Thursday, October 8, 2009
Volatility of Australian Dollar
The AUD hit a high of SGD1.30 in July 08. It dropped sharply to below SGD0.95 in October. It climbed steadily during the past 12 months and has now reached SGD1.25. Some experts predict that it is likely to pass SGD1.30 due to the recent increase in interest rate.
All about Condo Insurance
A condominium or a condo is a large property or a housing place consisting of many individual units such as apartments where the units are individually owned and the common areas are shared as per the ownership. When looking for an insurance policy for condominiums, it is important to remember that the whole condominium cannot be insured instead individual units are insured because there are many owners of different units. The common areas are insured such that the responsibility of the insurance is shared by all the condo owners.
Condo insurance is just like a home insurance policy in which you insure each part separately and funds are collected from all the residents of the condominium and these funds are used to insure the shared areas of the condominium. The condo insurance policy consists of two parts: master policy and association rules. The individual units insured by each owner separately comes under the master policy and the collective insurance of the shared areas comes under the association rules. One of the very important things in getting your condo insured is to decide what all to include in the insurance policy and also the coverage you would like to have for it. Generally it’s better to look for the market value of the entity and to cover it you can use the half of the market value which provides money to repair the damages caused in case of any accident. The other damages occurred are to be paid by the owner himself as they come under his personal expense.
To find more on condo insurance, visit www.campbellsolberg.com
Condo insurance is just like a home insurance policy in which you insure each part separately and funds are collected from all the residents of the condominium and these funds are used to insure the shared areas of the condominium. The condo insurance policy consists of two parts: master policy and association rules. The individual units insured by each owner separately comes under the master policy and the collective insurance of the shared areas comes under the association rules. One of the very important things in getting your condo insured is to decide what all to include in the insurance policy and also the coverage you would like to have for it. Generally it’s better to look for the market value of the entity and to cover it you can use the half of the market value which provides money to repair the damages caused in case of any accident. The other damages occurred are to be paid by the owner himself as they come under his personal expense.
To find more on condo insurance, visit www.campbellsolberg.com
Wednesday, October 7, 2009
Observations about Vientiane, Laos
Laos has a population of about 5 million people. This is the same as Singapore but the land area is large. It is located between Thailand and Vietnam and does not have a coastline. The Mekong river passes through part of Laos.
The capital is Vientiane. I like this small city. Most of the buildings are 5 stories or lower. The roads are not congested. Traffic moves slowly. The pace of life is slow. there are a few nice restaurants providing various types of Lao, European and Asian food in the city center, where my hotel is located.
It is nice to see some families with their young children playing in the park at the Fountain, which is in the center of Vientiane.
I like this type of life. It is much better than crowded cities like Singapore, Kuala Lumpur, Bangkok and Jakarta.
Laos is a communist country. But life goes on peacefully and there is no sense of fear or lack of freedom.
The capital is Vientiane. I like this small city. Most of the buildings are 5 stories or lower. The roads are not congested. Traffic moves slowly. The pace of life is slow. there are a few nice restaurants providing various types of Lao, European and Asian food in the city center, where my hotel is located.
It is nice to see some families with their young children playing in the park at the Fountain, which is in the center of Vientiane.
I like this type of life. It is much better than crowded cities like Singapore, Kuala Lumpur, Bangkok and Jakarta.
Laos is a communist country. But life goes on peacefully and there is no sense of fear or lack of freedom.
What's wrong with Investment Linked Policies?
Most investment linked policies marketed in Singapore have the following features:
a) designed to hide the high upfront charges
b) high charges for insurance cover
c) not tranparent
The upfront charge can be as high as two years of premium. If the savings is $300 a month, an amount of $7,200 can be taken away to pay commission and upfront charges. The consumer is not told directly about these charges. Here are the ways adopted to hide these charges, as adopted by different insurance companies:
a) The consumer is told that x% of the premium is allocated for investment. This means that (100-x)% is taken away. But the non-savvy consumer may not be aware about its significance.
b) The consumer is told that 100% is allocated for investment, but is not aware about the annual charge that is taken away to pay the distribution cost and the surrender penalty that is imposed if the policy is terminated within a certain period, say 10 years. Even if the consumer is told, the consumer is usually not aware about its significance
c) The consumer is told that the total amount allocated for investment is more than the premiums paid after a certain period, say 20 years or longer, but is not told that there is an additional charge (usually 5%) deducted from each premium that is invested. The actual amount invested will be less than the premiums, due to the upfront charges.
The charges for the insurance cover is usually much higher than the same cover provided by a separate term insurance or critical illness policy that can be bought in the market. The consumer is not aware that there is a choice to buy the cover separately or about the lower cost that is available in the market (but not from the insurer that markets the investment-linked product).
The consumer is not told and is not aware that the same premium can be invested in a unit trust that offers the same potential return, but does not incur the high upfront charge that is used to pay commission to the agent.
The terms of the investment-linked products are confusing to the consumer. In this environment, an agent can mislead the consumer into buying a product that pays a high commission to the agent, gives a high profit margin to the insurer, but provides a low return (relative to the risk) to the consumer.
Most informed consumers will never accept these high charges. This is why many insurers have devised ways to hide these charges from the consumer.
I will write a separate blog to describes the features of a good investment-linked product and to encourage insurance companies to adopt these features.
Tan Kin Lian
a) designed to hide the high upfront charges
b) high charges for insurance cover
c) not tranparent
The upfront charge can be as high as two years of premium. If the savings is $300 a month, an amount of $7,200 can be taken away to pay commission and upfront charges. The consumer is not told directly about these charges. Here are the ways adopted to hide these charges, as adopted by different insurance companies:
a) The consumer is told that x% of the premium is allocated for investment. This means that (100-x)% is taken away. But the non-savvy consumer may not be aware about its significance.
b) The consumer is told that 100% is allocated for investment, but is not aware about the annual charge that is taken away to pay the distribution cost and the surrender penalty that is imposed if the policy is terminated within a certain period, say 10 years. Even if the consumer is told, the consumer is usually not aware about its significance
c) The consumer is told that the total amount allocated for investment is more than the premiums paid after a certain period, say 20 years or longer, but is not told that there is an additional charge (usually 5%) deducted from each premium that is invested. The actual amount invested will be less than the premiums, due to the upfront charges.
The charges for the insurance cover is usually much higher than the same cover provided by a separate term insurance or critical illness policy that can be bought in the market. The consumer is not aware that there is a choice to buy the cover separately or about the lower cost that is available in the market (but not from the insurer that markets the investment-linked product).
The consumer is not told and is not aware that the same premium can be invested in a unit trust that offers the same potential return, but does not incur the high upfront charge that is used to pay commission to the agent.
The terms of the investment-linked products are confusing to the consumer. In this environment, an agent can mislead the consumer into buying a product that pays a high commission to the agent, gives a high profit margin to the insurer, but provides a low return (relative to the risk) to the consumer.
Most informed consumers will never accept these high charges. This is why many insurers have devised ways to hide these charges from the consumer.
I will write a separate blog to describes the features of a good investment-linked product and to encourage insurance companies to adopt these features.
Tan Kin Lian
An intent to cheat
Dear Mr. Tan
I bought a land banking product and was given an option to sell back the product after on year at the original cost plus X%. After completing this period, I gave notice to redeem the product according to the terms. The land banking firm did not pay the money back to me. A few other investors were caught in the same situation. We made a complaint to the Commercial Affairs Department, but were told to see a lawyer as this is a civil case. Can we ask the CAD to investigate if the company were cheating us?
REPLY
Cheating is defined in the Penal Code of Singapore as follows:
Cheating – Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he or she would not do or omit if he or she were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to "cheat". For example, A cheats if he intentionally deceives Z into a belief that A means to repay any money that Z may lend to him when A does not intend to repay it, and thereby dishonestly induces Z to lend him money.
At the time of selling the product, the land banking firm might not have any intent to cheat. They may have some reason now to be unable to honor the option to repay the investment, or may have some liquidity problem. This is probably the reason why CAD is not pursuing the matter as a cheating case, and has advised you to consult a lawyer to take civil action.
I bought a land banking product and was given an option to sell back the product after on year at the original cost plus X%. After completing this period, I gave notice to redeem the product according to the terms. The land banking firm did not pay the money back to me. A few other investors were caught in the same situation. We made a complaint to the Commercial Affairs Department, but were told to see a lawyer as this is a civil case. Can we ask the CAD to investigate if the company were cheating us?
REPLY
Cheating is defined in the Penal Code of Singapore as follows:
Cheating – Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he or she would not do or omit if he or she were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to "cheat". For example, A cheats if he intentionally deceives Z into a belief that A means to repay any money that Z may lend to him when A does not intend to repay it, and thereby dishonestly induces Z to lend him money.
At the time of selling the product, the land banking firm might not have any intent to cheat. They may have some reason now to be unable to honor the option to repay the investment, or may have some liquidity problem. This is probably the reason why CAD is not pursuing the matter as a cheating case, and has advised you to consult a lawyer to take civil action.
However, if the land banking firm, knowing that they are not able to fulfill its commitment for repay the investments to earlier investors due to liquidity problem and continues to market similar products to new investors with similar promises, it can be argued that they intend to cheat the new investors. You can bring this matter to the attention of CAD
Tuesday, October 6, 2009
RED Portal (17) HDB Resale Price
The RED portal now shows the median resale price of HDB flats by town and type of flats. This is taken from HDB website. Click on "Info" tab. It is easy to retreive the relevant information from this website.
Target Marketing - new restaurant
My friend started a new restaurant in Lorong Chuan. He used the target marketing service to send out mailers to the owners of landed property and 4/5 room flats within 3 km of his restaurant. He reported roaring business, with full house. It was a good start.
Singaporeans like to try a new restaurant. The target marketing is a good way to reach out to them at a low cost.
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