HK: Minibond investors misled, says prosecutor

A bank manager appeared in court yesterday accused of misleading six investors, some barely educated and retired, to buy HK$6.8 million of Lehman Brothers minibonds.

Cheung Kwai-kwai, 47, a former personal financial services manager at Bank of China (Hong Kong), pleaded not guilty in the District Court to nine counts of fraudulently or recklessly inducing the victims to invest money between 2005 and 2008, violating the Securities and Futures Ordinance.

Senior prosecutor Jonathan Man Tak-ho said that Cheung misrepresented to the victims the minibonds were "principal protected", "of very low risk" or "highly secured" while experts said the products were complicated structures whose principal - the sum invested - was not protected, meaning investors could lose all of their money.

The alleged victims are now aged 51 to 78. Three were retirees when they were induced to buy the products, the court heard on the first day of the trial.

Read the following link for the full story:
http://www.lbv.org.hk/content/pages/posts/minibond-investors-misled-says-prosecutor10705.php

Learn to be entrepreneur

Singaporeans generally are not entrepreneurial. They are brought up in an environment to be careful, to work hard, to get the right answer and to avoid mistake. They tend to avoid making decisions and to take responsibilty for bad decisions. They like other people to decide for them. This is part of the Singaporean culture.

To be an entrepreneur, one has to be willing to try and experiment, to make mistakes and learn from mistakes, to learn by doing (rather than to take instructions from other people).

I have developed the BEST Business Game to allow the players to learn the skill of making decisions on pricing, marketing and resource allocation. It allows the player to develop the skill by practicing over many rounds.

Learn to be a business entrepreneur. Go to www.easysearch.sg and click on BEST Business Game.

Making advance payments

Consumers should be wary about making advance payments for private school fees, spa treatments or other services, or investing in investment schemes by unregulated bodies that promises a high rate of return.

Ask Mr. Tan

Rising cost of health care

Many people are worried about the rising cost of health care. The insurance agent tell them that the solution is to buy private shield insurance. This is bad advice, especially for people who have a tight budget and do not have sufficient savings for their retirement.

My reasons are explained in several FAQs that can be found in my website, www.tankinlian.com/ask.aspx. You can search for them by using the keyword "Shield" or "health".

The insurance agents tend to exaggerate the need frequency and high cost of medical treatment to get people to buy private shield. Here are the reasons why you should avoid spending this money:

• Young people have a low incidence of serious illness
• If it happens, they can be treated at a low cost in a subsidized ward or will be paid by the employer
• By buying private shield, you have to pay a higher premium and a higher co-payment for treatment
• There is the risk of the claim under private shield being rejected due to non-disclosure or exclusion. You can read a few stories of rejected claims in my website. 

The cost of health care can increase 5 to 15 times for older people. If the buy private shield, the cost can be 2.5 to 4 times of Medishield. To keep the cost at a more manageable level, the elderly people insure under Medishield and pay a lower premium and a lower co-payment when they are hospitalised.

Private shield should only be bought by people who are wealthy and have more than enough savings for their retirement, and want to have the choice of their own doctor, and do not mind paying a higher premium and higher co-payments.

Tan Kin Lian

Buying Term Insurance

A few consumers have asked me to tell them how they can buy Term Insurance. I asked them to go to my website (www.tankinlian.com/ask.aspx) and search for "Term". There are a few FAQs that help them to find the right premium and to go to the right website. I do not know the answer myself, so I have to make the same search.

Pay the right price

Consumers often ask me the following:

• Is it good to buy private shield, compared to Medishield?
• Should I stay on pension or take the lump sum?
• Should I invest in an ILP?

The correct answer should be - it depends on the price. If you pay the right price relative to the benefits, then the policy is good. If you are paying an excessive price, then the policy is bad.

For example, a civil servant asked me whether it is better to keep the pension or take a lump sum. It depends on how much the retiree gets to give up the pension. After providing the figures, it is easier to make a judgement by comparing the different options. This type of question cannot be answered "in a vacuum". 

In the FAQs in my blog, I educate consumers about what is the right price, and how to avoid being over-charged. You can go to my website, www.tankinlian.com/ask.aspx to search for the relevant FAQ. You have to enter a keyword, such as "investment linked" or "shield" or "pension" and see the FAQs that are relevant to the subject. If you cannot find the FAQ, you can change the keyword and try again.

When you find the FAQ, you can read it on the browser, or download it into your PC. You can also print it out, if you need to read it offline.

Spend some time to search and read the relevant FAQ before you send a question to me. You can get a better answer when you are educated. You should not rely on other people to think for you.

Tan Kin Lian

Alan Shadrake's case - reply by Singapore High Commissioner

The Singapore High Commissioner to UK replied to the Guardian newspaper about Alan Shadrake's case.

SGEP