.
A few minutes later, the 'owner' comes up and confronts you, the 'thief'. He makes a big commotion that you stole his stuff.
You, caught unaware, are then pulled aside by the 'owner' for a settlement you are intimidated and threatened that if you do not pay up, the police will be brought in. If you pay up, this 'owner' lets you go. If not, the police are brought in.
Another strange thing is that, there always seems to be a 'witness' to the your 'theft'.
I am told this often happens to foreigners at the Kuala Lumpur International Airport (KLIA) or even at LRT trains. Given that you're 'guilty until proven innocent' as far as the Malaysian police are concerned, I understand some poor people are in jail for these 'offences'.
At the KLIA, the 'owner' throws his hand-phone and wallet with the few Ringgit notes into the luggage trolley of a just arrived passenger. The drama unfolds a few minutes later.
The real culprit has easily convinced our Malaysian police to arrest the real victim (if he has not paid up the 'settlement' demand).
This is a very serious matter.
This is another form of extortionists operating in broad daylight. They are disgusting criminals who will do anything to rob and steal. The sickening part of the whole scenario is that unless you pay the 'quoted settlement' money, they will put you in real trouble by calling the police.
The real culprit gets back his hand-phone and wallet but the real victim (i.e. could be any one of us) is thrown into the police lock up and charged in court.
So do be very careful, otherwise you may end up as a 'thief' as you have no way to prove your innocence.
While the scams are happening in Malaysia , it's a lesson worth noting for anyone of you who loves to travel. Be alert!!
I am sure you all have heard of 'pick pocket'. Now there is a new trend, 'push pocket'.
A few days ago a new type of crime has surfaced in town. It goes something like this:-
Somebody slips a hand-phone into your pocket, sometimes it could be just a wallet with an identity card and a few Ringgit.
A few minutes later, the 'owner' comes up and confronts you, the 'thief'. He makes a big commotion that you stole his stuff.
You, caught unaware, are then pulled aside by the 'owner' for a settlement you are intimidated and threatened that if you do not pay up, the police will be brought in. If you pay up, this 'owner' lets you go. If not, the police are brought in.
Another strange thing is that, there always seems to be a 'witness' to the your 'theft'.
I am told this often happens to foreigners at the Kuala Lumpur International Airport (KLIA) or even at LRT trains. Given that you're 'guilty until proven innocent' as far as the Malaysian police are concerned, I understand some poor people are in jail for these 'offences'.
At the KLIA, the 'owner' throws his hand-phone and wallet with the few Ringgit notes into the luggage trolley of a just arrived passenger. The drama unfolds a few minutes later.
The real culprit has easily convinced our Malaysian police to arrest the real victim (if he has not paid up the 'settlement' demand).
This is a very serious matter.
This is another form of extortionists operating in broad daylight. They are disgusting criminals who will do anything to rob and steal. The sickening part of the whole scenario is that unless you pay the 'quoted settlement' money, they will put you in real trouble by calling the police.
The real culprit gets back his hand-phone and wallet but the real victim (i.e. could be any one of us) is thrown into the police lock up and charged in court.
So do be very careful, otherwise you may end up as a 'thief' as you have no way to prove your innocence.
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