I hate to plan

Happy Valentine Day!

2012-02-14T13:21:00.000+08:00

Happy Valentine Day to all the my friends, clients, subscribers and those of you reading this website!

History of Valentine day.

Maybank is offering promotional interest rate up to 1.35% p.a. iSavvy Time Deposits!

2011-12-12T17:45:00.001+08:00

Maybank is offering promotional interest rate up to 1.35% p.a. for new placements of S$25,000 to S$1,000,000 to iSavvy Time Deposits. First customers with minimum S$200,000 placement will receive passes to Universal Studio Singapore.

😄😄😄

Is your Car PI? (Parallel Import) Check your IU registration with LTA

2011-11-10T17:52:00.000+08:00

Dear friends, note for people going to buy PI car. Do get a proof that your IU has been register with LTA. A friend of mine was fined for not having an IU in his car which he have been driving for 2.5 yrs with an IU. He went to Vicom for inspection and they say his IU is nt registered under his car license plate and have to change a new one with IMMEDIATE effect.
The technician say that recently a lot of PI car have this problem, as ERP system has just been upgraded so they are about to detect now. Anyway the change of IU cost around $160.

Brakes slammed on more "pimped up" cars

2011-10-20T11:46:00.001+08:00

Is your car modified? Did you declare them when you applied insurance? Did you modified after you purchased? Your car might not be covered at all.

New therapies for heart valve disease

2011-09-22T00:47:00.002+08:00

20 September 2011

TODAY (Singapore)
( c) 2011. MediaCorp Press Ltd.

Learn about advancements in the diagnosis and treatment of heart valve disease. Advanced imaging
capability and techniques like 3D echocardiography and percutaneous heart valve replacement allow
patients to be diagnosed more quickly and accurately.

Date: Friday
Time: 1pm to 2pm
Venue: Health Education Hub, 5 Lower Kent Ridge Road, Main Building 1, Level 1, Lobby B, National University Hospital
Fee/Registration: Free. Registration required. Call 6772 2184.

More than 51,000 employers to get S$17 million in SEC

2011-09-22T00:46:00.000+08:00

CHANNEL NEWSASIA

20 September 2011
TODAY (Singapore)
(c) 2011. MediaCorp Press Ltd.

SINGAPORE — The first payment under the Special Employment Credit (SEC) announced in this year’s
Budget will be given out by the end of this month.

The Ministry of Manpower says that more than 51,000 employers qualify.

They will receive a total of S$17 million for employing 167,000 older, low-wage Singaporeans in the first half of this year.

The SEC was announced in February as a one-off Budget measure to encourage employers who employ Singaporeans aged 55 and above and earn up to S$1,700 a month.

Eligible employers will receive notifications from the CPF Board this week.

The SEC will be paid twice a year in March and September between January this year and December 2013.

It is expected to cost the Government S$100 million over the three years.

Dispute resolution for motor accident claims of up to $3,000. Accident claims of up to $3k? Go to resolution centre

2011-09-02T22:03:00.002+08:00

2 September 2011
Business Times Singapore
(c) 2011 Singapore Press Holdings Limited

TO ADDRESS the issue of escalating claims, non-injury motor accident claims of $3,000 or less now
have to be heard first by the Financial Industry Disputes Resolution Centre (FIDReC) before court
proceedings can start.

This has been raised from the $1,000 limit previously.

The move is in line with recommendations put forward by the Motor Insurance Taskforce last year.

According to a release issued yesterday by the Consumers Association of Singapore, the industry
average amount for third party property damage claims is about $4,000. As such, the move to bump up
the limit to $3,000 is expected to reduce the number of disputes brought to court. FIDReC has also
beefed up its resources so that it will be able to handle the likely increase in the number of cases.

'GIA welcomes the increased FIDReC-NIMA limit which will further enhance the promotion of amicable
and faster settlement of disputes through the mediation process,' said Derek Teo, president of the
General Insurance Association of Singapore.

Accident claims of up to $3k? Go to resolution centre

Christopher Tan, Senior Correspondent
2 September 2011
Straits Times
(c) 2011 Singapore Press Holdings Limited

Limit for non-injury cases raised from $1,000
MOTORISTS who want to make non-injury accident claims of up to $3,000 will now have to go before
the Financial Industry Disputes Resolution Centre (Fidrec) before they can file them in court.

The $3,000 limit is three times the previous cap of $1,000.

The Consumers Association of Singapore, a member of the Motor Insurance Taskforce which lobbied
for the limit to be raised, said the new ceiling is more reflective of the average claim of $4,000.

The taskforce, which views Fidrec as yet another way to tackle spiralling costs, hopes the new limit will
pave the way for more claims to be settled quickly and cheaply - without the appointment of lawyers.

Since its formation in March 2008, Fidrec has heard 218 motor accident cases and helped resolve 213
of them - even if the number is a fraction of the approximately 1,200 non-injury accident claims that go to
court each year.

The taskforce reckons the $3,000 limit will allow Fidrec to handle more cases.

But lawyers point out that claimants may simply jack up their claims to exceed the new limit to avoid the

Fidrec process - one which requires claimants to turn up personally to file and present their cases.

General Insurance Association (GIA) president Derek Teo, a Fidrec proponent, said: 'There'll be people
who will bump up their claims to circumvent this... but they will have to produce substantive evidence in
court to show that their claims are justified.'

He added that the 'main intent is for all parties to reach an amicable settlement by themselves'.

However, should they need the help of a third party to resolve a case, there is Fidrec.

But motorists can still file their claims in court if they are not happy with Fidrec's decision, which is
handed down by retired judges.

The Motor Insurance Taskforce, whose members include the GIA, the Automobile Association of
Singapore, the Land Transport Authority, the Traffic Police and the Monetary Authority of Singapore,
had actually recommended the Fidrec cap be set at $10,000.

Observers said, however, this would be detrimental to the income of many lawyers.

A lawyer who specialises in accident claims said yesterday his business had already dipped since
Fidrec was formed. But he could not substantiate his claim, nor did he want to be named.

The taskforce has introduced several measures in recent years to tackle rising costs. These include
requiring motorists to file an accident report with their insurers - no matter how minor the accident - within 24 hours, and submit on-site photos of the vehicles involved.

Also, motorists who file insurance claims against another party after an accident have to contact the
other driver's insurer before getting their vehicle repaired. The other driver's insurer will have 48 hours to
inspect the damaged vehicle. If it fails to do so, it automatically waives its right to contest the claim.

The measures have met some success.

Last year, motor claims amounted to $767 million. If the $11.6 million attributed to flood damage was excluded, the sum would have been close to the $742 million posted three years ago - even though there
are now more vehicles on the road.

Things to consider when getting an insurance plan

2011-09-02T21:40:00.001+08:00

Should you be considering an Integrated Shield plan, here are some questions to ask the insurer or the adviser:

* What are the categories of benefits and types of cover under the Integrated Shield plan? Will it cover
claims incurred outside Singapore?

* What does the plan exclude?

* Can I buy a rider to cover the deductible and co-insurance?

* How much is the premium for the plan and the rider? How much of the premium can be paid out from
Medisave, and how much must be paid from cash?

* Might the premium be increased? Will my premium be affected if I make a claim?

* Is the plan guaranteed renewable and what is the penalty for late premium payment?

* Does the insurer provide a letter of guarantee to the hospital when I'm hospitalised?

* How do I make a claim?

If you need help in upgrading your MediShield plan, please drop me an SMS/Call me @ 91000078.

Prevention is better

2011-09-02T21:16:00.000+08:00

95% of countries, the medical trend or cost rate exceeded that of inflation. Singapore's medical cost rate is estimated at 8.4% this year, compared with 7.4% last year.

One very important way to cover the cost of health care is through insurance. Risk pooling enables insurers to offer cover to a fairly large group, at premiums that are relatively affordable.

It is prudent to take up such insurance while you are relatively young and healthy. Once illnesses develop, insurers may levy an extra charge, or even refuse coverage for what they call pre-existing conditions.

3 ways you can enjoy heavy subsidies

Acute public hospital wards
MediSave which earn 4% more then OA in your CPF
MediShield and private Integrated Shield plans.

MediSave- Limited amount on inpatient and outpatient expenses. Important to note that Medisave is still cash. It should be prudently used. While you are working, the contribution rate to Medisave will vary depending on your age. The contribution rate is also adjusted annually to keep pace with inflation.

Should you retire or cease working and your contributions stop, cash in Medisave could run out fairly quickly given high health care costs.

Priviate Integrated Shield - Hospital and surgical (H&S) plans are one of the most basic of health covers, and are a must for most people unless you have enough wealth to self-pay. It is also important to take up H&S plans for your children.

Many people put off taking up a H&S plan because their employers may offer very good and comprehensive cover. But you will need a private plan should you stop working. Waiting until retirement to take up one is untenable because at a later age you may develop conditions that make you uninsurable.

Why I keep emphasising on Private Integrated Shield? It the most afforadable plan that you can get using your CPF medisave account.

If you need help in upgrading your MediShield plan, please drop me an SMS/Call me @ 91000078.

New prescription guidelines for hypertension

2011-08-27T16:47:00.000+08:00

Reuters
25 August 2011
TODAY (Singapore)
(c) 2011. MediaCorp Press Ltd.

Taking repeated blood pressure readings over a 24-hour period rather than a one-off measurement in

the clinic is the most cost-effective way of deciding who should be prescribed drugs for hypertension,
according to a study published in The Lancet medical journal yesterday.

The findings in favour of so-called ambulatory blood pressure monitoring were immediately adopted by
Britain’s health costs watchdog, the National Institute for Health and Clinical Excellence.

Professor Bryan Williams of Leicester University said the change “is likely to be replicated across the
world”.

Ambulatory blood pressure measurement involves the patient wearing a blood pressure cuff attached to
an automatic blood pressure machine for 24 hours. Measurements are taken typically half hourly during
the day and hourly during the night.

An estimated one billion people around the world have high blood pressure. REUTERS

Cover Story - Cancer from breast

2011-08-27T16:39:00.001+08:00

More and More woman are opting for breast reconstruction with their mastectomies so they can still look and feel normal.

Do you know you are covered by hospitalisation insurance?
There is also a misconception that breast reconstruction is considered cosmetic surgery and will not be
covered by hospitalisation insurance or Medisave.

Depending on a patient's eligibility for subsidy, the estimated bill for a mastectomy followed by an
immediate breast reconstruction ranges between $6,000 and $30,000.

Breast cancer patients who undergo this procedure may use up to $7,550 from Medisave for it and
$450 per day for daily hospitalisation charges.

Younger women affected by cancer seek complete restoration of form for better integration back to
society, family, work and married life.

Have you upgraded your MediShield to "As Charged" plan yet?

As-charged feature

The as-charged feature has become a standard in all Medisave-approved integrated Shield plans but there are many people who have not upgraded to plans that offer this feature. Do take note that a Shield plan comes with deductible and co-insurance components. The former refers to the first layer of charges that the policyholder has to bear. These may range from $1,500 to $3,000.

The co-insurance payment is the portion shared by the policyholder, usually 10 per cent of the bill after taking into account the deductible. If you wish to be covered for the deductible and/or the co-insurance portions of the hospitalisation bill, Shield insurers offer optional riders for them, payable via cash.

If you need help in upgrading your MediShield plan, please drop me an SMS/Call me @ 91000078.

S'pore banks safest in Asia

2011-08-27T16:18:00.000+08:00

S'pore banks safest in Asia!

No cover when you need it most - Have you upgraded yours?

2011-08-23T00:56:00.000+08:00

ST Forum
No cover when you need it most
22 August 2011
Straits Times
(c) 2011 Singapore Press Holdings Limited

LIKE Mr Leong Quee Hian ("MediShield burden"; last Wednesday), my dad had signed up for MediShield cover when it was launched years ago. The cover expired in April when my dad reached the age limit of 85.

My dad was diagnosed with advance prostate cancer late last year and is currently receiving treatment.
While his treatment is MediShield claimable, he is unable to claim due to his age.

It is an anomaly that after paying the required premiums until 84, the insurance suddenly ceases coverage upon one reaching the age of 85, when one would need it most. We pay for MediShield to cover ourselves should we fall sick. The possibility of one falling ill after 85 is higher but ironically, the cover lapses.

In 2008, Madam Halimah Yacob (then head of the Government Parliamentary Committee for Health)
mentioned that medical insurance needed to be extended to cover people beyond the age of 85
("MediShield cover for those over 85?"; Jan 18, 2008). The issue seems to have been sidelined and to
date, MediShield still ceases to cover beyond age 85.

In an e-mail reply to me in September last year, the Ministry of Health explained that the age limit of the
scheme had been regularly reviewed and increased in line with the life expectancy of Singaporeans, the
last review being in 2006, when it was raised from age 80 to 85.

It has been a few years since Madam Halimah's comments and I was hoping that Prime Minister Lee Hsien Loong's National Day Rally speech would address the issue, but it did not.

Potentially huge medical bills not only pose a financial burden to elderly patients, but also an emotional burden to some. Elderly patients above 85 years will definitely be under greater stress knowing that every cent (if any) they had painstakingly saved over the years may be insufficient to meet hefty hospital bills without the MediShield cover.

Some may also feel guilty of being a financial burden to their children (especially if their children have retired), who may have their own family's needs to take care of. I hope the relevant authorities will review and raise the age limit as soon as possible.

Sharon Peh (Ms)

P.S Have you upgraded yours?

What turns off Gen X and Gen Y on life insurance

2011-08-08T18:00:00.000+08:00

Lynn Kan

2 August 2011
Business Times Singapore
(c) 2011 Singapore Press Holdings Limited

THREE in four of Singapore's Gen X and Gen Y are happy to pay at or above market price for a life insurance plan.

Yet only 19 per cent would actually consider taking out life insurance in the next 12 months, according
to Swiss Re's survey of 1,000 Singaporeans aged 20 to 40 years.

The gap between perceived costliness and actual price is probably why Singaporeans in this age
bracket are put off buying life insurance, says Sharon Ooi, Swiss Re's director of client markets in
South East Asia, Hong Kong and Taiwan.

Swiss Re asked respondents to come up with a value of how much life insurance should be worth.

'Their value of insurance is actually within the correct range, but they don't know that,' said Ms Ooi. 'If
you narrow the gap in perception, you would get more people buying the products.'

The most common reasons for scrimping on life insurance are not having enough spare money set
aside for it or the perceived costliness of the product.

Swiss Re conducted a region-wide survey of 13,800 respondents across 11 Asia-Pacific countries, after
a similar survey in 2009 with seven countries in the data pool.

Across the board, Asia- Pacific countries' risk appetites have shrunk since 2009.

That is to be expected given what has happened since then. 'We've seen more natural disasters like
what has happened in New Zealand and Japan. There is more understanding about the exposures
people face,' said Ms Ooi. 'There is also the continued financial crisis in Europe and the US, so that
would add to the fact that they would want to take less risk overall.'

Overall, Singapore has the highest insurance ownership rate at 96 per cent.

Still, fewer than half of the respondents believed what they had taken out would be a good enough
buffer to cover their medical or health expenses.

'There is a legitimate understanding that there is a rising medical cost issue because they've seen it
happen in other countries. They need to see what they need to do to plan for it,' said Ms Ooi.

HEFTY HOSPITAL BILLS; Don't ban ward switch entirely

2011-08-08T17:58:00.000+08:00

ST Forum
2 August 2011
Straits Times
(c) 2011 Singapore Press Holdings Limited

ONE reason patients are saddled with hefty hospital bills is that they have to choose an A-class ward
instead of the subsidised B-class ward when beds in the latter are unavailable.

Consequently, they are barred from switching to B-class beds, and are saddled with hefty A-class
charges.

I can understand the Government's reason for barring the switch when there is a choice. But in cases
where the hospital is out of B-class beds, such patients should be allowed to switch back when one
becomes available.

Alternatively, such 'A-class' patients should be allowed access to subsidised care for follow-up
treatment.

The hospital's standard reply has always been that the patient could wait till a B-class bed becomes
available, or have an ambulance take him to another hospital with an available bed.

However, when one's loved one is ill and in pain, the hospital's reply represents a Hobson's choice.

Families will opt naturally for the practical and immediate solution, which is to stump out for an A-class
bed to ease the suffering of their loved ones.

We are almost held to ransom by the hospital to pay the higher fees. I would gladly pay for an A-class
bed for my loved one who falls ill when no B-class bed is available. But I urge the Health Ministry to
consider allowing these patients to downgrade when a B-class bed becomes available.

As for myself, I recently upgraded my MediShield to cover private hospital fees. This is expensive but I
will not burden my family with having to make such hard choices.

Ho Suit Keng (Ms)

Tighter safeguards for investors from Jan 1 2012

2011-08-03T00:51:00.000+08:00

Tighter safeguards for investors from Jan 1

Lorna Tan, Senior Correspondent
29 July 2011
Straits Times
(c) 2011 Singapore Press Holdings Limited

'Knowledge test' for investors before they can buy certain products

SINGAPORE'S central bank has unveiled new measures aimed at ensuring that financially
inexperienced investors do not buy complex investment products without knowing what they are getting
into.

From next Jan 1, all banks and other outlets will have to assess the financial knowledge and investment
experience of everyone keen to buy such products.

Those who pass the checks will be allowed to buy. But those who are not approved and still wish to buy
must be given advice by the banks on whether the product is suitable.

The products include exchange traded funds, investment-linked insurance policies, structured notes,
warrants, options and futures.

And the Monetary Authority of Singapore (MAS) has set the bar fairly high before someone can invest in
these products. For example, customers will be approved if they have a business diploma, or have
bought certain products at least six times in the past three years, or have a minimum of three years of
working experience related to investment products.

The safeguards come in the wake of the 2008 financial crisis, when 9,900 investors here suffered huge
losses totalling $520 million after the implosion of Lehman Minibonds they had thought were low-risk.

Some people were mis-sold products by banks which had wrongly classified the products as being lowrisk
while others were pushed products without proper advice and complete information. Some providers
did not even gather any financial information from clients before selling.

Under the new measures, financial institutions have to conduct a 'customer knowledge assessment' with
their clients before selling certain products.

In the case of a trading account such as for buying exchange traded funds, a 'customer account review'
will be needed.

Welcoming the moves, Consumers Association of Singapore executive director Seah Seng Choon said
the assessment measures would help investors understand the risks and implications of such
investments and minimise mis-selling.

But he felt that even those who have cleared the assessment should exercise caution.

Retail investor Susan Foo, 48, a retiree, who lost $50,000 from her investment in Lehman Minibonds,
said she might have avoided that fate if the new measures had been in existence earlier.

Under the new regulations, the seller should tell the customer if he is assessed as not having the
relevant knowledge or experience.

If the customer is not approved, banks may suggest that he undergoes learning modules to learn more
about these products. And in some cases, a lower trading limit would have to be set.

As the assessment results are not transferable, investors will be assessed repeatedly if they go
shopping at different banks. The results are valid for either one or three years subject to certain
conditions.

Banks contacted yesterday said they would have no problem meeting the new rules from MAS.

'Since early 2009, we have adopted an even more stringent sales process by incorporating certain
knowledge assessment criteria into our financial needs analysis, and requiring a full financial needs
analysis of our customers for every investment product sold,' said Mr Lim Wyson, OCBC's head of
global wealth management.

DBS Bank said it would not sell a product even if the customer insists if the product is deemed
unsuitable and he has no clear capability of understanding it.

Standard Chartered Bank said it takes account of factors such as a customer's personal background,
risk tolerance, investment horizon and funds, to come to an agreed risk rating.

However, for some businesses, the new rules might prove too costly and a hassle to implement
because they may have to get more staff and spend more time with each customer.

Mr Wong Sui Jau, general manager of online unit trust distributor Fundsupermart, believes the new
measures will weed out weaker rivals. His company has had to modify its IT systems and hire
investment specialists to deal with customers.

Products not covered

THE new rules apply to 'specified investment products' which are any investment products other than
those listed below. Products that are listed only on a stock exchange outside Singapore are also not
subject to the rules.

* Shares
* Depository receipts representing shares
* Rights issues
* Company warrants
* Units in business trusts
* Units in real estate investment trusts
* Certain debentures
* Life insurance policies (other than investment-linked insurance policies)
* Foreign exchange contracts

More S'porean women getting ovarian cancer

2011-08-03T00:46:00.000+08:00

More S'porean women getting ovarian cancer
26 July 2011
Straits Times
(c) 2011 Singapore Press Holdings Limited

Reduced child-bearing a main cause for rise in illness' occurrence

WITH women putting off pregnancy and having fewer or no children at all nowadays, ovarian cancer has
become more common.

For every 100,000 women here, 15.5 will come down with this disease, a rate more than twice that of 40
years ago.

This trend is not unique to Singapore; it is also being seen in developing and newly developed countries
where women have begun putting off having children in order to build their careers.

Associate Professor Tay Eng Hseon, the medical director of Thomson Women Cancer Centre,
described the trend as 'alarming', coming as it does among a trio of women's cancers on the rise, in
tandem with reduced child-bearing.

The three cancers are ovarian cancer, breast cancer and uterine or womb cancer.

Of the three, ovarian cancer - the fifth most common cancer among women here - is of the greatest concern, he said, because no effective screening process exists for it.

It has no symptoms, and unlike uterine cancer, ovarian cancer is usually diagnosed only in the
advanced stages, he added.

Seven in 10 women are diagnosed only after the cancer has spread; by this time, it is very difficult to
treat it successfully.

The cancer is triggered by the rapid growth and division of cells within one or both ovaries, the
reproductive glands that produce eggs and female sex hormones.

Under normal circumstances, the ovaries contain cells that reproduce to maintain tissue health, but
when these cells divide too quickly, a tumour results.

It is not known what causes ovarian cancer, but family history is an important factor when estimating a
woman's risk of ovarian cancer.

Another factor is reduced child-bearing. Prof Tay said women who have delivered two or more children
and those who have used birth-control pills to suppress ovulation for five years or more can halve their
risk of this cancer.

Associate Professor Marcela del Carmen of the Massachusetts General Hospital in the United States
said that even those who have had this cancer before face a 75 per cent recurrence rate within two
years.

Specialists were attending a meeting here over the weekend to evaluate findings from Calypso, the
largest clinical trial done on recurrent ovarian cancer.

The trial, involving nearly 1,000 women, was carried out in several countries to test the effectiveness
and safety of the combination of new drugs, compared with the standard treatment for relapsed ovarian
cancer.

JUDITH TAN

Before you take up an ILP

2011-08-03T00:42:00.000+08:00

Banks should not act like insurance agents

2011-08-03T00:34:00.000+08:00

ST Forum

Banks should not act like insurance agents
25 July 2011
Straits Times
(c) 2011 Singapore Press Holdings Limited

RECENTLY, my husband and I were looking to buy some insurance policies. As we had previous bad
experiences buying through insurance agents who were keen on pushing only their own companies'
products, we thought of buying through banks instead.

Since most banks are now positioning themselves as one-stop centres offering a suite of financial
products, we thought they would be independent. We were wrong.

We visited DBS Bank and it was aggressively pushing only Aviva's products. We tried OCBC Bank and
it was pushing Great Eastern's products. We tried United Overseas Bank and Standard Chartered Bank
as well and came out ruffled as their insurance consultants were pushing Prudential's products. In
other words, we had no choice.

The bank staff told us that the insurance companies they were representing were the best and their
products offered the best value. But how would we know if this is true if we cannot make any direct
comparisons and decide for ourselves?

Are banks independent if each pushes only one insurance company's products? Or have they become
agents of the insurance companies? Are banks driven by customers' needs and interests or by the
commissions paid by insurance companies?

Shouldn't the Monetary Authority of Singapore make banks stick to their banking business and stop
behaving like insurance agents?

Jessie Loy (Ms)

Time for action on home loan rates?

2011-07-16T23:14:00.000+08:00

Colin Tan
15 July 2011
TODAY (Singapore)
(c) 2011. MediaCorp Press Ltd.

Home loan rates are back in the news. In the latest move to maintain loan volumes in an uncertain
market, at least two Singapore banks have reportedly been dangling some of the lowest rates, currently
pegged at about 0.2 per cent to market benchmarks, on selected properties.

The offered mortgage rates are pegged against two commonly used benchmark interest rates. These
are the Singapore interbank lending rate (Sibor) and the swap offer rate (SOR). The three-month
Singapore dollar Sibor has been at a record low of 0.438 per cent since January, while the three-month

SOR has moved between 0.189 and 0.3 per cent since April. It now stands at 0.21 per cent.

The fact that these deals have not been offered to the rest of the market yet and with the marketing kept
low-profile, suggests that the banks themselves recognise that it would be counter-productive to engage
in an open mortgage war at this time.

However, it may not be too long before this happens, given the globaleconomic situation where at a
recent meeting of the United States Federal Reserve, policy-makers discussed “Quantitative Easing
Three”. And Fed chairman Ben Bernanke said on Wednesday that further stimulus might be needed to
help the US recovery.

Quantitative easing is a tool to try to revive the US economy by expanding the money supply via huge
purchases of government bonds. If this happens, foreign investors are likely to head back to our region
in a big way as they switch out of developed markets, such as the US and Europe, which have recently
been spooked by concerns of slowing growth.

The upsurge of fresh money seeking higher yields may trigger what one analyst calls the “mother of all
bubbles”.

At 0.2 per cent, the first step towards buying a home must be almost painless. It may be the reason for
some of the recent buying in some projects in an otherwise gloomy market.

Buying sentiment had been significantly affected by the ongoing euro zone debt crisis. The last time our
private housing market was similarly downcast was in April last year when the Greek crisis erupted.

So, it was not the “Khaw” effect as some have suggested, referring to the uncertainty that has clouded
the market since Mr Khaw Boon Wan took over as Minister of National Development. Nor was it the
anxiety felt by the industry arising from the frequent blog postings of the minister.

It was due to macro-economic events. You cannot help notice the strong correlation every time a major
economic crisis looms on the horizon. But why should macro events play such a big part in affecting
buying sentiment? After all, home purchases are for the long term and should not be derailed by short term
developments.

Perhaps it is because most buyers these days are investors rather than owner-occupiers. Investors
always have their eye on the stock markets and when regional equity markets are rattled, they become
ultra-cautious.

When it became clear to me about a year ago that there is a strong possibility that home loan rates may
remain low longer than anticipated, I sounded out to those around me that maybe we should
contemplate some official action to edge mortgage rates higher to reflect the longer term and to have
them at a more sustainable level. This would protect some of the naive home buyers or novice investors
from being seduced by the very low promotional rates for the initial loan period.

The first time I brought up the idea, many reacted in horror and dismissed it quickly without giving me a
chance to flesh out my suggestion. But as the months went by, each time I revisited the subject, I
noticed that the reaction, though still strong, was less vehement. Some were even beginning to be more
receptive to the idea.

More recently, I suggested that we change the rules by which the banks compete for home loans. All
loans should be on offered at a fixed rate for a fixed period, say, three or five years, but the banks
should be allowed to freely determine this rate. This means the banks can continue to offer 0.2 per cent
if they want to. However, the risk of assessing interest rate risks is passed onto the lenders.

Banks can protect themselves by hedging some of the risks by, say, offering better rates for fixed
deposit to cover themselves during this period.

Let me put it this way: Who is more able to gauge interest rate risks? As corporations with more
resources and being players in the financing industry themselves, banks are definitely better placed
than individuals to assess these risks.

The writer is head of research and consultancy at Chesterton Suntec International.

Home sweet loan

2011-07-16T23:01:00.000+08:00

Robin Chan & Magdalen Ng
12 July 2011
Straits Times
(c) 2011 Singapore Press Holdings Limited

Home loans for as low as 0.2% for a few new projects and for a limited time. Move may be driven by
slowing mortgage applications

AT LEAST two Singapore banks have been dangling some of the lowest ever home loan rates,
currently pegged at about 0.2 per cent, on selected properties.

Analysts say the moves by DBS Bank and United Overseas Bank (UOB) may reflect intensifying
competition to maintain loan volumes in an uncertain market. These loans may be more attractive to
short-term property investors.

The two banks confirmed to The Straits Times yesterday they have offered mortgage rates pegged at
two commonly used benchmark interest rates - and not a whisker more - in the initial period.

These are the Singapore interbank lending rate (Sibor) and swap offer rate (SOR). The three-month
Singdollar Sibor has been at a record low of 0.438 per cent since January; the three-month SOR has
moved between 0.3 and 0.189 per cent since April. It is now 0.21 per cent.

The SOR tends to be more sensitive to exchange rate movements.

Typically, when banks use the Sibor or SOR, they add their own profit margin.

These new rock bottom rates are usually for a promotional period such as the first year or even longer -
after that a higher rate, such as the usual benchmark plus a margin, is applied.

Mr Vinod Nair, chief executive of website Smartloans.sg, which offers home loan comparisons, said the
low rates are more suitable for short-term investors.

Compare a SOR plus zero package that rises to SOR plus1 per cent after three years, and a flat SOR
plus 0.7 per cent package, on a $1 million, 30-year loan.

A person pays $5,430 in total interest for the first three years under the first package, compared to
$25,557 over the same period for the second, he said.

But over the 30-year loan tenure, he would actually pay less using the second package.

Dr Chua Hak Bin, economist at Bank of America-Merrill Lynch, said the latest trend could be because mortgage applications have fallen, and there is 'intensified competition among banks to maintain mortgage loan volumes'.

He said lenders may also be anticipating more cooling measures which could hit loan volumes, and the
global slowdown may cause banks to focus more on mortgages and less on riskier corporate loans.

While home loans eased, total loans rose 24.2 per cent in May from a year earlier, the 'same highs seen
in mid-2008 before the global financial crisis hit', he added.

But Mr Tan Kok Keong, Orange Tee's head of research and consultancy, said mortgage packages with
zero spreads are not new, and he does not think lenders are about to engage in a price war as not every
bank can match the low rates.

'Neither will there be a spike in speculators entering the market because of the 16 per cent (sellers')
stamp duty,' he said, referring to one government cooling measure.

There have been at least three property launches since April featuring low-rate packages.

DBS is offering a Sibor plus zero package for Skyline Residences - a freehold condo in Telok Blangah
launched last week - till next Monday. The zero rate is for one year, then it rises.

At Woodhaven, a Far East Organization project launched last month in Woodlands, DBS is offering an
SOR plus zero package applying to the loan period until the property's completion, before the zero rating
also rises. The offer is set to end soon. A DBS spokesman said these are 'tactical offers... usually
available for a very short period and selectively offered at some launches'.

UOB said it had offered the SOR plus zero package for The Boutiq in Killiney Road, but it has ceased. A
UOB spokesman said: 'Apart from projects committed to previously, UOB will not be offering the SOR
plus zero home loan package.'

OCBC and Citibank have not offered similar deals this year. OCBC's head of consumer secured lending
Phang Lah Hwa said: 'It is not uncommon for players to revise offerings to stay competitive.'

chanckr@sph.com.sg
songyuan@sph.com.sg

Hefty deposit for hospitalising baby and refund takes too long

2011-07-16T18:57:00.000+08:00

11 July 2011
Straits Times
(c) 2011 Singapore Press Holdings Limited

MY 21-MONTH-OLD daughter was recently hospitalised at the National University Hospital (NUH) due
to high fever.

The only available ward was Class A1, so we decided to take that. To our horror, we found out that a
deposit of $5,000 was required. We inquired about Class B1 and were told that would require a deposit
of $3,000.

We had no choice but to place the $5,000 deposit due to my daughter's condition. I asked the staff when
this deposit would be returned as I had used my credit card and was worried about the hefty interest
charges. The reply was that it would take two months.

I asked whether the time taken to return the deposit would be shorter if I paid my bill in full when my
daughter was discharged, and the answer was 'no'.

I have a few queries:

* Why does it take two months for the deposit to be credited back to the patient?
* What if the hospital does not have available beds in the lower-class wards and the family cannot afford
the hospital deposit?

* Why are hospitals allowed to take such a hefty deposit when so many of us have Medisave accounts
which should be there to protect and lessen the amount of cash we have to fork out for our medical
bills?

Shahnawaz Saleem

No deposit needed if Medisave can be used: NUH

2011-07-16T18:54:00.001+08:00

11 July 2011

Straits Times
(c) 2011 Singapore Press Holdings Limited

FROM our records, Mr Shahnawaz Saleem had requested the non-subsidised Class A1 ward for his child's admission, similar to a previous admission.

For patients who choose a non-subsidised ward, a deposit is usually required unless the patient's
insurance, employee benefits and Medisave (subject to withdrawal limits) are sufficient to cover the
estimated hospitalisation charges.

Mr Shahnawaz had indicated that he would not use Medisave for this admission. As we did not have
details of the quantum of his insurance coverage, to ascertain if it would cover the estimated
hospitalisation bill without the use of Medisave, Mr Shahnawaz was asked to furnish a deposit.

Our staff would generally advise that a refund may take up to two months if it involves Medisave or insuranc e claims which need to be processed. For a previous admission where Mr Shahnawaz had used
his Medisave, the refund was made three weeks after his child's discharge.

Mr Shahnawaz asked what would happen if the hospital does not have available beds in the lower-class
wards and a patient cannot afford the hospital deposit.

Patients who choose subsidised wards are not required to furnish a deposit unless the estimated
hospitalisation bill is higher than the Medisave withdrawal limits or if the funds in the Medisave account
are insufficient.

Despite this, patients needing emergency care and who have financial difficulty will still be admitted if
the medical condition warrants so. If the choice of ward type is temporarily unavailable, the patient will
be cared for at the accident and emergency department and admitted to the ward as soon as the
assigned bed is available.

On the rare occasion where waiting time for the bed is expected to be exceptionally long, such as when
there is a surge in demand due to the unpredictable nature of emergencies, we will make arrangements
for the patient to be transferred to another restructured hospital which can offer a bed in the chosen
ward type.

We thank Mr Shahnawaz for the opportunity to address his concerns and would like to apologise for any
misunderstanding that may have arisen from his interaction with our staff.

Ang Kwok Ann
Director, Finance
National University Hospital

Not all hospitals allow Medisave for cancer tests

2011-07-10T22:14:00.000+08:00

Salma Khalik, Health Correspondent

2 July 2011
Straits Times
(c) 2011 Singapore Press Holdings Limited

WHILE Medisave can now be used to pay for colorectal and breast cancer screenings, not all public
hospitals are on the approved list.

Tan Tock Seng Hospital and Changi General Hospital are not on the list for colorectal screening.

Alexandra Hospital is not approved for both breast and colorectal screenings.

These hospitals do provide the services but patients cannot use Medisave to pay for them.

The Straits Times understands that they missed the deadline for submitting applications to be included
in the list. They are now doing so and are likely to make it to the list in the coming weeks.

Polyclinics and private centres, such as Raffles Hospital, are also on the approved list. This can be
accessed at the Ministry of Health (MOH) website www.moh.gov.sg

Colorectal cancer is the top cancer here, with 1,500 new cases a year. Breast cancer is the top cancer
among women, with 1,400 cases each year.

Medisave can be used only at places that 'meet the quality assurance requirements for the scheme',
said MOH. The quality assurance takes into account 'patient safety, staff competency and clinical quality
requirements'.

A ministry spokesman said the ministry will work with more centres to reach the requirements for
inclusion on the list.

To encourage early diagnosis, which greatly improves the chances of beating the two cancers, the Heal
th Ministry decided to allow people to use Medisave to offset the high cost of screening.

They may draw up to $950 for a colonoscopy, though a higher limit of $1,250 applies if polyps are found.

On top of that, they may claim up to $300 for any additional charges, such as for medicine.

This test, which costs about $1,000, is recommended once every 10 years for adults from age 50.

There are also cheaper stool tests to check for colorectal cancer which can be done at most clinics.

These should be done annually.

Women can tap the $300 a year from Medisave that is set aside for outpatient use to pay for a
mammogram to detect breast cancer. A mammogram costs about $100. Women aged 50 to 69 are
urged to go for one once every two years.

Medisave can be used for mammograms & colonoscopies

2011-07-04T18:14:00.001+08:00

Medisave can be used for mammograms & colonoscopies

123 words
30 June 2011
18:58
Channel NewsAsia
CNEWAS
English
(c) 2011 MediaCorp News Pte Ltd. All Rights Reserved

SINGAPORE : With effect from July 1, patients can use their Medisave for screening mammograms and
colonoscopies.

The Ministry of Health said this would make screening tests more affordable and accessible to
Singaporeans.

It said the change would benefit around 450,000 women for mammogram screening and one million
Singaporeans for colonoscopy screening.

Patients can withdraw up to S$300 from their Medisave account each year to offset the cost of their
mammograms.

On average, mammograms cost about S$100.

Subsidised mammograms are available for Singapore citizens and permanent residents at participating
BreastScreen Singapore centres.

The Medisave withdrawal limit for colonoscopy screening will be pegged at the prevailing withdrawal
limit for day surgery procedures.

- CNA/al

How financial advisers earn your money

2010-11-09T11:22:00.000+08:00

If Your Employer Doesn't Offer Health Insurance. What Do You Do?

2010-11-04T12:57:00.002+08:00

Pay Your Kids, Not the Tax Man

2010-11-03T14:32:00.002+08:00

Review, rebalance portfolios regularly

2010-11-02T13:59:00.002+08:00

Fruitful decade for Singaporeans

2010-11-01T11:56:00.001+08:00

The Business Times

By Roy Varghese

Foundation Adviser
IPAC Singapore

WITH less than 100 days to the end of 2010, it makes sense to take stock of the first decade of the new millennium. Baby boomers, those born between 1946 and 1964, have a special incentive to reflect on the past and take charge of the future to ensure that their quality of lifestyle in retirement is not permanently impaired as a result of the massive negative impact of global bear markets in the last 10 years.

The experience of investors and families in this decade will vary based on their circumstances and where they live and work. American baby boomers, especially those who are about to start their retirement, generally feel that they have made no progress in this miserable decade as the US stock market is now at the same level or below what it was on Jan 1, 2001.

Singapore's middle-class families, in contrast, have a lot to be grateful for in the same period. In 2001, the youngest cohort of baby boomers was probably starting families and living in their first homes. Now, in their mid-40s, most of them may be close to being mortgage-free unless they upgraded to private property.

Meanwhile, Singapore baby boomers in their mid-50s are dealing with funding children's tertiary education and building their retirement capital, which took a substantial hit two years ago if the portfolios were invested in higher-risk assets.

Finally, those in the early to mid-60s may be anxious about having enough resources to see them through retirement in the next two decades.

To understand the gripes of investors who are still under water as a result of the 2008 global financial crisis, I ran a series of simulations comparing lump-sum investing and regular savings plans in MSCI World Index, S&P 500 Index, Berkshire Hathaway-A (BRK-A) and the Straits Times Index (STI), all measured in US dollars.

There are some interesting conclusions for the serious-minded wealth accumulator.

MSCI World Index

If you invested US$100,000 into the MSCI World Index 10 years ago (through an exchange-traded fund or index fund if it existed in 2001), your portfolio would be worth US$80,000 today.

If you invested US$10,000 every year starting September 2000, your portfolio would be worth US$106,000 today.

In reality, it's unlikely anyone in the world would have chosen either of these two approaches exclusively.

The principle here is the application of basic diversification in global equities based on stocks from selected developed countries.

The exclusion of developing markets from this index is reason enough to question if the MSCI World Index is a relevant benchmark for retail investors in the new world order.

S&P 500

If you invested US$100,000 into the S&P 500 Index 10 years ago, the portfolio would be valued at US$78,000 today. This is slightly worse than the MSCI World Index lump-sum strategy.

On the other hand, if you had invested US$10,000 every year for 10 years as part of a regular investment programme, your portfolio would be worth US$99,000 today.

An American retail investor seeking exposure to large-cap domestic stocks might have included this index as part of a larger portfolio. This is why there is widespread unhappiness among Americans who feel that they were let down by their domestic stock market despite diligent regular investing over a 10-year period in a pension plan.

Berkshire Hathaway

As an American or international investor who is a fan of Warren Buffett, let's assume that you invested US$100,000 into the BRK-A stock 10 years ago.

You would own one share plus change of this legendary stock that would be worth US$194,000 today, up by 94 per cent.

If it were possible to buy fractional BRK-A as part of a regular savings plan, investing US$10,000 per year over 10 years would have created a single-stock portfolio with less than two shares of BRK-A worth US$ 146,000.

Mr Buffett's stock picks have proven superior to any diversified global or American equity market in this decade.

Straits Times Index

Finally, if you invested US$100,000 into the STI 10 years ago, your portfolio would be worth about US$198,000 today.

It would have almost doubled in 10 years and this works out to be an annual growth rate of 7 per cent in US dollar terms.

As a disciplined Singapore investor who invested US$10,000 equivalent per year over 10 years into the STI, presumably with manual construction of the index (which has changed its component stocks over time), your portfolio would be worth US$191,000 today .

The low base in Singapore stock prices in September 2000 gave the lump-sum approach a slight edge over regular investing.

In any case, it cannot be denied that the dazzling recovery from the two bear markets in this decade resulted in the STI being the clear winner of the four pairs of scenarios in our simulation.

Conclusions on the outcomes

Before we draw some over-arching conclusions, it is worth clarifying two points.

First, dividends from the underlying stocks are not reflected in the indexes, which measure only price changes. This means that at least 2 per cent per annum of dividend yield can be added to the annualised returns for all four scenarios to estimate total returns more accurately.

Second, we have not considered fees and charges for fund management, financial advice or income taxes. At the individual investor level, the actual results would not have been exactly the same as the simulated performance. Overall, we can be confident the general outcomes of the four scenarios can provide us some direction going forward.

In terms of the merits of anchoring a diversified portfolio to US domestic large caps, shadowing the MSCI World Index and the S&P 500 was detrimental to investment performance after 10 years.

The global financial crisis had a more severe impact on US stocks than either Singapore equities or Berkshire Hathaway.

There were two separate bear markets that impacted US equities this decade: the 2001 to 2003 global recession (-50 per cent) and the 2008 to 2009 global financial crisis (-45 per cent).

The Singapore stock market generally mimicked the declines of the S&P 500 but the ensuing bull markets in 2003 to 2007 (+200 per cent) and 2009 to the present (+100 per cent) have propelled the STI to a brilliant position compared to the start of the decade. BRK-A was more like the STI than the S&P 500 except that the Berkshire recovery was more stellar after the first recession compared to the post Wall Street meltdown of 2008.

Mr Buffett can afford the risk-concentrated holdings in the Berkshire conglomerate that includes insurance company Geico, railway Burlington Northern Santa Fe, Washington Post, Amex, Coke, Goldman Sachs and General Electric. This may not be appropriate for retail investors who need diversity in their portfolio.

Asset allocation, with asset classes outside equities, remains the cornerstone of sound investment strategies for individuals, especially those who are very close to retirement.

On the question of dollar-cost averaging versus lump-sum investing based on the four selected candidates, it is clear that adding to the portfolio after a steep market decline pays off in the future. Mechanical equal investing may not be optimal; a shrewd investor should be prepared to do ad-hoc top-ups to the portfolio when a correction is deemed substantial. Professional advice is strongly recommended when investors are confused, irrationally exuberant or nervous.

What now for Singaporeans?

Based on anecdotal evidence, Singaporean baby boomers who own private property did very well this decade if they measured growth in personal net worth. This is a simple exercise to do. Subtract liabilities from assets on Jan 1, 2001 and compare this figure with your net assets today. Private property values may have doubled or tripled over the decade.

If this is indeed the case, a compounded growth rate of 10 per cent per annum in personal net worth is entirely possible. That's a better growth rate than the STI of bluechip stocks held over the decade.

Even iconic Berkshire Hathaway delivered only 4 per cent per annum in Sing dollar terms over the decade owing to the massive depreciation of the US dollar in the last few years.

How can an investor justify a hypothetical benchmark of 10 per cent per annum compounded growth rate for his personal net worth? Add a risk premium of 3 per cent per annum to a risk-free yield of 3 per cent per annum and inflation of 3 per cent per annum over the long term and one per cent per annum currency impact for foreign currency assets and you get a rough benchmark of 10 per cent per annum nominal growth rate for personal net worth.

What this means is that a Singapore investor should not be bound to global indexes for personal net worth progress reporting. For a moderate-risk baby boomer, a globally diversified portfolio of equities, with no more than 20 per cent dedicated to US stocks, plus bonds, Reits, Singapore and Asian equities represents an ideal investment core. (Older baby boomers should have more bonds and defensive assets).

Private property underpins the liquid assets for long-term capital appreciation of retirement capital.

Baby boomers in Singapore received an excellent tutorial from The Lost Decade that never was.

These are the writer's personal views and not ipac's.
This article was first published in The Business Times.

Could interest rates hit zero?

2010-10-30T12:09:00.000+08:00

What MediShield coverage may exclude

2010-10-28T10:41:00.002+08:00

How Health Minister Khaw paid $8 for his heart bypass ...

2010-10-27T09:22:00.000+08:00

From iTODAY
Ng Jing Yng

SINGAPORE - Health Minister Khaw Boon Wan paid only $8 from his pocket for his heart bypass in May.

In order to reiterate the importance of adequate coverage, Mr Khaw said in his latest blog post yesterday that his operation, at the National Heart Centre Singapore (NHCS), was mostly paid for by MediShield and a private Shield supplement, while Medisave helped in the co-payment of the rest of his hospital bill.

According to figures on the Ministry of Health website, the bill for heart bypass surgery is less than $30,000 for nine in 10 patients staying in an A class ward in NHCS.

Those covered under MediShield - a basic insurance scheme for CPF members - can choose to top up their basic coverage by supplementing it with plans from private insurers, while Medisave allows members to dip into its accounts to pay for hospitalisation expenses.

Recounting a recent meeting with health insurers, Mr Khaw also flagged the possibility of extending MediShield to cover mental illness, congenital illness and neonatal treatment.

Mr Raymond Fernando, whose wife suffers from schizophrenia, told MediaCorp such a move would "greatly help in relieving my financial burden and, hopefully, lead to other insurers taking the cue". It could also reduce the stigma of mental illnes and encourage more patients to come forward, said Mr Fernando.

Another idea floated during Mr Khaw's meeting with the health insurers was to raise the MediShield claim limits on outpatient cancer care, which stand at $300 per weekly treatment cycle and up to $2,800 for radiotherapy treatment.

Mr Khaw added that there was also discussion on raising the monthly payout for ElderShield - a severe disability insurance scheme - to extend the monthly basic payout of $400 and to extend the payout period beyond six years.

Seek cover when you're young

2010-10-26T13:18:00.001+08:00

my paper
By Reico Wong

MENTION the word "insurance" and most people tend to yawn, change the topic or, in some cases, literally vanish.

It is undeniable that the subject becomes unbearable when pesky insurance agents descend on you and try to shove different products down your throat.

However, the benefits of getting insured is apparent in the long term, as adequate insurance coverage is a necessity.

The time to seek cover is when one is young and healthy, as insurers grant full coverage and at a lower premium.

But, more importantly, insurance coverage is critical as one's future is unpredictable.

Individuals will also want to think about their dependants - parents, as they become older and unable to work; one's spouse, who may be tied down by financial obligations like home-mortgage and other personal loans; and one's children, to fund their education.

Besides death, other tragedies can occur. Then, hospitalisation and health-care bills will be an immense burden. You do not want to drain your loved ones' savings.

Life insurance is one of the most basic, yet critical, types of policies you should have.

Life insurance is a contract between an insurer and a policyholder, where the insurer agrees to pay a designated beneficiary a sum of money upon the contracted individual's death and, in some cases, if the individual becomes critically ill or suffers from a permanent disability.

In return, the policyholder pays a stipulated premium, either at regular intervals or in a lump sum.

According to the latest statistics from the Life Insurance Association of Singapore (LIA), the industry paid out a total of $1.85 billion to policyholders and beneficiaries as of end June.

Of this, $210 million was related to death, critical-illness or disability claims, while the remaining $1.64 billion went to policies that had matured.

With more than 140 registered insurers in Singapore offering a wide variety of life-insurance policies, it is no surprise that even those interested in the product may feel overwhelmed and not know where to start looking.

Issuers say a variety of factors determine the type of insurance policy and extent of coverage one should look for. These revolve around one's age and the stage of life one is at, including marital status, children, medical history, earning capacity, goals and anticipated financial needs.

For example, a person in his 20s to 30s who is unmarried would typically be focused on building his career and on asset accumulation.

With his financial resources in the foundation phase, his main concerns should be in the areas of accident and disability protection, as well as on investment.

On the other hand, a married couple in their mid-30s to early 40s with children should be more focused on wealth accumulation and enhancement. They should look towards family security and debt cancellation, focusing not only on the same aspects as those in their 20s to 30s, but also on the long-term care and welfare of dependants.

"A person's sum assured (or the insurance coverage needed) should be roughly 10 times of his annual income, as a rule of thumb," said insurer Great Eastern Holdings.

The company pointed out that term-insurance plans, the cheapest among the various types of life insurance, can cost less than $50 each month. Whole life-insurance policies, meanwhile, cost much more because they offer longer-term protection and have an investment component.

The LIA points out that individuals should expect to receive three documents from their financial advisers at the point of sale - a guide to life insurance, a product summary and a benefit illustration.
It also advises that individuals purchase insurance policies on a needs-driven basis, and always after conducting a cautious analysis of financial status and the ability to pay long-term regular premiums.

While individuals can choose to cancel or switch insurance policies, this must be done wisely as premiums paid will not be refundable, and there are typically penalties imposed on policyholders for early policy termination.
Individuals switching from one policy to another might also want to ensure that they do not cancel the original policy until the new one is in force - you do not want to be left without coverage, especially for a long period of time.
While there is no cap to the number of life-insurance policies an individual can buy, critical-illness and permanent-disability claims is subject to certain benefit caps. Multiple claims cannot be made if coverage is on a reimbursement basis.

Financial advisers' track record should be also evaluated, not just the range of products offered.
Other tips the LIA suggests include not taking up any policy if you are unsure of its scope and functions, as well as insisting on having all documents.

LIFE INSURANCE TYPES

WHOLE LIFE

ALSO known as ordinary, permanent or straight life insurance, this type of policy provides life-long protection that pays out a benefit to a contracted individual's beneficiaries upon the policyholder's death.

Such policies sometimes also cover critical illness and permanent disability.
It typically also has an investment component, which builds up cash value that the policyholder can withdraw or borrow against to meet future goals.
Note that the rate of returns here may not be as competitive as other investment alternatives.
Often, such policies allocate more money as one ages to the mortality component, while what goes into the investment portion is reduced over time.

TERM LIFE
This is a pure protection plan that covers a contracted individual for a fixed period of time.
The benefit is specific, and will be paid out only if a policyholder's death occurs within the specified time period.

Premiums for term insurance are usually lower than those for a wholelife policy, and such policies offer higher coverage for most people, except for those advanced in age.

This is due not only to the shorter time period of insurance coverage, but also because the policy does not have an investment component.

VARIABLE LIFE
Variable life policies are like whole life policies, except that they allow more flexibility in the investment component.

A contracted individual is able to choose from a range of investment options within an insurer's portfolio, such as stocks, bonds and certain types of funds. The insurer often manages these investment products itself, collecting a fee.
Financial planners, however, warn that such policies are only for riskoriented individuals and those unlikely to need to tap on their savings on a short notice.
Variable returns fluctuate with the direction of financial markets and, if the markets plunge, the cash value portion of the policy will be severely affected.

UNIVERSAL LIFE
Universal life policies allow a contracted individual to review and shift money between the mortality and investment components. The cash value of investments can thus grow at an adjusted variable rate.
Most of such policies also guarantee a minimum interest-crediting rate.
The policyholder can also adjust the premiums as his circumstances change.

Although highly flexible, universal life policies have certain drawbacks. If you choose to pay lower premiums at certain times, you might have to pay higher charges later on. The alternative is to drop the policy and withdraw the cash value you may have built up. But, if you drop the policy early, you will have to pay a surrender charge.

Is savings enough for retirement?

2010-10-25T16:01:00.001+08:00

The Star/Asia News Network

For many young adults, retirement is not something they are thinking about at this stage of their lives.

Those who have been working for less than 10 years have only recently begun to establish their careers, so foremost on their mind would be working to achieve success in their respective vocations.

For them, life still has a lot to offer, and the process of winding down an active lifestyle and retiring is, quite simply, not high on their list of things to do.

According to the findings of the AXA Retirement Scope 2010, a global retirement study conducted across 26 countries in Europe, the United States and Asia, the percentage of the Malaysian working population who have started preparing for their retirement has declined from 48% in 2007 to 38% in 2010.

The study also shows that among the 38% who have started to prepare for retirement, most of them did so only at or near age of 40.

Meanwhile, 46% said they would start to prepare for retirement when they hit 50.

Among the young, only one in five has started to prepare for retirement.

Most of them do plan to start but rather late, at age 46.

Take for example, Anusya Sree, 28, who got married late last year.

"Retirement is not something I am thinking about at the moment; and isn't it a negative thought with so much yet to do? I am only just experiencing life as a married woman. I am looking forward to spending many happy years with my husband and raising a family of our own," says the bank executive.

For Anusya, her priority now is to ensure she has a successful career.

"I have been working for five years, and am enjoying the thrill of being an independent working adult. I have not even decided when I will have children, much less when I will retire."

Similarly for Nicole Tan, 26, a producer for an online travel web portal, retirement is not high on her list of priorities at the moment.

"No, I have not started planning. I would like to build up my career so I have a good platform from where I can start planning for retirement. I am saving up to buy my first property, if that counts."

However, she is aware that having sufficient funds in her retirement years will require a large amount of money.

"It would be an astronomical amount. I am not capable of reaching even 10% of it at the moment," says Tan.

Findings of the AXA Retirement Scope 2010 survey confirm the general perception that only 14% of the Malaysian working population know exactly how much their retirement income should be.

However, not all young adults are focused on the here and now.

Badrulsyah, 35, for example, started planning for his eventual retirement five years ago.

"It is vital for one to start planning early. I learnt that if you leave it to the last minute, you will not have enough time to build up sufficient funds.

"I also know I cannot count on EPF savings alone. After making withdrawals to buy a house, for example, there is even less money to last through the retirement years," says the self-employed entrepreneur.

The AXA Retirement Scope 2010 survey findings show that the working segment's (especially young and mid-life) level of confidence in their own amount of retirement income suffered a big drop from 2007.

Only 37% of the working population now consider their future income to be sufficient compared with 62% in 2007.

Badrulsyah roughly estimates that he will need about RM750,000 (S$312,572) in his retirement fund and if invested wisely, should generate an income stream of its own.

"I try to put away 50% of my income every month, and this includes EPF contributions, insurance premiums, property investments and more."

"However, it is not easy as there are other obligations such as the house and car loans, utility bills and food expenditure," he says.

Lee Yun-Han, 25, is one who had his life mapped out from when he was still in secondary school.

"I came up with my lifetime plan 10 years ago - become a professional chartered accountant, work my way up the corporate ladder and become the CEO of a listed company."

Lee saysthe accounting path did not work out so well, but his plan is still on course.

"I modified my plan, and today I work as a management consultant. I am now in step two of my plan, and remain hopeful that I will reach step three before I retire."

Lee also believes it is crucial to start planning early.

"Life goes by really fast, and before you know it, retirement is just around the corner. I have now lived a quarter of a century, and the time seems to have passed in a blink of the eye. With another blink, I will be 50, and in a third blink, I could be pushing up daisies (deceased)."

Lee has done his homework on how much he will need for retirement.

"I estimate that I will require at least RM5.1mil (S$2.1 million), assuming that I live for another 35 years and need RM5,000 (S$2,083) a month to get by."

"I make a conscious effort not only to save, but also to grow my savings by investing in a diversified portfolio of shares and property."

"Right now, 50% of my income goes to servicing my loans on investment properties, 30% to bills, and 20% to cash reserves. There is a separate slush fund for girlfriend expenditure that is not on the books," quips Lee.

Furthermore, not everyone who is not planning for retirement is living an extravagant lifestyle.

Anusya says that she does not spend money freely.

"Money is hard to come by - that much I have realised over the past few years. I realise now that I am more careful with my own money than I was when getting hand-outs from my parents!"

She says that she does buy the occasional piece of designer wear and her husband sports the latest-generation mobile phone.

"We like to enjoy life, and if this means spending money, then we will. But we only do so after the bills have been paid and there is money to spare."

Anusya also says that they have other financial priorities besides retirement planning.

"We are saving to buy our own house, and also need a second car. Even after we have enough for that, there is the family issue to think about."

"Quite frankly, I do not see a distinction between the act of saving money and planning for retirement. We put some money away every month for what we call our 'emergency' fund, so isn't that the same?"

Similarly, Tan likes to enjoy life, and she has a passion for visiting new places.

"I have an addiction to travel, so there's quite a heavy monthly expense there. But I try to save about RM1,000 to RM2,000 (S$417-S$834) every month."

She says that she does not have any fixed monthly commitments now, but she expects more of them in future.

That could be one of the reasons she still puts money away whenever possible, and not necessarily for retirement.

"I started saving five years ago when I got my first full-time job. I would feel insecure if I had no savings. We will always need to save for that rainy day that could hit us anytime - be it being stuck in a period of unemployment, or hospitalisation fees for a close family member, or to cover for those days when we just want to quit and travel the world," she says.

Ultimately, those interviewed wished that their retirement will come at a time they choose, and not be forced upon them.

"The retirement age is something forced upon you by virtue of policy and legislation. If you enjoy and love what you do, it becomes a passion - and you do not retire from a passion," says Lee.

"I would want to continue working past the retirement age of 55 - not because of the money, but because I would be able to contribute so much more to society. I would very much want to keep my body active, my mind sharp, and my spirit alive."

But for Linda Eng, 31, an administration executive with a construction company, retirement planning is not just about saving.

"Yes, I have my own contingency fund for my retirement, i.e. savings in the bank, a small investment amount in unit trust funds and, of course, EPF. I am now planning to buy a house for my retirement. So, I have to work hard to ensure that my retirement life is well planned."

"Recently, however, something happened that made me realise only having savings is not enough. I need to also protect what I have saved."

She explains that one of her colleagues who seemed to be in perfect health, ate well and kept a balanced lifestyle was diagnosed with cancer.

"It was a terrible shock to all of us, and what was even more shocking was that he had to spend close to RM100,000 (S$41,676) for medical treatment. He and his family had to use some of their hard-earned savings, which was meant to be used for later years. It was gone in a blink of an eye!"

While Eng accepts that uncertainties in life cannot be controlled, "It can happen to anyone at any age", she believes one can take precautions.

"It is not about how much you saved because what you have saved may just disappear overnight when something unexpected happens. And when it does, I do not want my savings to be affected. I want to be sure that my retirement fund will last my lifetime." -The Star/ANN

When picking stocks, keep it simple

2010-10-20T11:13:00.002+08:00

Two safety nets for health care

2010-10-19T11:17:00.000+08:00

An income for life

2010-10-18T10:29:00.003+08:00

Don't follow your heart in the market

2010-10-12T11:24:00.002+08:00

Tue, Oct 12, 2010

my paper

IT'S A well-known fact that investors love "hot" stocks.

They're always interested in learning about the latest market sentiments, which companies other investors are putting their money on, and chasing stocks that are on the upswing.

But following the market is one of the worst ways to make investment decisions, experts say. Investors miss prime buying opportunities and lose out on good returns, especially if they focus only on the short term.

"Value in the long run is determined by (company) fundamentals, while short-term gyrations reflect market participants' psychological weaknesses, such as herding," Georgetown University accounting and finance professor Prem Jain wrote in his latest book, Buffett Beyond Value: Why Warren Buffett Looks To Growth And Management When Investing.

"Knowledge is the best antidote to making wrong decisions," he said.

Such knowledge applies on a variety of fronts: understanding market psychology, examining the intrinsic value of a stock, and identifying your own buying and selling patterns.

Know what drives the market

Prof Jain may have highlighted the importance of fundamentals, but he and other experts would add that fundamentals alone do not drive stock prices - investors' emotions also play a role.

Stock prices often move in wild swings, particularly in the short run, because they are driven to a large extent by emotions and human behaviour.

Fear, greed, attachment, overconfidence, denial and optimism drive the market, often without much basis. Most investors also don't have the self-discipline to overcome these emotions.

Market trends leading to booms and busts do not last forever and will eventually reverse. As historical data shows, there are few warning signs for investors to take heed of before the market moves in the opposite direction.

Investors thus need to learn how to spot when emotions and human behaviour are driving stock prices.

They need to look beyond what others are buying and think of a winning strategy instead.

Commit to a strategy

As investors may well point out, it's easy to talk about behaving rationally, but it's immensely difficult to walk the talk

Essentially, investors need to prepare and pre-commit, argued Mr James Montier, author of The Little Book Of Behavioural Investing: How Not To Be Your Own Worst Enemy.

He pointed out that investors can and do control the process by which they invest: They simply need to remove the drivers of forced decisions from their portfolios.

To do that, they need to do their research in a cold, rational state. They must seek out the intrinsic value of a stock, and then pre-commit to following their own analysis and prepared steps of action.

Firstly, an investor might want to evaluate the fundamentals on a combination of fronts, such as the price-to-earnings ratio of the stock, its track record, how conservatively the company is financed, and what makes the stock likely to be worth more in the future.

Mr Montier also pointed out in his book that it's useful to have a "wish list" of companies you believe to be well-run and have sustainable potential, but are priced too high.

Standing orders can be placed with brokers to buy these stocks if, for some reason, the market brings their prices down to bargain levels.

Still, it might be also a good idea to follow Mr Buffett's core investment principle of investing only within your circle of competence, buying stocks of companies whose businesses you truly understand.

Understand your own investment behaviour

Another notable point highlighted by experts is that investors should focus more on the process of investing, rather than on just the outcome, as there are no magical short cuts to being a good investor.

Investors need to understand their own investment habits, particularly where their weaknesses lie.

And this is best done by putting it all down on paper, said Prof Jain.

He encouraged investors to write down the various investment decisions they made, what types of stocks they bought, pinpoint the reasons behind the decision, and separate all the months the market went up from the months it went down.

This would enable an investor to establish if he is a net buyer or net seller during the various months, and whether he may have a herd mentality.

"Systematic thinking will help you determine what you know or do not know, and help to overcome your psychological biases," said Prof Jain.

"Ultimately, everyone has to make judgment calls, but following a systematic approach will help you know when you are making a judgment call."

Self-awareness is power

2010-10-03T19:05:00.002+08:00

Published October 2, 2010, The Business Times

Knowing yourself, your goals, and errors is the first lesson in behavioural finance. By Genevieve Cua

BUY-AND-HOLD investing came in for a hammering with the crisis of 2008, as did diversification. Thanks to deep losses in the recent downturn, more advisers have begun to trade client portfolios more actively at the margins, an exercise called 'tactical' asset allocation - or, to put it more plainly, market timing.

But this practice came in for a beating at a talk earlier this week at the Private Wealth Management Conference organised by the CFA Institute.

In a talk laced with humour, Meir Statman, Glenn Klimek professor of Finance at Santa Clara University, had a very clear message for investors and advisers. Prof Statman's research focuses on behavioural finance.

The first lesson, he says, is to know yourself, your goals, and errors. The second is to assure yourself by knowing not just the science of financial markets and instruments, but also the science of human behaviour.

He likens financial advisers to financial physicians. 'Physicians take care of your health, and financial advisers your wealth and well being . . . Good financial advisers have to listen, empathise, educate. That's a big job.

'In standard finance, investors are rational. In behavioural finance, they are normal. People are not rational, they are normal. Sometimes we are normal smart, sometimes normal stupid. It would be nice if we could increase the ratio of smart to stupid, but we're always people.'

People, he says, have been disappointed by diversification, which failed to provide any cushion from loss at the worst of the crisis. Assets in a portfolio are picked for their low correlations with each other, so that they should not rise or fall in tandem. But in a crisis, correlations among most assets spike.

'Diversification assures you that you won't have all your eggs in the crummiest asset. But it also means you won't have your entire portfolio in the best. But you'd be in between.

'People say I'm disappointed. There must be something better - market timing, tactical asset allocation. It's tempting, but it's the equivalent of jumping from the frying pan into the fire.'

He cites a joint study with Kenneth Fisher, to ascertain if the implementation of PE trading rules work. Between 1871 and 2002, US$1 invested in the stock market grew to about US$67,000 using a buy-and-hold mode. In contrast, a trading rule of investing whenever PEs dropped below 26 times would have netted roughly US$60,000.

If market timing isn't a panacea, why do many people - finance professionals included - believe that it is? A number of human traits can explain this: Overconfidence; 'representative' error which is the human tendency to find patterns where they may not exist. The latter error blurs the line between hindsight and foresight.

Trading, in any case, is a zero sum game, he says. 'If I think the market is too high and I sell, someone else is buying it. There is an idiot in every trade and if you don't know who it is, you're in trouble . . .

'You have to ask yourself: . . . What's my information advantage to give me an edge? In all likelihood it's nothing, you're deluding yourself.'

Investors, he says, can protect themselves by making advisers their allies. 'To advisers, I say make yourself worthy of the designation.

'Knowing that you commit cognitive errors is the first step. The second is to remind yourself. Like me, you probably have problems creating defences.'

Advisers, he says, 'have to continuously be teachers of our clients'. 'You can't say I told you that, that you know fear will cause you to be risk averse. You have to teach them again and again.'

While modern portfolio theory (MPT) is routinely taught in finance schools, it is impractical in practice. MPT has a number of key assumptions - that investors are rational and risk averse; that there are no trading costs, for instance.

It points investors to 'optimal' portfolios which represent a combination of assets that give the maximum return for a given level of risk.

The theory implies just one level of risk tolerance, says Prof Statman. 'But we build portfolios not as a whole, as prescribed by (Harry) Markowitz, but in a pyramid. We buy money market funds for downside protection and stocks and lottery for the upside.'

Together with Hersh Shefrin, Prof Statman published a paper in 2000 on 'behavioural portfolio theory'. It posits that investors have multiple mental accounts, and the resulting portfolio does not coincide with a traditional portfolio based on MPT and an efficient frontier.

The behavioural portfolio basically is a two-level pyramid where the lower layer is designed to avoid poverty, and the higher layer is designed 'for a shot at riches'.

Risk tolerance itself may be linked to culture. Prof Statman has written a paper on this - The Cultures of Risk Tolerance. He finds that people who are more trusting, for instance, are more willing to take risk. Those from countries where incomes are relatively low are more willing to take risk.

In 'collectivistic' societies, where there is a family network and cohesive ties, risk tolerance is also higher. This could be because an extended family provides a downside cushion.

At the other end of the spectrum is the 'individualistic' society where individuals are expected to look after themselves. Singapore and China rank fairly low on the individualistic scale, and the highest ranked are the US and UK.

Prof Statman himself keeps his investments 'very, very simple'. 'What do I do in a crazy market? I invest and close my eyes rather than try to pick out where the mania will go; it's self-defeating.

'It's very hard to explain to clients, but I think the way to do it is to say - here is what we know from science. Here are some studies I can show you about how people try to take advantage of cycles and fail.'

Once you've made the plunge to invest, switch off the noise from news commentators, he says. 'I keep my investments very, very simple, and I think I've done very well. I invest exclusively in index funds and let stuff take its course. I have enough money in my downside protection account to make sure I'm not going to be poor.

'The money in my upside account, I don't do options. The stuff I have in equities, sometimes it goes up and it goes down. I shrug, what can I do?

'If you train yourself to be like that, you will do yourself a great favour. It's hard, (an adviser's) business is transaction oriented, because I'm not going to give you much business. I don't trade. I think (that's) smart behaviour.'

Retirement

2010-10-01T15:21:00.002+08:00

12 Weeks Equals 1 Year

2010-09-29T14:46:00.000+08:00

Forget about a year. Let's redefine a year. A year is now 12 weeks. No, there are not four periods in a year, that's old thinking. Think about the implications of a 12-week year. The excitement, energy, and focus that happen every December now happen continuously. The year-end push to hit our goals now takes place not once every 12 months, but all the time.

How many bad weekdays can you have in a 12-week year and still hit your goal? And if you can't afford a bad week, then each day of the week automatically becomes more important. Periodization narrows the focus to daily and weekly, which is where execution occurs.

A Period-by period focus keeps us from getting ahead of ourselves and ensures that each week counts.

Commitments are powerful. I’m sure you can recall a time when you were determined to accomplish something meaningful to you, and were willing to do whatever it took to make it happen. I remember back when I was a young boy in fifth grade and how I yearned for a new 10-speed bicycle. Boy, was it a beauty! Metal-flake green paint with racing tires and a black leather saddle! The problem was it was a hundred bucks, which was a lot of money for a ten-year old kid back then. But that didn’t stop me. I had to have that bike. So I did anything and everything I could to earn money. There was nothing that was going to keep me from owning that bike. That’s an example of commitment, a personal promise that you make with yourself. Keeping self-promises builds character, esteem, and success.

We all know intuitively that commitment is fundamental to effective execution and high performance. Any yet many of us fall short of our commitments on a regular basis. It seems that when things get difficult we find “reasons’ to focus on other activities. Often our interest wanes when things get tough. There is a difference between interest and commitment. When you’re interested in doing something, you only do it when circumstances permit. But, when you’re commitment to something, you accept no excuses, only results. When we commit to something, we do things that we would not ordinarily do. The question if “if” goes away and the only question is “how”? Commitment is powerful, and yet there are times when all of us struggle to commit.

There are four keys to successful commitment:

STRONG DESIRE – in order to fully commit to something you will need a clear and personally compelling reason. Without a strong desire you will struggle when the implementation gets difficult. With that compelling desire driving you, “insurmountable” obstacles become exciting challenges. In other words, the end result that you are striving to achieve needs to be meaningful enough to get you through the hard times and keep you on track.
CLEAR ACTIONS – Once you have an intense desire to accomplish something, you then need to identify the core actions that will produce the result you’re after. In today’s world, many of us have become spectators, rather than participants. We must remember that it’s what we do that counts. In any endeavour, there are numerous activities to accomplishing an effort. In most cases there are few core activities that account for the majority of the results, and in some cases there is one, perhaps two, primary activities that ultimately produce the result. It is critical that you identify the one or two core actions and focus on them.
COUNT THE COSTS – Commitments require sacrifice. In any effort there are benefits and costs. Too often we claim we desire something without considering the costs. Costs are the hardships that you will have to endure to accomplish your desire. Costs can include time, money, risk, uncertainty, loss of comfort, etc. Identifying the costs allows you to consciously choose whether or not you are willing to pay that price. It is extremely helpful when you are in the middle of one of the costs to recognize that you anticipated this and decided it was all worth it.
ACT ON COMMITMENTS, NOT FEELING – There will be times when you won’t fell like doing the critical activities. We’ve all been there, getting out of bed at 4.30am to jog in the cold can be daunting, especially when you are in a toasty warm bed. It is during these times that you will need to learn to act on your commitments, not your feelings. If not, you will never build momentum and will be continually starting over, or as is so often the case, giving up. Learning to do the things you know you need to do regardless of how you feel is a core discipline for success.

Many times commitments are made more arduous by the time frame in which the commitment is made. It is difficult to commit to anything for a lifetime. Even keeping a promise for an entire year can be challenging. With periodization you are not asked to make lifetime or annual commitments, but rather period commitments. It is much more feasible to establish and keep a 12-week commitment than an annual promise. At the end of the period you reassess your commitment and begin again.

Commitments ultimately shape our lives. Making and keeping commitments starts a constructive process that is self-reinforcing and empowering.

What is capital guaranteed?

2010-09-28T14:46:00.001+08:00

Travel Insurance FAQ

2010-09-27T11:01:00.002+08:00

Travel insurance is an essential part of any trip and is something that should not be put aside as it is as important as the tickets to your destination. People usually have heard about travel insurance, but might not know the specific reasons why they need travel insurance. There are many who undermine the importance of travel insurance.

But is it also a fact that numerous individuals have suffered immensely because of not having travel insurance. In order to ensure that you do not ruin your entire trip and repent later, it is best to find out all about travel insurance and getting it done. The following are frequently asked questions for travel insurance.

What is travel insurance protection?

Travel insurance is a type of insurance that covers you financial for any losses or illness that may unfortunately occur to you while on your trip. Having travel insurance policy is the best idea to reduce your risks and increase your enjoyment while traveling.

Why should I buy travel insurance?

Travel insurance will help and provide necessary protection you will need in the occurrence of an unfortunate event while traveling. Any individual traveling anywhere without travel insurance will be in a dangerous situation if an accident occurs. There are many things that can suddenly happen, leaving you in dire straits. In case of emergency situations, you should always have travel insurance to fall back on.

Have you ever imagined what would happen if a planned trip gets cancelled or the airline you were planning to flu with goes bankrupt? These are situations that are, indeed, unlikely. But at the same time, they are not impossible. As the old saying goes, it is always better to be safe than sorry. So getting travel insurance is a very good idea.

What is the coverage for travel insurance?

Travel insurance provides coverage for medical cost, transportation to a medical facility, and reimburse you for certain or some nonrefundable costs due to a interrupted trip, and financial loss of funds. It also provides coverage if you lost your luggage at the airport.

Travel insurance covers stolen or lost possessions but there may be limits on cash or individual items. It can protect you from all substantial losses that includes canceled trips, lost luggage, medical emergencies or other unexpected situations.

How does Travel Insurance help you?

Travel insurance is a great friend in need. Even if you fall ill and cannot travel, thanks to travel insurance, you can rest assured about getting your money back.

The whole point of insurance is to guard you from unprecedented trouble. Life is uncertain. There is no way in which we can tell what is about to happen even in the very next moment. Thus, it is best not to take chances and make proper arrangements so that when you land up in trouble, you have something to fall back on.

Travel insurance is very important because it provides a buffer for you in case anything goes wrong. It is especially important when you are in a foreign land, you are at a greater risk because your familiarity with the place is low.

How much does travel insurance cost?

It will depend on your insurance company provider and their policy. The cost of travel insurance usually will range up to 12 percent of the cost of your vacation/trip. If you are investing more in your trip, you need more protection.

Is travel insurance really important and how many people actually get paid for their claims?

Travel insurance is highly recommended, there are usually about 10% of people who file claims. Some travelers may have taken a overly expensive trip when they have to pay out of their own pocket if they did not buy travel insurance.

What is the medical care coverage?

When there is a case of illness or serious injury, medical transportation to an appropriate medical facility and medical treatment will be covered.

How long will travel insurance provide coverage?

Travel insurance can be brought starting from as little as one day to up to a year. Different insurance companies may vary with their service of coverage.

When is the best time to buy travel insurance?

The best time to buy travel insurance is as soon as possible before you go on your trip or vacation. Travel insurance should be active during your entire trip.

Perils of the financial safety net

2010-09-23T11:06:00.001+08:00

http://www.todayonline.com/Business/Invest/EDC100923-0000044/Perils-of-the-financial-safety-net
by Jan M Rosen Sep 23, 2010

SHAKEN by what seemed to be an earthquake in the world's financial markets two years ago, millions of retirees fled to safety, shifting their holdings into savings accounts, Treasury bills, money market funds or certificates of deposit.

Now, they are suffering from the aftershocks: With short-term interest rates well below 1 per cent, their assets are not producing enough income for daily living expenses.

What to do? There is no quick answer to that question but four leading financial advisers offered a variety of ideas for investing with significantly better yields while limiting risk.

Diversifying portfolios is a main theme and it's important to analyse cash flow and assess financial priorities, distinguishing between needs like money for food and utilities and favourite outlays like family gifts that may no longer be practical.

Some may discover that, although portfolio values have fallen in the last two years, their assets are still sufficient for their long-term needs. Others may have to rethink their financial plans and tailor their portfolios accordingly. What follows are the advisers' suggestions:

Dr Jason T Thomas, chief investment officer of Aspiriant, a wealth management firm, emphasised the need for a diverse portfolio with a strong equity stake meant to provide solid cash flow. In trying to avoid risk, many people have incurred "purchasing power risk", he said, because the return is lower than the level of inflation.

Dr Thomas also favours real estate investment trusts because they are "an opportunity to buy into a depressed market" and many pay dividends of 5 per cent and higher.

Commodities are "an unloved asset class", but holding them or an exchange-traded fund that holds them is a way to hedge against rising prices of raw materials in the future.

When buying high-yield bonds, he prefers a fund because of its professional management and diversified holdings. He said he would avoid most Treasury and corporate bonds for now because interest rates are so low. As rates rise, bond prices fall, so holders may have to keep the bonds until maturity to get their principal back. In repositioning a portfolio, Dr Thomas said: "Don't do it all at once; do it in steps."

Mr Mark L Pollard, wealth management adviser and senior vice-president at Merrill Lynch warned: "In desperate times, people do desperate things. If you blow your capital, it's gone. It maybe necessary to temper expectations."

Still, he said, a prudent investor can do much better than staying in cash or Treasury bills. A portfolio of high-quality stocks can yield dividends of 4 per cent and offer a potential for long-term capital appreciation.

Retirees who have enough for basic expenses from other holdings, pensions or Social Security and are bullish on the underlying stock might find the notes attractive for generating income, provided they are comfortable with the downside risk.

Mr Jamie Kalamarides of Prudential Retirement said retirees in their late 60s may live for 30 more years; many fear they may outlive their money. Yet, as investors, they tend to be risk-averse.

He recommended slowly shifting to a diversified portfolio from money market funds and CD's. Traditionally, that would include preferred stocks and bonds, and perhaps a fixed annuity for guaranteed income. Today, he said, Prudential and others offer a new generation of annuities with a guaranteed minimum-withdrawal benefit.

The product is meant to overcome misgivings about traditional annuities while providing lifetime income, appreciation if the market rises, flexibility in withdrawing money and money for the estates of holders who die within 20 years.

Ms Elizabeth Schlueter, national practice leader for the private wealth management group of JPMorgan Chase, advised retirees to look at the total return of their portfolios, not just interest and dividends. "We believe as a firm that it is important to stay invested," she said, with diversified holdings of equities, bonds, mutual funds and alternatives like hedge funds, commodities and currency but changes in a portfolio should be made over time, not suddenly. The New York Times

2010-09-22T14:28:00.003+08:00

Experts recommend having three to six months of living expenses squirreled away for a crisis -- twice that amount in a bad economy! Find the cash for it with these steps.

To complete this How-To you will need:

Cash
Savings account
Automatic deposits
Discipline

Step 1: Boost your take-home pay

Increase your take-home pay by reducing or temporarily suspending your 401K contributions and any other voluntary paycheck deductions. If you usually get a tax refund, ask your employer to reduce the taxes taken out of your paycheck. Resume your 401K contributions as soon as you can.

Step 2: Increase deductibles

Lower insurance costs by increasing the deductible — the amount you pay out of pocket before your insurance kicks in. Higher deductibles mean lower monthly premiums.

Step 3: Sell what you don't need

Sell possessions you can live without on eBay, through online classified ads such as Craigslist, or at a yard sale.

Step 4: Open a savings account

Put the proceeds of your cash-generating measures into the highest-yielding interest account you can find that does not penalize you for early withdrawal.

Tip: Online savings banks usually offer the best rates.

Step 5: Divert money into savings

Set up an automatic deduction from your paycheck that goes directly into your savings account.

Step 6: Earn more

Earn some extra money with part-time work. Maybe a local merchant could use an extra pair of hands over a holiday. Or perhaps there's a resort area nearby that hires part-time seasonal help. Babysitting and yard work are also effective standbys.

Step 7: Hands off!

Keep your hands off the money unless you have a true emergency.

All-out effort to pay out unclaimed CPF savings

2010-09-21T12:28:00.001+08:00

CPF members from January can opt to have their savings transferred directly to CPF accounts of their nominees instead of having the payouts made in cash when they pass away. CPF board will automatically disburse the money to the nominees.

CPF savings if left unclaimed for seven years following the death of a member will be moved into the general monies of the CPF Fund. However, claimants will still be able to approach CPF board any time after the seven years to claim the money due to them.

CPF board will trace beneficiaries by exploring all ways to try to locate them. It will go through its own records and residential listings to locate the beneficiary. If this fails, letters will be send to the person who notified the board of the member’s death of to the last known address of the dead member.

If there is no response, advertisement in major newspapers will be placed to ask beneficiaries to come forward to claim the money.

To prevent unclaimed money, if you have not done a CPF nomination, making a nomination will be recommended if you like your nominees to receive proportion of CPF savings when you are no longer around.

Who can make you richer?

2010-09-20T11:46:00.002+08:00

Whether or not you're clueless about money, it pays to have a financial expert to help you manage and grow your wealth.

When you are young, you were given your first piggy bank and encouraged to save for a rainy day. Years later, you are still doing the same thing – saving for a rainy day, albeit with more sophisticated instruments. Your piggy bank may long have given way to internet banking. It’s not really enough to just have savings.

What is more important is making sure your money is growing, whether you have parked it. Unfortunately, keeping your cash in a traditional savings account, however stable, wouldn’t deliver the big bucks – not with today’s interest rates. What you need are people who can help you make your money grow, and make you richer in the long run.

A financial planner helps you to map your financial future. He will create investment plan to help you meet your targets: your children’s education or your retirement. Combination of investment products that will deliver the returns you expect within the risks you can tolerate will be implemented.

Financial planner will help carry out your retirement plan, maximise your investments, minimise your risks, having the right insurance product to cover these risks, manage your budget and reduce your debt, determine how you can save on taxes, and so on.

Don’t let financial experts fool you with sales talk, if he promises high returns for low risks, that’s a major red flag. Higher returns always mean more risks, there are no exceptions. To protect yourself from such hype, insist on written information and advice from your expert. If he is qualified, your expert will be happy to comply. If you have the advice or information in writing, it allows you to review your options before making a decision.

Six Retirement Mistakes to Avoid

2010-09-17T15:33:00.003+08:00

http://www.cnbc.com/id/39197343
By: Cindy Perman
CNBC.com Writer

You know you need to save for retirement and to max out your company matching.

But beyond that, do you really know what you’re doing? It’s quite possible you’re still making mistakes with your retirement savings.

If you’re not scared, you should be: With most retirement mistakes, you’re losing money that you’ll never get back. And, it’s a lot of money. Imagine if your employer screwed up your paycheck. You wouldn’t tolerate that at all. And you certainly shouldn’t tolerate it from yourself — your retirement is your paycheck after you retire.

“Saving for retirement needs to be a higher priority,” said Greg McBride, a senior financial analyst at Bankrate.com. “There is a widespread, cavalier attitude toward retirement savings because our parents got along just fine with very little retirement savings, thanks to pensions and government benefits. But today’s workforce has no assurance of either once they retire.”

So, we checked in with a few financial analysts and here are Six Retirement Mistakes You Should Avoid.

1. Not utilizing tax-savings options.

Admittedly, this doesn’t sound sexy, but pay attention: Never pay any tax on your retirement savings before it’s time. In 401(k)s, Simple Employee Pension plans, Individual Retirement Accounts and Keogh plans for the self-employed, you are only taxed when you withdraw money. So don’t withdraw it until you’re ready to retire, or you will not only lose that money to taxes — but also the compound interest that money would make in your account. In the case of Roth IRAs and Roth 401(k)s, there are never any taxes — even in retirement.

2. Not utilizing catch-up provisions for those 50 and older.
When you turn 50, the annual contribution limit goes up for both IRAs and 401(k)s. With the IRA, you can add an additional $1,000 per year for a total of $6,000. And with the 401(k), you can add an additional $5,500 for a total of $22,000.

Even if you're on track to meet all of your retirement goals, this is tax-free money that can start working for you now. And, like mistake No. 1 — if you miss the opportunity now, you'll never get the chance to make up that money later. So tuck a little more away now — and you'll rest easier in retirement.

3. Withdrawing or borrowing from your retirement plan — FOR ANY REASON.

But I need it to buy a house! But I need it to send my kid to college! I promise I’ll pay it back!

Whatever reason you can come up with for why you need to borrow money from your 401(k), it’s never a good idea. Let’s repeat that so we’re clear: It’s NEVER a good idea.

The reason why is simple: You’ll never get that money back — even if you repay it.

“No one would argue with the merits of sending your kid to college. Or the notable benefits to homeownership,” McBride said. “But you won’t get a higher contribution limit next year because you took money out this year — You will always have that amount less. There’s no way to close the gap.”

“If you have to raid the retirement account to buy a house — don’t buy a house,” McBride said. “Your kid can borrow money to go to school — but you can’t borrow money to retire.”

4. Underestimating how long you’re going to live.

So your parents lived until they were 80 or 90 but you’re convinced you’re going to 70 tops.

Say, where’d you get that crystal ball?

The official retirement age was set at 65 because the average life expectancy used to be 62. But guess what? Now it’s in the mid-80s.

“When we plan out retirement for our clients, we assume life expectancy of 90 for men and 95 for women,” said Stacy Francis, a personal financial adviser and founder of Savvy Ladies, a group aimed at educating women about money.

“Our clients just look at us and roll their eyes,” Francis said. “They say — if I’m still around at 88 there’s just no way!”

Well, unless you have a time machine and know for sure — you should follow Francis’s lead and plan for living into your 90s — or even to 100. If not, you can be pleasantly surprised … with all the money you have left over.

5. Overestimating your returns.

So, you took quite a hit in your retirement savings during the past two years. You feel humbled. You feel like you’ve learned a lot.

But have you?

If you’re assuming that you’ll get back to an average of 8 percent to 10 percent returns by the time you retire, then the answer to that question is “No.”

“We call this the ‘New Economy’ because the returns we expect on our portfolio are closer to 6 percent — maybe even 7 percent,” Francis said. “A lot of people have really used the market as a backup to get them where they want to go … We’re telling people, ‘Guess what? There’s a new normal.’”

Francis advises people to take a long, hard look at their lifestyle, and consider a different standard of living for retirement. If you have two homes, maybe downsize to one. Spend less. Really, how much more stuff do you need?

6. Failing to make a retirement budget.

In these working years, you probably know what your annual salary is, what your net take-home pay is — and what your expenses are.

But do you know those numbers for your retirement?

How exactly do you expect to live?

It’s not enough to just dump money into an account. You need to know how much is there, how much it’s projected it will grow — and if it’s going to meet your income needs.

“The assumptions that people have about retirement are generally insane,” said Jerry Lynch, a financial adviser and owner of JFL Consulting in Fairfield, NJ. “They don’t realize the potential cost of medical care and they assume rates of return which just aren’t realistic,” he said.

Lynch says a safe withdrawal for your retirement income is 4 to 4.5 percent. That means, if you have a million dollars when you retire, you should be drawing no more than $40,000 to $45,000 a year.

If you don’t set up a budget now — and make sure your savings plan is set up to meet that goal, you could be in for a big surprise.

“The quality of your retirement is going to die if you think you’re going to run out of money,” Lynch said.
Ask yourself this: If you run out of money, how easy would it be to get a job at 85?

Investing is like buying clothes

2010-09-15T13:38:00.001+08:00

An investment portfolio is not very much different from clothes in a wardrobe as we rely on our financial goals, time horizon and risk appetite when we decide how much we want to invest in each asset class.

Cash, equities and bonds are common investment instruments. All of them come with different degree of risk. Cash is the safest of them all but it will not maintain its value over time because of inflation. Equities which include shares and unit trusts are relatively riskier than cash and bonds.

Equities generally give positive returns if one has a long investing horizon and is able to ride out the volatilities of the market but they are riskier assets. There is a simple rule to calculate the percentage to put in equities, but this formula may not suit everyone.

The optimal combination depends on your risk appetite, risk capacity, financial goals and age. You will be able to sleep soundly through any economic cycle when you have a suitable portfolio that matches all these factors.

Who should have life insurance?

2010-09-14T15:19:00.001+08:00

Simply put, insurance is the protecting of assets, giving you the peace of mind knowing your property is safe. List of types of insurance goes on from health, life, vehicle, and house. People living in the developed world have at least one form of insurance.

Insurance is protecting something by paying insurance company a monthly premium and they will in return protect your property, health or loved ones if something were to happen.

Insurance has become a very important aspect of our daily lives. Imagine you are driving your car and you get rear ended, insurance doesn’t exist. What will you do? Chances are you will have to pay for the repair bill or you will have to sue the person at fault in court. Imagine your house is burned down and you don’t have insurance. You will be out of a house and you will still have to pay for the mortgage. Insurance allows us the peace of mind to purchase expensive assets and know that they are safe.

If insurance didn’t exist, most people wouldn’t buy expensive cars, houses and people will be paying thousands of dollars in medical bills when they are sick. Some might be thinking insurance isn’t worth it. This may be true for insurance such as boat insurance that you might use only once or twice a year. But for valuable asset such as a house, car or your health, insurance is almost a must.

Er, what is passive investing?

2010-09-08T15:03:00.003+08:00

She has 3 policies, but no coverage

2010-09-07T15:54:00.000+08:00

WITH three critical illness policies under her belt, she assumed her insurance coverage was comprehensive enough.

Ms Theresa Tan's policies with Prudential saw her dutifully forking out a total of $600 in insurance premiums every month.

She believed she had forked out about $77,000 for them over the years. But when it came to coverage, the mother of three, 42, thought wrong.

She was diagnosed with early stage breast cancer, or stage 0, in June.

That same month, she went through a 12-hour operation at Gleneagles Hospital to remove her right breast and to have reconstructive surgery done, using skin and fat from her stomach.

The operation and hospitalisation cost $30,000 and was covered by another insurance policy she had with Aviva.

Ms Tan then tried submitting her claim to Prudential this month for loss or potential loss of income.

She thought she could claim up to $100,000 for one policy and up to $107,000 for another policy.

But her claims were rejected by Prudential, which explained to her in a letter that her condition was non-invasive and "does not fulfil the definition of cancer".

Ms Tan's condition is known as ductal carcinoma in situ (DCIS) in her right breast.

This is a condition where the cancer starts in the milk ducts of the breast. It was considered non-invasive at that stage as the cancer had not spread beyond the milk ducts into the surrounding breast tissue.

In Ms Tan's case, she had a mastectomy because the cancer cells were located in various parts of her breast.

Prudential's decision has surprised Ms Tan, especially since her family's medical history was known to her insurance agents.

Her mother was diagnosed with breast cancer when she was 19 years old. She subsequently died in 2003 after a long battle against cancer.

Her mother's illness was what made Ms Tan buy her first insurance policy when she was 22.

Said Ms Tan, who is the co-partner of nanzinc.com, an online portal set up with her friend, entrepreneur Nanz Chong-Komo: "Fortunately, my mum had a pension plan so her treatment was covered.

"But seeing what she went through and given I was not under pension, I wanted to make sure that I was provided for.

"I thought by buying three policies I was covering myself in every circumstance, but it didn't work out that way."

She claimed the gaps in her policy - it did not cover early stage cancer - was not explained to her by her insurance agents.

Neither was the option of a rider to supplement her existing policies offered.

"What does this term mean?"

Did she think she should have read the fine print in her policy documents?

She said: "Even if I had read the fine print, I don't think I would have understood what DCIS meant as a layman."

Ms Tan, who set up a blog - A Clean Breast of It - about her battle with breast cancer, said she later found out that most insurers do not pay out for non-invasive, early stage cancers.

Critical illness coverage typically covers the loss of income that comes from up to 30 critical diseases. These include major cancers, heart attack, coronary artery bypass, stroke and kidney failure.

Fortunately, Ms Tan, who is on three months' medical leave since her operation, has not suffered loss of income as she is still being paid.

Apart from the online portal, Ms Tan also runs a writing agency, earning on average $5,500 per month.

But she said: "It does limit my options. I can't continue to keep being paid if I'm not working. What happens if I still don't feel well after three months? Or if I need to take a six-month break to rest?"

Currently, she suffers from stomach cramps and can barely sit up for two hours at a go, she said. Ms Tan said: "I hope telling my story will create more awareness. I tell my friends to check their coverage and to make sure they are covered in full."

What she wishes is for the insurance industry to broaden its definition of critical illness to include non-invasive and early stage cancers.

Or to at least make it compulsory to offer to customers other options which cover the gaps in any policy, she said.

Ms Tan lives in the east with her husband, 43, a civil servant, their son, 11, two daughters, four and nine, and her parents-in-law, both retirees in their 70s.

A spokesman for Prudential Singapore said Ms Tan's policies "unfortunately do not qualify for stage 0 cancer."

She said coverage of early stage cancers depend on the kind of policy purchased and the definition of cancer in that particular policy.

She said: "Standard critical illness (CI) policies typically do not cover stage 0 cancer... It is important to know that each and every critical illness stated in the CI policy is precisely defined.

"They are based on standard definitions given by the Life Insurance Association (LIA). Unless the person's disease or surgery has fully satisfied the definition in the policy, no claim is payable."

But the spokesman pointed out that Prudential has policies like PruSmart Lady, which provide coverage for female-related illnesses that are non-critical in nature such as DCIS.

Policy booklet

She added that all information pertaining to a specific policy is provided in the policy booklet given to customers.

Dr Wong Seng Weng, 40, consultant oncologist at The Cancer Centre, drew a distinction between cancers where the person's longevity is compromised versus conditions which are treatable.

He said: "DCIS, if diagnosed and treated early, usually the survival rate is 100 per cent.

"Usually life insurers pay out when a person's longevity is compromised."

But this doesn't mean that the cancer has to be very advanced, before a claim can be made, he clarified.

Even if the cancer is at stage 1, the insurer can pay out if it is an invasive form that spreads, he said.

Ms Tan is grateful she caught her cancer early. She said: "I'm thankful I caught it earlier so I didn't need to go through chemotherapy and radiation.

"But I believe cancer is cancer, whether in the early or late stages."

Why most standard policies don't include non-invasive cancer

WHY do the bulk of standard critical illness policies not include non-invasive cancer?

MsPauline Lim, executive director of Life Insurance Association (LIA), explained: "Carcinoma in situ is specifically excluded from cover as these cancers can be treated and is not viewed as a 'critical' condition."

She said: "Insurers base their premiums on the extent of coverage.

"There is a much higher incidence of the less serious cancers, so if they are also covered, it means premiums will cost much more and become less affordable for most ordinary people.

"This is not beneficial from a public policy perspective. LIA reviews its standard CI definitions from time to time."

The LIA standardises the definitions of critical illnesses.

Ms Lim said consumers should look out for the following:

The scope of coverage and the circumstances under which policy will pay out.
Whether the amount of critical illness (CI) payout is sufficient.
If the CI premiums are fixed or if they increase as the policy holder gets older.
If there are exclusions for any of the CI conditions

Recent policies

Recent policies in the market do offer early stage coverage or multiple critical illness coverage.

These typically cost more than policies based on LIA's standard definitions, said the spokesman.

One such policy is Great Eastern's Early-Payout Critical Care (EPCC), which provides payouts at earlier stages of critical illness.

Its Great Eastern PinkLife plan pays out 25 per cent of the sum assured for carcinoma in situ, for cancers in the female organs.

This article was first published in The New Paper.

Don't let your health get you in the red

2010-09-06T10:32:00.000+08:00

By The Life Insurance Association

Economists call it "hyperbolic discounting", but really, it is at the heart of human nature.

Discounting is the human tendency to put a higher value on something that reaps little benefits at present over something that can bring you greater benefits in the future.

This can be easily applied to health insurance coverage. With pressing financial needs such as your mortgage and car loan playing tug-of-war for your wallet, you would rather not spend on a personal health insurance plan, thinking that the national healthcare schemes will help to pick up the tab.

Our national healthcare system is targeted to ensure affordability, and whilst our healthcare system is one of the best in the world, the truth is that healthcare costs are escalating.

The increase in our healthcare costs is inevitable, given our ageing population, the shift towards "rich-country" chronic degenerative diseases that cost more and take longer to treat, and a general attitudinal shift towards a preference for private healthcare.

In Singapore, whilst 84 per cent of our population is covered by Medishield (as of 2009), against a backdrop of rising healthcare costs, many of us may potentially find ourselves in dire straits when an accident or debilitating illness strikes and wipes out a large portion of our savings account.

The bare minimum

If you are working, you will have Medisave, a dedicated savings account that is meant for medical treatment. However, there is a limit to how much you can withdraw a year, provided you have an excess of $34,500 in your Medisave account. Factor in escalating medical costs and it will be highly likely that any major surgery will wipe out your Medisave account for future use.

Even a simple accident can set you back more than you think. Tear your knee ligaments because of slip down a staircase, and the operation can set you back anywhere from $6,000 to $10,000. That could be a big financial burden for someone in his 30s trying to achieve financial stability.

True, Medisave provides minimal cover and can be used to buy Medishield, a low cost insurance scheme that covers medical expenses of major illnesses. However, Medishield will still leave you with a significant portion of your medical bill to cover, and will only pay for expenses in a Class B2/C ward. Should you want treatment in a Class A ward or a private hospital, Medishield suddenly begins to look threadbare.

As such, having a comprehensive personal health insurance plan is especially important. It prevents you and your family from enduring any financial suffering when you face a health crisis.

The truth is, only the indigent or large families living on very modest incomes cannot afford some kind of basic health insurance these days. A family of four could probably get a private Shield plan for as low as $300 a year. To put it in perspective - that is less than a cheap holiday for four, and certainly cheaper than a couple of nights out every week.

Health insurance actually comes in several different forms, and knowing the difference goes a long way in getting you the appropriate coverage

Integrated Shield Plans

If you are looking for higher medical expense coverage than what your Medishield provides, you can consider Integrated Shield Plans that are offered by some insurance companies.

These are suitable if you plan to use Class B1, Class A wards or private hospitals and the best part is that they are combined with your basic Medishield so that you only pay one premium for coverage under both the private plan and the basic Medishield.

To make things even easier on your pocket, you can actually use Medisave to pay for your premiums, up to the prevailing withdrawal limit set by the Ministry of Health.

Medical Expense Insurance

If you are looking to cover your medical expenses, then you may want to consider Medical Expense Insurance.

It will pay medical expenses incurred as a result of an accident or illness as well as cover expenses for inpatient medical treatment or surgery, some outpatient charges for day surgery, consultations with specialists before and after the hospital stay and x-rays and laboratory tests.

Note, however, that medical insurance will not pay you more than the actual medical expenses incurred, regardless of the number of policies you have.

Also, you should be aware that there are limits to the amounts you can claim, as each policy will have varying criteria. Some medical expense policies may also have deductible and co-insurance features.

Hospital Cash Insurance

If you want to receive a fixed amount of cash while you are in hospital, then Hospital Cash Insurance is what you are looking for.

This kind of policy actually pays you a fixed amount of benefits for each day that you are in hospital, regardless of the actual expenses incurred for your stay.

The point to note with this type of policy is that the total amount you are paid may be more or less than your actual expenses.

Critical Illness Insurance

On the other hand, Critical Illness Insurance reduces your burden in the unfortunate incidence that you are afflicted by a major illness or disease.

While the types of diseases covered by these policies vary from one insurer to the next, there is a list of major illnesses that are covered by almost all policies. These include cancer, heart attack, coronary artery bypass surgery, stroke and kidney failure.

It is important to note that benefits are paid only if the disease or surgery exactly meets the definitions stated in the policy. These definitions are fixed across all insurance companies in Singapore and can be found in website of the Life Insurance Association (www.lia.org.sg).

As long as you can prove that you are diagnosed with one of the diseases, as it is defined by your policy, you are entitled to the payout, which usually comes in the form of a lump sum. The amount paid does not depend on being admitted into hospital or the actual medical expenses you incur.

Disability Income Insurance

One of the main concerns of the breadwinner of the family is where the money will come from should they be unable to work. This underscores the advantage of disability income insurance.

These types of policies pay out a fixed amount of money, usually up to 80 percent of your monthly salary, on a monthly basis to ease the burden on those you who were dependent on you. The monthly payout income benefit will usually be paid for up to five or 10 years, or until you are 60 or 65 years old.

The most important point to note with disability income insurance is the definition of disability used in the policy. Some policies define it as not being able to perform your usual work while others define it as not being able to work at all, so be sure to check with your financial adviser on the definitions before taking on the policy.

Long-Term Care Insurance

For rapidly ageing Singapore, long-term insurance care is becoming increasingly relevant. For these policies, benefits are paid when you cannot perform 'activities of daily living', which include bathing, dressing and moving around.

However, these policies have strict definitions and may vary from one policy to the next. To qualify for payment benefits, you must meet those definitions and the minimum number of activities you are unable to perform. Should the number of activities you are not able to perform fall below the minimum required number, payment of benefits will stop.

Pinpointing your healthcare needs

Of course, it is more likely that more than one of these policies might apply to you. It is not unusual to have more than one - but the first thing you should do is check the extent of your current private coverage, and any coverage that your employer might be providing before making a choice.

You may want to approach a financial adviser who will be able to perform a fact-find process. It is a detailed analysis that assesses and identifies your insurance needs so that your financial adviser can then recommend the suitable products to meet your healthcare needs.

The outcomes from discounting can be very dear so don't risk it - for the sake of your family.

What Happens to Me if I Have a Medical Catastrophe I Cant Afford?

2010-09-03T11:44:00.002+08:00

A medical catastrophe can generate enormous bills. Beyond that, it can affect your ability to earn a living. A serious illness or injury can be devastating to your health and your finances.

She has 3 policies, but no coverage

2010-09-02T11:15:00.003+08:00

Tue, Aug 31, 2010

The New Paper

Protect the roof over your head, buying cover early can save costs

2010-09-01T12:25:00.001+08:00

A family’s biggest ticket item is the house they own but only 3 out of 10 home loan customers in Singapore buy mortgage insurance.

We need to realize that home loans need to be insured too on top of all of our needs, from children’s education to hospitalisation.

Mortgage insurance can be extended to cover permanent disability, critical illness and unemployment by offering decreasing coverage over your outstanding mortgage loan duration.

Family stands to lose the roof over their heads should the bank reposes the house if the breadwinner who is paying the mortgage dies prematurely.

Mortgage insurance is compulsory for HDB flat owners who use his CPF savings but it is not a bank requirement for private home owners. However, some banks do bundle mortgage insurance into their home loan packages.

Mortgage insurance is an important part of an overall financial plan as your home is probably the biggest purchase and financial commitment in a lifetime. Family must ensure they will not be burdened with outstanding home loans, or possibility of selling the house in the event of unforeseen circumstances.

There are a few considerations when shopping for mortgage cover.

The amount of cover
Buy on a joint life basis
Buy early
Interest rate assumption
Guaranteed premiums
Check the supplementary benefits

No such thing as high returns, low risk

2010-08-30T15:19:00.001+08:00

Sunshine Empire episode contains lessons on how to spot a scam. Sunshine is not the first Ponzi-like scheme and will probably not be the last. There was the Gemini Chit Fund in the early 1970s. In a Ponzi scheme, people are enticed to investing by promises of high returns. However, the returns are paid out of funds from new investors entering the scheme. All will go well until the flow of new funds dries up. Warning bells should ring if you are asked to invest money and rope in others with you.

Only professional trained people can provide financial products and services and you will enjoy the protection of MAS laws if you deal with a regulated entity. MAS provide a Investor Alert list which details the entities it has not authorized to conduct regulated activities here.

Here are some questions you should ask:

Is the provider regulated?
What are the returns dependent on? Is the return being paid from new inflows of money or from actual investments?
When will the returns be paid? What is the amount and how much is guaranteed? Who provides the guarantee?
How long must you stay invested? If you want to withdraw your money prematurely, what are the penalties and procedures?
How can you monitor the performance of the investment? What reports will you receive and how often?

There is a universal concept in investment known as risk-return trade-off: Low risk level is associated with a low potential return, while a high risk level offer potential higher returns. High returns investment product means there is a higher risk of losing the capital. There is no free lunch in the world, thus there is no such thing as a zero-risk, high return investment.

Buying within your means

2010-08-27T11:52:00.001+08:00

First time home buyers in a rush to secure a home may inadvertently commit themselves to properties beyond their means.

It is important to take a long-term perspective on housing affordability since mortgage payments take priority over other basic necessities. In Singapore, affordability is measured by the ratio of monthly mortgage payment to current monthly household income with a cut-off ratio of 40% by banks to decide on home loans. However, this might not be a good measure of affordability.

Ratio of house to lifetime income can be a better indicator of housing affordability. Homebuyers need an estimate of their lifetime income after they know the prices of the houses they want and the transaction costs.

The table provides illustrative computations of housing affordability for three income group references by focusing on young homebuyers.

Travel Insurance for Travel Tours

2010-08-26T14:45:00.002+08:00

You may not know if you need travel insurance or not even though you are planning for your vacation. You may have come to know about the necessity of travel insurance from travel agents. Hotel reservations, airfares and additional arrangement cost a bomb so question arises whether to make insurance or not.

You might request for money back because of various incidents. Travel tours might be cancelled due to number of incidents. Travel insurance ensures that your money will be refunded if airline unexpectedly go out of business one week prior to your trip or you are not able to travel and vacation deals are off due to illness. Travel insurance can help in one way or another.

Travel insurance will take care of unforeseen circumstance that may prohibit you from flying. In the event of sickness to a death in the family, your money will be refunded.

Travel insurance is an essential part of any trip and is something that should not be put aside.

Why buy travel insurance?

Travel insurance protects you while traveling, thus providing the necessary protection you will need in the event of a unfortunate event. Any person traveling anywhere without travel insurance will be in a dangerous situation if an accident occur.

Coverage for travel insurance

Medical cost, transportation to a medical facility, and reimbursement for certain or some nonrefundable costs due to a interrupted trip, and financial loss of funds are coverage which travel insurance provide.

What is the medical care coverage?

In the event of illness or serious injury, medical transportation to an appropriate medical facility and medical treatment will be covered. There will be coverage to bring you back home if it is deem necessary.

Hong Kong: Hostage victims to receive insurance compensation

2010-08-26T14:26:00.001+08:00

http://www.asiainsurancereview.com/pages/print2.asp?article_ID=12744

The families of four of the victims killed in Monday's bloody hostage crisis in Manila will receive compensation totaling up to HK$1,320,000 (US$170,000) for each victim. The sum comprises a HK$300,000 payout from the insurer of the Hong Kong-organised tour they had been travelling on, a HK$20,000 gratuity from the Hong Kong government, as well as an extra HK$1 million because the four had bought travel insurance from Chartis through the travel agency, Hong Thai, for the tour. The next of kin of the other four dead victims will receive up to HK$320,000 for each victim.

Chartis Vice President, Mr Wong Fu-tat, said at a press conference that as the incident was a special case, "the level of compensation for victims has been doubled from HK$500,000 to HK$1 million, under insurance covering accidents caused by public transport". The insurer will also help with the cost of bringing the remains of the dead to Hong Kong.

Mr Wong adds that the injured stand to receive up to HK$1 million in medical insurance benefits. Chartis will also provide them with cover of up to HK$100,000 for six months of follow-up medical treatment in Hong Kong.

Separately, the Manila Bulletin newspaper reports that the victims of the hostage-taking crisis will receive insurance benefits from the Passenger Accident Management and Insurance (PAMI) Agency as the bus that carried the tourists is insured by the agency.

Land Transportation Franchising and Regulatory Board (LTFRB) officer-in-charge Assistant Secretary, Dante Lantin, said: "The families of the dead victims of the hostage are entitled to at least PHP60,000 (US$1,318) insurance claims each. As for the injured passengers, PAMI has committed to shoulder part of their hospital expenses," he said. Apart from the eight Hong Kong tourists killed, the hostage-taker himself, former police officer Rolando Mendoza, was shot dead. At least seven others were injured in the incident.

Long Term Care Insurance

2010-08-25T15:00:00.001+08:00

Average life expectancy of people has been extended due to medical breakthroughs and advancement in technology. Seventy years old is no longer considered to be old age by today’s standard. But there is an increasing chance of us requiring some kind of professional care or assistance in our lifetime.

Elderly people have three most important concerns (1) having enough money for daily living and not outliving their assets; (2) maintaining their health; (3) the ability to remain independent in their home.

People often overlook long-term care as part of their financial plans. Long-term care provides a monetary benefit for necessary health care services when individuals become incapable of caring for themselves.

Caring for an elderly is difficult and demanding as it requires a high level of responsibility. The secondary issue will be expense of health care which can have financially devastating consequences.

Family of bus accident victim left in dire straits

2010-08-24T11:58:00.001+08:00

Sole breadwinner’s last pay cheque of $300 was the only source of income that keeps the family of six going. Now the window has to worry about where the next meal for her and her children will come from without her husband around. To make things worse, two of the children are ill; one was diagnosed with kidney failure four years ago, another has been seeking treatment for depression at IMH.

You can by no means be familiar with when you might breathe your last. Family will be blown apart all of a sudden with unforeseen happening. Having protection will assist you to look after your family even after you are no longer around. A life insurance can be used as a protector of your loved ones once you are no longer there to do it personally. You will be providing financial protection to your family as well as securing their future on the whole.

Some may not be familiar that life insurance not just protect you, it protect your entire family as well. It is weird that a lot of people are just not familiar with the advantage provided by life insurance. That is why they desist from buying them. The idea behind all life insurance policies like whole life or term life insurance is to grant you with financial help in case of tragedies.

There are infinite and several advantage of life insurance like financial security to your family in case you are no longer with them, protecting the future of your children by providing them with financial help to keep on with their studies.

Ensuring your family is taken care of after you are gone is a very important thing to think about. It is very depressing to ponder over this issue but it is essential to ensure your family has enough financial support when the time has come for you to go. Especially if your family members are financially dependent on you and your salary. If you have already invested in life insurance, take a look at your policy and see if it’s the right one to have.

For all the above reason, don’t waste your time, act fast and buy a life insurance to protect the financial future of your family right now. Don’t buy life insurance because someone tells you to or because that is what the rest of the world is doing. Buy it because you want to take care of your family today, you will be able to take care of them even when you are gone.

Thai Insurance Commercial - "Grandpa"

2010-08-23T14:38:00.002+08:00

3 financial shocks you should guard against

2010-08-20T10:50:00.002+08:00

By Thomas Mathew

All of us are given an opportunity to manage our own time and resources. Every day, we are given 86,400 seconds - to invest or to spend. The choice is yours.

If you have invested your time well, you will find that you have created enough wealth. Creating wealth is easy if you have invested your time, energy and money in the right places for the right purposes.

These three shocks are inevitable in most individuals' life, it is just a matter of when and the sequence.

However, if every individual handles them well, I would say your financial health status should be in pink, as your strategy should ensure retirement goes as planned even if the three shocks all occur at the same time.

Financial planning creates a well-planned and well-organised time line that can withstand three major shocks.

Time-line Shock

Disruptions to your life: Mainly physical or medical conditions and situations where you are not able to perform to your usual physical ability

You are very likely to have purchased insurance policies without much consideration and coordination to the scope of coverage, level of coverage and cost of coverage. As a result, you may be implicated in one of the followings:

Coverage that is not comprehensive - Risks that you should have been covered for, but are not
Too low coverage amount - Risks that you are currently covered for, but at too low a level
Too high in overall premiums paid - Paying a larger premium than necessary

To avoid the risks above, you should establish a proper Risk Management Portfolio (RMP) to manage your risk exposure efficiently and effectively.

What is an RMP? An RMP is a combination of a portfolio of risk management programmes to manage the different aspects, levels and degree of impact of the risks that you are exposed to everyday.

All these inefficiencies can be avoided by :

Insisting that you be given a thorough financial health check before any insurance plan be recommended or purchased.
Insisting that you be given a comprehensive selection of the insurance plans from different companies to compare and choose from so that you can have the best option in terms of coverage and premium costing.
Insisting that you be given a complete report on how your overall risk management portfolio is able to withstand the time-line Shock, Self-funding Shock as well as the Market Shock.

Self-Funding Shock

This situation arises when income comes to a stop and money is required to handle daily expenses until income start to stream in again.

This is one of the most overlooked aspects in risk management.

A classic example can be found in the way most people manage their medical risks. The cost of medical insurance plan increases every three to five years, depending on the medical plan.

If you are struck with a critical illness like cancer or heart attack, most probably you will be out of work for some time, and maybe even a long time. When that happens, it will create a great challenge - who is going to pay the premium for the medical insurance plan which is increasing every three to five years?

The premium can reach an unaffordable level after a few rounds of adjustment so unless a funding mechanism is structured within the overall Risk Management Portfolio, your savings or cash reserve will be wiped out rather quickly.

Therefore, it is important to ensure that your overall Risk Management Portfolio is able to withstand the self-funding shock and at the same time, provide you and your family with lifetime financial security.

Market Shock

When the market does not go in your favour or major events cause disruption to the usual performance of the market.

A risk management portfolio without any element of protecting you against market shock can only be as good as temporary protection.

We have seen so many cases in which the risk management portfolio was wiped out completely due to the inability to keep the program going in the midst of an economic or market crisis.

Market shock can only be managed through proper strategic planning. Understanding how inflation, economic data, interest rate and liquidity can impact the market is vital to the successful management of your money.

Depending on your risk profile, your funds can be invested into tactical growth, balanced and income funds. The percentage of allocation into each of these investment categories will depend on your risk appetite, investment objectives, time horizon, how much capital you wish to accumulated and the portfolio returns needed to achieve your investment objectives.

Your objective here is to construct an investment portfolio that can withstand market shocks and also give you a decent rate of return of between 8 per cent to 12 per cent annually.

Planning ahead...

One of the keys towards achieving lifetime success is to engage ourselves in financial education.

Financial education is more than just acquiring information and knowledge. Financial education is more than just knowing the facts.

The real process of financial education should entail:

Acquiring financial knowledge
Connecting to the financial community
Engaging in financial development
Being mentored by financial experts
Exploring new financial options
Being clear about your own financial destiny

Education insurance for your children

2010-08-19T10:51:00.001+08:00

The love for children is so much that parents are willing to do everything for them. Right? There wouldn’t be any parent who does not think for the future of their children. When one enters a married life, he is already thinking of having a baby. As early as conception, parents are already preparing for the future of their baby.

Education of the child is the very first thing parents would think of when the baby is born to the family aside from bringing him/her up. That is why couple would plan for the education of their child as early as they can. This is to prevent the child from being deprived of his right for education in case something happen to the parents. Education insurance can help the child to pursue his education with or without his parents later if he has been insured of his education through education insurance.

Education insurance can be purchased anytime for a child, even before the child is born. It is beneficial to purchase during this period because the premium is lesser compared to when the child is already there.

At the moment you buy education insurance for your child, you should already decide which school your child will study. If you plan to send your child overseas to an exclusive school, you know that you will need to prepare a huge amount later. So it is better to have a plan for his education as early as zero age.

The premium of the education insurance depends upon on the kind of school your child will enter in university. Alongside with the education insurance are benefits for the payer. Insurance companies offer in case of untimely or premature death of the payer, the insurance is considered paid. This means that the child’s tertiary education is already assured even without his parents. The child will enjoy the benefits of the education insurance that his parents brought for him.

If you are a parent who wishes to offer a bright future for your child, get education insurance for him now.

Some parents have purchased permanent life insurance policies on children so that they can use the cash value accumulation later in life. Permanent life insurance should be considered on a child once the parents have taken care of their own life insurance needs.

The added benefit is teaching child about life insurance. Parents that show their children the benefits of life insurance prepare the child to take responsibility for their own financial future.

You may ask is it wise to buy an insurance policy for your child? Is it really necessary? Parents often ponder over these questions.

It is wise actually buying a policy of child life insurance as it leads your child’s life to a future which is financially secured. As they step into adulthood, the child life insurance policy will have cash value that supports your child’s life with a financial cushion.

Child life insurance policies are affordable as any adult life insurance policies.

Some might consider this as a foolish decision to spend money on any child life insurance policy. But the following are reasons why it is important to beneficial to have a child life insurance policy.

In case your child suffers from illness that may take his/her life, you may be left with funeral and burial cost or may be even medical bills. So the pre existing life insurance proceeds could provide the extra cash you need to settle the worries.
In case of fatal illness, you may have to bear huge medical expenses. So the child life insurance policy’s proceeds can support the family with significant financial relief.
If your child develops any serious medical condition while he/she is uninsured, parents may find premiums to be expensive. However, early coverage results in significant cost-savings.

It is agreeable that the child hardly show any significant contribution to family’s income, but purchasing some insurance policy for children can really give good financial support under certain events.

Plan early for your children's education

2010-08-18T16:30:00.001+08:00

Child’s education is one of the most important topic when it comes to financial planning. It is essential to plan for the future because cost of education is advancing faster than inflation.

Education planning is a long process as it could range from 15 to 20 years. There is a need to start the planning process as soon as you can to reduce the monthly commitment required by taking advantage of power of compounding over time and the ability to ride out the volatility of different market cycles over a longer period.

Endowment insurance plan is one of the most popular choices as it provides both savings and protection. However, parents who are savvier with finances can consider equity market, high dividend stock, mutual funds or unit trust. Early planning brings flexibility and the opportunity to optimize risk return on the strategy chosen.

People who prefer the traditional way of saving can open a bank savings account for the child to provide liquidity and cultivate a good savings habit.

Not every family can afford to set aside a lump sum to finance a child’s education. Thus, it is a good strategy to have the discipline to set aside money on a monthly basis through either a regular savings/investment plan. It is very easy to find excuses to dig into savings if there isn’t a strategy or specific account setup, so stay focus.

There will be sense of comfort and peace of mind if children education fees are secured by starting early to plan with a saving and investment strategy. Discipline will be the key to success of education planning.

Life insurers hit $2.6b in new sales

2010-08-17T11:26:00.001+08:00

New business premiums are 34% ahead in the first half of 2010. There are several possible reason for this scorching rate of growth.

People are using life insurance to provide their families with more than just money for final expenses and limited replacement income if something should happen to them. They may be interested in providing enough money to fund a life annuity to support their spouses, as well as enough money to provide for their children until they can support themselves. If they want to provide university money for their children, additional insurance may also be needed.
Dual-in-income families often depend on both incomes for necessities, and must protect themselves against potential loss of this income if one spouse should die. This means both spouses need to purchase insurance.

More people are buying increasingly larger policies to maintain a standard of living for their families rather than just provide for necessities. Part of this may be because consumer goods and services that were previously considered luxuries are now considered necessities (air-conditioning, personal computers, higher education, etc.) Also purchases of larger policies will likely be part of formal financial planning as people suddenly realize how much insurance they actually need to protect their families against the possibility of their untimely death.

Financial planning itself will become more commonplace and will no longer be a planning tool only for the affluent.

Where Are You? And Where Do You Want to Go Today?

2010-08-16T10:20:00.001+08:00

Ever heard of the phrase, “You can’t get there from here?” You also can’t get to the next level of success until you know where you are today.

Ever heard of the phrase, “If you do what you’ve always done, you will get what you’ve always gotten?” If you’ve never taken an hour to think about where you want to go with your finance, how will you know where to go?

Of course, the most frightening question of all is, “If you don’t know where you’re going, how will you know when you will get there?”

Do you want to be doing better than you are right now financially? How will you achieve that? And will your course of action be anything new?

The point of all these questions is that it’s nice to have a helping hand when you start to define where you are and where you’re going. This is what this blog is all about, block out a time slot today and arrange a appointment with a professional to give you a helping hand.

Take a little time out for some introspection and reflection on where you are and where you want to go; otherwise, you can’t get there from here!

Money advice for new graduates

2010-08-13T17:07:00.000+08:00

1. Define your financial goals. What do you want to have in the future? Write down your goals and a general timetable so you can remind yourself of your goals later on. Some good goals are: having a car in three years' time, enrolling in graduate school in five years' time, establishing an emergency fund within a year. By having a timetable, your goals become more realistic and attainable.

2. Look for a job that will use your skills, give you room for growth, and will give you steady income enough to meet your needs and allow you to save. The job market is very competitive but that does not mean that you should grab the first job opportunity that comes by. Weigh the pros and cons of each job offer and choose wisely. If the job offer comes with additional benefits such as car plan, subsidy for further studies, and profit-sharing, that's even better.

3. Once you have a firm job offer, draft a budget to help you plan your monthly spending. With a new job, you will have a steady income coming in. Start by saving first (see next item below), then allot amounts for regular expenses such as food, transportation, clothing, and others. Live within your means.

4. Open a separate bank account for savings, different from your payroll account. This will be for your savings. Ideally, you should deposit money here regularly and make the money grow for future consumption. Ideally, too, you should take out the money meant for your savings (at least 10 percent of your income) as soon as you get your pay, so you won't be tempted to spend all of your income.

5. Save up for an emergency fund. Make this your priority for saving. Build up a fund equal to three to six months' worth of your expenses so that if anything happens-you lose your job or get sick-you can have a fund to dip into to help you in your day-to-day expenses.

Don't touch this fund unless there's an emergency (thus the name). You can put this fund in a time deposit or money market account for easy access.

6. Once you have saved up enough money for an emergency fund, tackle your other savings goals. Save for that car or dream home in the future. Don't forget to start saving for a retirement fund because the earlier you do it, the better as compound interest will make your money earn even more without you doing anything. To give your savings a kick (in terms of growth), look into investing them in instruments or accounts that may give you more interest or yield than what a savings account may offer. Talk to your bank for more details.

7. Get insurance coverage. You'll never know what's going to happen, but it pays to be prepared always. Take out a life insurance policy if you have dependents. Buying life insurance while you are young also means paying for lower premiums. If your company does not give free health insurance, make sure you get one for yourself. With health care costs escalating and more so as you get older, it will do you good to have some form of coverage in place.

8. Read up on financial matters. Sharpen your financial IQ by reading more about personal finance and attending personal finance seminars. You can learn from experts to help you stay on the right track financially.

Good luck and we hope all your financial dreams come true.

Philippine Daily Inquirer/Asia News Network

Want to retire? Start saving at 24

2010-08-12T18:40:00.001+08:00

If you only think about retirement when you are in your 40s, there is only 20 years to save for 25 years of retirement life. You should start when you begin to work, saving at least 20% of your monthly income. Your savings plan will be determined by what kind of retirement lifestyle do you want.

There will be a need to upgrade your Medishield to a comprehensive medical insurance to prevent yourself from paying $20,000 or more for major operation which will be covered in the upgraded scheme.

You will not be able to purchase insurance or there will be exclusions when you hit a certain age and start developing age-related illness. So do get yourself insured when you are young and healthy.

Managing money at every stage of life

2010-08-10T14:19:00.002+08:00

AS day follows night and is little under our control, so do our lives move through the years.

On this journey, our physical, social and family needs continue to evolve as the years go by.

We're the children of our parents.

We're the parents of our children.

Sometimes, we may become the support system of our parents.

And finally, our children often become the support system for us, especially for most Malaysians.

Accompanying each and every stage and change in life, we face different challenges of money management.

Whether you're young and single, newly married, or starting a family, find out your financial needs and objectives are, as well as the financial risks and mistakes you need to avoid at every stage.

Young and single

The young and single group includes those who have not married or teamed up with a partner.

They are typically:

From ages 18 to late 20s
Developing a first or maybe, a second career
Still staying with parents or are renting or owning a house
Beginning to invest money

Their financial needs and objectives include:

Establishing a lifestyle
Establishing a career
Controlling credit card and other debts
Supporting themselves and perhaps their family
Buying a car
Buying a home

The financial risks and mistakes to avoid at this stage of life may include:

Spending too much of your income in establishing a lifestyle
Incurring too much consumer (credit card) debt
Failing to start building the habit of saving and investing
Failing to establish financial goals and objectives
Thinking that you can postpone saving for the future until you earn more
Not investing in assets that offer reasonably high capital growth
Investing too much money in high-risk assets such as options and futures, or speculating in the stock market
Failing to get insurance coverage against the risk of disability and medical expenses

The key to money management at this stage of life is to set financial goals and use your money wisely.

Since you're just starting to earn an income, your spending profile can seriously affect your savings and investing habit for the rest of your life.

But since most earn a relatively fixed income, we should be able to plan our living expenses reasonably.

The key money management strategy here is to adopt a relatively conservative lifestyle that is within your means.

Start building your wealth as early as possible.

Newly married couples

This group is those who recently got married.

They are typically:

From ages mid-20s to mid-30s
Melding the lives of two different people
Bringing two extended families together
Joining finances
Merging the financial objectives and investment styles of two people
May rent or own a house

Their financial needs and objectives include:

Establishing a lifestyle as a couple
Seeking promotion and status in their career
Saving and investing for retirement of two people
Supporting the family
Buying a home
Furnishing a home

The financial risks and mistakes to avoid at this stage of life may include:

Not able to establish joint financial goals
Spending too much money for the wedding and new family lifestyle
Incurring too much consumer (credit card) debt
Failing to save and invest your income
Failing to consider each spouse's financial objectives, investment style and risk tolerance
Thinking you can postpone saving for the future until you earn more ? Not investing in assets that offer reasonably high capital growth
Investing too much money in high-risk assets such as options and futures, or speculating in the stock market

The challenge of money management at this stage is to establish a financial plan together as a couple and compound the synergy effectively.

This stage of financial life is typically characterised by two people with different upbringing and value systems joining together. Developing a financial plan together may not necessary mean that you should merge all of your assets into one plan.

The key is to have a master plan that takes into account the holistic view of the family and still allows for two different investment styles and risk tolerance.

For some couples, financial matters can be a sensitive topic.

If this is the case for you, consider getting a financial coach to act as facilitator.

Married with children

This group includes married couples with one or more children.

They are typically:

From ages late-20s to late-30s
Transitioning from a family of two to a family of three or more
Facing changing lifestyle and spending patterns due to the children
Considering whether one spouse will leave the workforce to take care of the children

Their financial needs and objectives include:

Establishing a lifestyle as a couple with children
Advancing in career or setting up own business
Financing expenses of their newborn and growing children
Saving and investing for tertiary education of their children
Supporting a now larger family
Buying a larger home for their expanding family
Furnishing a new home

The financial risks and mistakes to avoid at this stage of life may include:

Not planning and saving for increased expenses relating to your children
Spending too much money on your newborn and growing children
Failing to save and invest for retirement due to too much focus on planning your children's tertiary education
Not having sufficient insurance coverage in line with the increased responsibilities
Not investing in assets that offer reasonably high capital growth
Not making a will or appointing a guardian and trustee for your children

The key focus at this stage is to take your children into money management consideration.

There's often an adjustment period due to the increased responsibilities and family commitments.

Despite the importance of your children, you must not neglect saving and investing for old age.

By Yap Ming Hui

The writer is managing director of Whitman Independent Advisors Sdn Bhd and author of five best-selling personal finance books.

HSBC advertisement on their "Future of Retirement" plan

2010-08-09T13:30:00.002+08:00

Minimise risks of retirement

2010-08-05T10:02:00.001+08:00

Reuters

WASHINGTON - Retirement is full of risks. There's the risk of sickness and needing expensive care, or of running out of money or of being divorced or widowed.

The problem with many retirement plans is that they try to treat all of these risks with a single solution -- save more money or buy an annuity.

"There are multiple risks in retirement, and it's wise to insure against each of them, to the extent insurance vehicles are available and affordable," says Frank Todisco of the American Academy of Actuaries.

Here are some of the risks that can occur in retirement and some ways to insure against them.

-- You may not have enough money to afford your lifestyle. This is the first risk everyone talks about. The best way to prepare for it is to save. You can also protect yourself against this risk by delaying retirement and the start date of your Social Security benefits.

Cultivate the skills and contacts that could net you part-time income after retirement. Do the lifestyle analysis necessary so that you know how much of your current way of living you could give up. Sometimes the only 'insurance' you need is the flexibility to know you could downsize and still enjoy life.

-- To address the need for extensive healthcare there is long-term care insurance. Policies have improved from their early days, and premiums now are tax deductible. But shop carefully. Some policies cover only nursing home costs. Others also cover care at assisted living facilities and at home. Most policies require you to have some physical or cognitive problem that makes it necessary for you to get help with the activities of daily living. Policies also have different rules about how long they will pay, how much they will pay, and whether their benefits will rise with inflation.

-- Long-term care insurance will not pay your rent every month if you live to be 98 and are still healthy and somewhat self-sufficient. To insure that you'll not run out of money over a long, long life, many advisers are starting to recommend a product called "longevity insurance."

It's really a deferred annuity that you defer for a very long time. In an example provided by bankrate.com, you might buy it for a one-time payment of $25,000 when you are 65, and it won't start paying until you're 85. At that time it would pay $3,000 every month for the rest of your life. A product like that might be competitively priced enough to take a chance on, if good genes run in your family. If you invested $25,000, earned an 8 percent return every year, and then took out $3,000 every month, you'd be out of money in fewer than four years.

Another approach is to buy several immediate annuities at different times in your retirement, a strategy called an "annuity ladder" that is recommended by Virginia financial advisor Bob Carlson, editor of Retirement Watch newsletter (www.retirementwatch.com).

When you buy an immediate annuity, you turn over a flat sum to an insurance company which promises to pay you monthly for the rest of your life. Most advisers recommend that retirees only annuitize a portion of their savings anyway.

He takes it a step further by suggesting retirees phase in their annuity purchases over several years. That would protect them from the possibility of losing out: buying a big annuity and dying before receiving many payments. It would also help you to bump up the monthly amounts you receive from those annuities. They would be larger in the future both because they'd be calculated on your (presumably shorter) life span, and because they would be calculated on the basis of bond yields that might be expected to rise from today's comparably low rates.

Disability Life Insurance

2010-08-02T13:41:00.001+08:00

Most families don’t have enough disability life insurance. If you are one of those families, chances are you don’t have it because it is too expensive. Sometimes you don’t have the time to apply for one. You keep putting it off to tomorrow.

Well, if you find the right insurance company to provide you with what you need, you will have your disability life insurance in no time. You will have the insurance protection that you and your family deserve.

Have you ever thought of this happening? What if your last payday was your actual last payday? What will you do for money? How would you pay daily expenses like electricity, mortgage, food, car, and other expenses if there is not money coming in?

If you don’t have a paycheck for the next 3 months, can you see yourself surviving?

A number of Singaporeans know the need for health insurance, life insurance, car insurance, and home insurance. Nonetheless, they still think about insuring their ability when it comes to their work.

They understand that it is very important to acknowledge the fact that they should have insurance on their income or what is also known as disability life insurance, just in case they get to the point when they can no longer work for a period of time.

Here’s an example of disability life insurance. Imagine that there is a person who is earning $3000/mth. If he works for 30 years, he will have $1.08 million. This does not include the annual bonuses as well as pay increment. It is only practical that the individual files for some kind of disability life insurance.

The thought of becoming disabled may not enter a person’s thoughts but there is a possibility of that happening so it pays to be prepared when it does happen. With disability life insurance, one can keep a steady income from flowing in.

Although disability life insurance covers us and our loved ones during good and bad times, it can be a very dry subject. Following is a quick list to make understanding disability life insurance easier.

Tip #1
Buy only what you need: Make sure you have enough coverage if you ever have to make a claim. And be sure to keep policies up to date with any salary increases you get.

Tip#2
Compare Apples with Apples: When comparing disability life insurance policies, be careful as they have different definitions of disability for each illness. Make sure you specify the same amount of coverage for both so you can make a level comparison.

Buying Disability Life Insurance Makes Sense

Financial planning is necessary to make sure you have enough life insurance and disability life insurance to protect your income. It may not be a topic that everyone finds interesting, but if an emergency arises, you will be glad you took the time to get some good disability life insurance.

$1M awarded to paralysed Bangladeshi

2010-07-30T16:47:00.001+08:00

A Bangladeshi construction worker’s future is in ruins when he was left paralysed from waist down. A sum of $910,000 was paid to him to cover his loss of future earnings, the cost of having a full-time nurse, and other medical expenses. He now stays in a nursing home and need help with basic daily activities like bathing, eating and putting on clothes.

People often neglect planning for their future. Ask yourself today, what if disability is going to happen, how is it going to affect my future? How is it going to affect my family, my love ones? If a foreign worker require $910,000 to cover his loss of future earnings and all other expenses, what about you?

Have you done any planning for your future?

What is Financial Planning

2010-07-29T17:12:00.000+08:00

Learn about the concept of financial planning and how it impacts you.

Insurance costs may rise with flood waters

2010-07-28T12:23:00.001+08:00

People living in or owning properties in flood-prone areas could pay more for general insurance in the future as underwriters review their risk exposure. There are no planned increases but the recent cases of flooding are causing concern in the industry. Insurance premiums are unlikely to rise if floods happen every 5 to 10 years, but it will be a different story if it is happening every year.

Claims for damages to property and motor vehicles could exceed $10 million as a result of the three floods recently. Income has received more than 100 claims from the floods for damage to properties and vehicles to date.

Loading or surcharge on premiums are likely to be impose by insurers for properties in areas like Bukit Timah, Dunearn Road and certain stretches of Orchard Road. Properties in flood-susceptible areas could attract a surcharge of about 10% of the premiums payable. Cost of motor insurance may also rise for people living and working in flood-prone areas.

Think like the rich

2010-07-27T14:48:00.000+08:00

If you pass all the money of the affluent to the middle class and the poor, who would have it in 20 years? The answer is the rich and most of their wealth will be back with interest. The rich are not smarter or more deserved; they just know how to recover it. The rich tend to do a better job of managing what they accumulated. Learn to think and invest like the rich, then let time provide the transportation to bring you to your wealthier future. You will be wealthier over time if you make time your friend, not your enemy. It’s not the honey, money or talent that makes the rich wealthy. It’s the way they think about financial matters that make their capital grow.

The number-one retirement plan in Singapore is to win the next TOTO or 4D. Consumers spend more time packing undergarments for a weekend getaways or vacations than they do planning for their financial futures. Are you racing towards retirement faster than the rate your retirement savings is growing?

Things to think about

2010-07-26T14:30:00.004+08:00

Now that you've decided to save, and found out where you can put your money more effectively, here are a few things you need to remember when you're trying to accumulate your wealth.

If you're buying an endowment policy for both its insurance and saving capacity, it is important to note that the insurance element is less and not necessarily adequate.

If you're intending to capitalise off high projected returns, it is important to note that they may not materialise and to assess whether you can bear the brunt of possible losses.

If you're going to limit the loss on your principal, then make sure the plan is capital guaranteed. Regular premium endowment plans may not always be capital guaranteed.

If you're going to need more cash and ensure more liquidity, then picking a plan that provides regular cash payouts is a better choice. If it's retirement that you're considering, then a longer tenure and a lump-sum payout type of plan are what you should be considering.

If you're unsure about where to start, it is imperative to seek professional advice from a financial adviser. It is important to pick a good financial adviser and one who is able to be objective. It is equally important for you to be forthcoming with relevant information for the adviser to work with.

If you're going to start buying policies, it is a good idea to buy them from different insurance companies instead of just one, in case the insurer is exposed to problems.

INVESTMENT DISPOSITION

Risk appetite: The ability to stomach price volatility. Staying out of riskier investments is advisable if you have a low tolerance for temporary losses in your capital.

Risk capacity: Separate from your appetite, the reality of your financial condition should shape your decisions. If you have outstanding debt, doubts over your job security or high levels of expenditure, then your risk capacity is limited.

Time horizon: The more time you are prepared to remain invested, the lower your risk of realising a loss.

This article was first published in The Straits Times.

Retire by design, not default

2010-07-23T14:39:00.000+08:00

FOR most people, the 'age of retirement' is about 65. While some plan to leave the workforce earlier, others often realise they will need to continue working longer than planned. But people generally calculate 'early' or 'late' from a mile-marker of about age 65.

Unfortunately, this type of thinking encourages too many people to view retirement as a one-size-fits-all event - and that couldn't be further from the truth. Retirement is a highly personalised lifestyle change that requires careful attention and good decision-making skills. Retirees need to live on assets they have accumulated during a lifetime of work, and those assets cannot be easily replaced if any costly mistakes are made.

Planning your retirement

To get started, you need to ask yourself four basic questions:

What are my investment goals?
How long do I have to invest?
How long do I expect to live in retirement?
How much risk am I willing to take?

Your investment goals will depend on how you plan to spend your retirement. If you don't have a clear idea just yet, consider your current lifestyle and your dreams. This will help you formulate an investment goal, which you can adjust as retirement age approaches.

Next, determine how long it will be before you retire - your time horizon. Generally speaking, the longer your time horizon, the more risk you may be able to accept in exchange for potentially higher returns. If your time horizon is relatively short, you may not want to accept as much risk.

The toughest part of investing for retirement is the discipline it takes over the long term to build a large enough nest egg to enjoy happy and fulfilling golden years.

It requires you to stick with an investment strategy that exposes you to the possibility of loss, which can be a bit unnerving at times. However, there will always be risk in financial markets, so meeting your retirement goals will force you to take an honest view of your own willingness to tolerate risk, to have reasonable expectations regarding market performance and to invest consistently for the long term.

Designing your retirement

If you are nearing retirement, it may be time to do some specific thinking about what your retirement years will look like and how you will use your personal savings and other income sources to fund them.

During our working years, the primary financial goal we should all have is to focus on accumulating assets. Once we retire, the focus is on how to use those assets wisely. In short, every decision you make about your retirement lifestyle will affect your retirement assets.

It pays to think about dividing your retirement savings into three distinct pools of capital and to have the right investment strategy for each pool.

Certain expenses during your retirement will be essential for your everyday needs. Other expenses will be more discretionary - things you might consider lifestyle expenses. In addition you may have financial goals that extend beyond your lifetime, such as creating an estate for your children, grandchildren or a charitable cause.

A complete retirement strategy recognises that each of these three financial categories - essentials, lifestyle and estate - can and should have its own unique investment portfolio.

Essentials

The fixed expenses of life such as groceries, housing, insurance, healthcare and taxes. Investment strategy: Consider an asset mix of 35 per cent equities and 65 per cent bonds to generate a prudent mix of monthly income and long-term growth.

Lifestyle

Those 'nice to have' things that make retirement more enjoyable, such as dining out, club memberships, travel or golf lessons. Investment strategy: Consider an asset mix of 40 per cent equities and 60 per cent bonds to enhance long-term income and growth potential.

Estate

Creating a future legacy, such as an inheritance for children and/or grandchildren or a gift to a cause that matters to you. Investment strategy: Consider an asset mix that includes 40 per cent equities or more and re-invest any monthly income to maximise long-term growth potential.

Don't let the recent financial crisis alter your retirement plans. In fact, there are lessons to be learned,

Despite the negative outcomes we have all experienced during the past year, strategic asset allocation remains the foundation that helps lead to long-term success in reaching your financial objectives.

Don't let 2008 dampen your commitment to strategic asset allocation. Financial turbulence is an integral part of the functioning of capital markets. There will always be some form of crisis that will derail the financial markets every so often. History has shown that financial markets are resilient and will always recover strongly and continue their upward trend.

This is why it is important that, as an investor, you do not make hasty decisions that will affect the performance of your investment portfolios - financial markets will return to their normal state.

Without a doubt the recent financial crisis has taken a toll on investing philosophies. Traditional instruments of diversification - namely, emerging markets, international developed equity and US equities all under-performed US Treasuries in 2008. But the pendulum is swinging back. Many of the 'losing' asset classes in 2008 have historically performed well - and are starting to reward us again. The areas that suffered the most in 2008 are also recovering well.

The other thing that should not change, regardless of whatever financial crisis we may experience, is our lifestyle goals. Retirement, children's education, buying property, etc are long-term aspirations that should not change because we are going through a crisis. Hence, we should not overhaul our investments and put these lifestyle goals at risk. Adjustments may be needed, but strategic allocations should not change. What happens in the financial markets today or the next few months should not affect our plans for the next 10 years or more.

When it comes to investing, a diversified approach across asset classes, markets and managers will cushion us against the impact of market cycles, volatility and corporate failure, like Lehman Brothers, for instance. Investing is also about managing downside risk, as the greater the fall, the bigger the gap you need to fill to recover to pre-crisis level.

Home bias is another factor you need to remove from your investment portfolio, as most people are very comfortable with over-weighting their portfolio in their home country and overlook the benefits of global investing. For example, many people are underweight in US equities at the moment, but the valuations in the US are more attractive right now relative to, for example, Asian equity markets.

Finally, remember to stick to your strategy. Once you have your retirement goals and plans in place, it's generally best to stick with your strategy - even if the markets go down. Unless your life situation changes, you will likely be better off sticking with your strategy than moving in and out of investments in pursuit of better returns.

This doesn't mean, however, that you should set your investment strategy in stone. You should regularly evaluate your investment decisions and adjust them accordingly as your needs change and your time horizon grows shorter.

This article was first published in The Business Times.

S'poreans grossly under-insured: Study

2010-07-22T11:25:00.002+08:00

Singaporean need an average of $495,000 of life insurance but most only have one-third of that coverage ($165,000), even after including mortgage insurance and CPF savings. There is a shocking shortfall of $330,000.

One should provide enough cash from protection needs to maintain dependant’s current living standard, coverage for any outstanding debts and funeral expenses should also be included. Furthermore, it needs to cover housing costs, allowances for parents and children’s expenses, including education fees.

Men aged 30 to 49 have the highest protection needs as they tend to have the highest income and are prone to having higher personal loans. Thus more dependants are relying on them financially.

Buy Term Life Insurance and hope your term does not come up

2010-07-21T16:59:00.001+08:00

Most of us give thoughts on life expectancy and wish for longevity and a bright future. Some people just have better luck than others. They just happen to be at the right place at the right time for good things to fall onto them. Some just inherit magnificent genes like high metabolism rates and they can just eat and eat without putting on weights while other can gain weight just by drinking water.

But whether you are lucky enough to have good health or otherwise, having term life insurance appears to be a good investment. I will not debate the pros and cons of “whole” versus “term” life insurance as they are financial tools designed differently.

Many of us obtain a term life insurance policy from our job and some don’t even know about it. No amount of money can replace the loss of a loved one, but knowing that the check would provide some financial security can provide disaster from getting worse.

Term insurance bring not just financial security. It represents good planning and can be symbolic of being a well-prepared and planned person. It falls into the same category of having good lesson plans, being prepared for emergency situations, having a roadmap of goals and objectives, and lastly, knowing that you can sleep peacefully at night when you have done your best to be prepared for the future. In short, it is being responsible to yourself and others.

So buy term life insurance. It can bring peace of mind. Of course, hope that your term does not come up.

Focus on objectives

2010-07-20T12:44:00.001+08:00

Each person’s financial objectives may differ in terms of individual circumstances, goals, attitudes, and needs. However, the objectives of most people can be classified as follows:

1. Protection against the personal risks of

Premature death
Disability losses
Medical care expenses
Long-term care expenses
Property and liability losses
Unemployment

2. Capital accumulation for

Emergency fund purposes
Family purposes
Educational needs
General investment portfolio

3. Provision for retirement income

4. Planning for one’s heirs (estate planning)

5. Investment and property management (including planning for property management in the event of disability or incapacity)

Be clear about how your CPF is split after you die

2010-07-19T17:40:00.000+08:00

Be clear about how your CPF is split after you die

Monthly contributions to CPF goes into three accounts.

Ordinary Account which can be used to purchase a flat, pay for insurance, investment and education
Special Account which is designed for old age and investment in retirement-related financial products
Medisave Account for hospialisation expenses and approved medical insurance.

A retirement account will be set up when you reach age 55 by combining ordinary and special account up to the prevailing minimum sum.

CPF savings will be distributed to family according to intestacy laws if no nomination is done after death has occur.

CPF nomination only cover assets under Ordinary, Special, Medisave and Retirement account and discounted Singtel shares brought in 1933

CPF nomination does not cover the following assets

Cash and investments held in CPF investment account under CPFIS-Ordinary Account
CPFIS-Special Account investment
Claim proceeds for Dependant’ Protection Scheme (DPS)
Properties brought with CPF savings

If there is a wish to cover item 1 and 2, it can be done with a will, if not they will be distributed according to intestacy laws.

DPS proceeds can also be covered by a will, however the DPS policy is under NTUC, you can opt to nominate under the Cooperative Societies Act.

Property depends on holding status. If the property is joint, it will be pass to the remaining surviving owner. If not it will form part of deceased estate.

CPFIS are options for CPF member to invest their CPF savings. First $60,000 of combined CPF account earns an extra 1 percent interest, thus to enable members to earn extra interest. CPFIS can only be done after setting aside $20,000 in Ordinary Account and $40,000 in Special Account.

CPF balance is protected from creditors. However, any investments from CPF savings will not be protected from creditors upon death. If there are creditors, you might want to liquidate all CPF investments before death so they are transferred back to CPF and protected from creditors.

CPF nomination can be done by filling up a nomination form which can be obtained on CPF website.

Victim sues Ionescu for $630,000

2010-07-16T13:18:00.002+08:00

A pedestrian is seeking more than $630,000 in damages including loss of future income, medical expenses and transport costs against Silviu Ionsecu in a civil suit.

It is one of the most overlooked elements of financial planning. Yet, it is one of the most important areas. Some might disagree, arguing death is a certainty for all of us but disability is not. However, it is not just the case of one ceasing to be an income-generating asset to the family, the person sudden change from an asset to a liability. Cost for diagnosis, treatment, and ongoing care adds up quick.

No one thinks that disability will affect them. Yet everyone knows at least one person who has suffered from a heart attack, lived with cancer, or undergone a period of surgery. Car accidents happen on daily basics. Whether it is due to accident or sickness, risk of disability is always present. Financial planner plays an important role in bringing awareness of this need and assists people in planning for continued income.

Que Sera Sera

2010-07-15T09:59:00.000+08:00

The Dollars and Sense of parenthood

2010-07-14T11:55:00.001+08:00

Bringing a child up to tertiary education level can cost parents between $190K and $700K. On average, it cost stands at about $300,000 to see a child through from birth to local tertiary education.

The single largest cost comes from tertiary education especially when it is overseas. Thus, it is importance to start planning as soon as possible through a discipline and systematic way. The amount required to set aside on a monthly basics will be smaller if you start early.

Financial planning is about having s strict regimen of setting money aside and investing. It will be easier to achieve financial goals when you start early because you would not need to rely too much on high-risk investments like stocks or derivatives.

Families are encourage to invest small amounts regularly since it can help to lower average cost of investing over time and help to build up a diversified portfolio that comprises a mix of stocks, cash and bonds.

Financial resources required to raise a child is substantial, but no amount of money can buy things like the joy and laughter which children are able to bring in life. They far exceed the costs.

Paradigm is changing

2010-07-11T15:25:00.001+08:00

Investor might not reach his retirement goals even if the return for expected average long-term portfolio is met. This is because it is not only the magnitude of returns which matters; it is also the order of the returns that matter. An investor’s financial goal of a 20 year portfolio return of 8% may not be achieved if they earn 0% for 10 years and then 16% for the next 10 years.

Retirees should focus on whether or not the stock market and their portfolio is likely to deliver needed returns over a specific time period, which happens to be the first 10 years of their retirement.

The table below is a simple illustration of a 30-year retirement scenario where the portfolio is valued at $1 million during the first year of retirement is there is a payment of $50,000 (5% of $1 million). Portfolio is growing at 10.43% each year and the payment to maintain lifestyle with inflation which is assumed to be 5.38%. Therefore, the absolute return is 5.05%.

There seems to be little risk that the retiree would run out of money with the withdrawal growing with inflation. Retirement withdrawal during year 1 of $52,690 grows to $240,833 during year 30 with the initial $1 million portfolio growing to $4,183,628.

But what if the scenario is different? The table below shows that the portfolio still earns the same average annual return of 10.43% over 30-year period like the above example. Inflation is following the actual yearly change in CPI for the 30-year period starting from 1966.

Even though this portfolio has the same average portfolio return and inflation rate for the period as the first table, the results are startling with the value of portfolio decreasing in value after year 15 of retirement. By year 20, portfolio value fell to $632,508. What do you think the 60 year old retiree who is now 80 years old be thinking when their projected value in year 21 was supposed to be $2.79 million dollars but is actually $589,000?

This is a very good example of how one calendar year where portfolio delivered a negative return can blow up in year 25 of the retirement plan. It is the order of the return, not the magnitude of the return that matters. Because the retiree experienced less than expected returns in the early years of his retirement, the retirement plan was doomed to fail even though the returns for the last 20 years of retirement was outstanding. You may never be able to retire by using buy-and hold-investment strategies in bear market.

However, the biggest risk an investor can make is to not own stocks, because stock market offer investors the highest real, or inflation adjusted, rates of return over long periods of time, typically over 10 to 20 year time periods.

Investors will feel they are a genius in a bull market where asset values are rising during these highly profitable periods. Investors should avoid buying overvalued assets. Overvalued assets will not deliver average annual returns to investors in a time horizon that is short enough to help them achieve their financial goals.

There are two unbreakable rules of managing risk, diversify and don’t buy overvalued assets.

These two rules are simple, but investors don’t find it easy to follow and using them to construct their portfolios. The problem with diversification is correlation. A well-diversified portfolio has assets that have a low correlation to one another so they don’t move during the same time in one direction.

The problem with valuation is that market valuation is a poor market-timing device. Markets tend to “overshoot” their fair values both to the downside and upside, making valuation a difficult tool for investing for any time frame other than the intermediate term which is 7 to 10 years.

Be a tactical investor rather than a strategic investor. Tactical investors believe in both diversification as well as fundamental assessments of market values as the best means to manage risks.

S'poreans face lowered risk of dying young

2010-07-11T15:17:00.003+08:00

Singapore’s mortality rate went down significantly as Singaporeans are less likely to die early. Singaporeans today have an average age of 81, which is 15 years more than 1970 when it was 66.

Factors such as improved nutrition, advancements in health care, control of infectious diseases and promotion of healthy living lowed Singapore’s mortality rates. The only Asian countries which ranked higher than Singapore are Japan and South Korea.

With people living longer, health issues are getting more important. Long-term disability and palliative care will be expensive.

With the increase of singles and of single-child families, we must be prepared to deal with an ageing population where the social support from the family is going to be very stressed.

If you have not done anything for your retirement, now is a good time for you re-look into it.

Save for retirement, S'poreans urged

2010-07-10T21:16:00.002+08:00

Singaporeans are being reminded by Manpower Minister to save enough for retirement in the face of increasing longevity, declining fertility and an ageing population.

Insufficient thought is being put into retirement planning if assumption that CPF monthly income would be equivalent to last-drawn monthly salary.

Singapore inflation climbs to 14-month high

2010-07-06T12:05:00.001+08:00

Singapore’s inflation rate hits a new high. Upward inflation trend is likely to stay and is expected to continue due to transport costs.

Savings being eroded by inflation?

To prevent this from happening, your investment has to earn more than inflation. From 1961 to 2009, inflation has averaged about 2.74% per year.

Assume the inflation is at 3%, one person will need more than $2 at the age of 75 to pay for something which cost $1 at age 50. However, you will come out ahead if your investment is higher than the inflation rate. This means that if you assume your returns to be 8%, $1 dollar investment at the age of 50 will be worth $6.85 at age 75, which outpaces the effect of inflation.

Lost opportunities?

Let’s look things in a different point of view now. If you fail to take advantage of compounding, what is your opportunity lost? If you are 50 years old, for every dollar you spend now will deprive you of almost $7 at age 75 (at 8%). Which means one extra pair of shoe which you spend $90 on today will cost you more than $600 ($90 × $6.85) of retirement money. For a 30 year old, the opportunity cost will be much higher if he purchases the same shoe, it will cost him almost $2,900 ($90 × $31.93) at age 75 and about $6,200 ($90 × $69.93) at age 85.

2010-07-01T10:58:00.000+08:00

Love Card

2010-06-30T14:07:00.002+08:00

TV Commercial. Emotional story depicts the life of a father and son. When the boy's father dies, he is a grown man. He receives a note from his deceased father along with his father's life insurance telling him how much he loved him.

Er, what is a CPF Special Account?

2010-06-29T12:00:00.000+08:00

Ms, it makes sense to mind your money

2010-06-28T11:13:00.002+08:00

Women should pay more attention to investment and family finance due to their longer lifespan and prevent a crisis during a divorce or sudden death of sole bread winner.

Consider a life insurance cover of either whole or term with the child as the beneficiary while setting aside money for a good education because it will cost more than $200,000 in 15 years time to seek for foreign education . Money should also be set aside for emergency fund with at least 6 months of family monthly expenses.

Instructions should be organized and people should be informed where things like record of bank accounts, investments, insurance policies, wills are and easily accessible.

Steps like CPF nomination, will writing, mental capacity act are things which can be done to ensure a smooth transfer of wealth.

Contribution to CPF SRS (Supplement Retirement Scheme) allow claim for tax relief for those who pay income tax and it will be a stream of income with others like rental, CPF Life plan and other investments.

Protect your Retirement Savings

2010-06-24T12:08:00.003+08:00

A loss in the stock market can have a big impact on your retirement plans. Learn how to protect your savings.

What about Early Retirement

2010-06-23T11:53:00.002+08:00

Many people fantasize about retiring early, but the reality may not be as pleasant as the fantasy. Early retirement may not be strictly voluntary, but may occur under pressure. Because business are constantly cutting costs, restructuring, and downsizing to increase profits, employers offer “early retirement” packages as incentives to encourage older, highly paid employees to retire sooner than planned.

Factors to consider when contemplating a voluntary early retirement, or evaluating an early retirement package, include the following:

Fewer working years in which to save
More years over which to stretch retirement savings
The psychological impact of not working
Need to reduce living expenses
Retraining for a job that could provide part-time income

How Much Do You Need?

The sooner you begin planning your retirement, the better off you will be.

Whether or not to take early retirement is not an easy decision. You must analyse your financial resources and estimate what your expenses might be after you retire. Consulting with a financial planner to guide you through the decision-making process is a wise choice. Calculate the amount you can expect to receive after you retire and the difference between that amount and early retirement amount – how will that difference decide your future lifestyle?

So you want to retire early

2010-06-22T15:18:00.001+08:00

There isn’t a retirement strategy which can suitable everybody. It has to be tailored made with individual’s risk profile. People also believe that they will not spend much during their retirement years but actually they will as more leisure time means increase in spending.

Inflation should be factored in when using benchmarks on retirement income. Financial planners can help to do simulation to see how different inputs can affect the outcome. A main decision is how much money should go into risky assets which are decided not just by number figures but also emotion like fear of market crashes or inflation.

Lockbox strategies and glide path are two approaches which can be used to help early retirees to make a decision.

Retirees with huge savings which require modest growth rates can consider government and government-linked bonds, bonds funds, rental property, single-premium insurance plans.

There is no ideal early retirement product but some might say a job which you enjoy is the perfect early retirement plan.

Take cover from retirement risks

2010-06-21T13:38:00.003+08:00

Singapore will face the same retirement issues Japan face today as we are approaching aged society from a ageing society. Retirees must be prepared to return to workforce or delay their retirement unless they done their retirement planning during their younger days.

CPF Life was introduced to provide a regular payout for as long as you live because with medicine and technology advancement, the probability of outliving your savings and assets are much higher. However, to ensure comfortable retirement, other sources of retirement income are required.

Cover the biggest cost in retirement by transferring some of the risk to insurers with a hospitalisation and surgical insurance plan. Don’t underestimate cost of health-care or nursing cost as medical expenses are higher for person above 65.

If you plan to retire at 60 and expected to live till 90, there will be 30 years without a pay cheque. So make sure there is a serious calculation of retirement income instead of just rough estimation because it will be impractical to re-enter the workforce when you realized that you don’t have enough money.

It is going to be harder to time the market, so rather than timing the market, stay invested after a market decline to gain from the subsequent recovery. Always try to balance investment performance of retirement portfolio with withdrawal to ensure that retirement funds will last.

Inflation is going to play a very important factor when planning for your retirement funds as it can erode the value of your funds over time. Do not underestimate how big the impact of inflation on your portfolio.