The leader of a neighbouring country said that the traders are hoarding rice, creating an artificial shortage leading to escalation in its price. This is making life hard for the ordinary people.
This is an example of the failure of the free market. It applies not only to the price of rice, but other essential commodities as well.
In Singapore, we are fortunate to have a co-operative in Singapore (i.e. NTUC Fairprice), that provides essential commodities based on its cost plus a margin to cover expenses and profit. This helps to moderate price increases.
Tuesday, April 15, 2008
High cost of transportation
I read a report in a Jakarata newspaper that the cost of transportation in Indonesia is much higher than several neighbouring countries, such as Malaysia, Thailand and Vietnam. (Singapore is not mentioned).
This high cost adds to the total business costs, and affects competitiveness of business in Indonesia.
This cost affects businesses in two ways:
a) Cost of transporting goods
b) Cost of workers getting to work.
Lesson: It is important to reduce transportation cost, to make an economy more competitive.
This high cost adds to the total business costs, and affects competitiveness of business in Indonesia.
This cost affects businesses in two ways:
a) Cost of transporting goods
b) Cost of workers getting to work.
Lesson: It is important to reduce transportation cost, to make an economy more competitive.
Gold Savings Deposit Account
Hi Mr. Tan,
I have been pondering whether to park some of my savings in a gold savings deposit account. I saw it being offered by a local bank. But there's an administrative fee (in grams of gold) as low as 0.12 gm per month or 0.25% p.a. on the highest balance per month, whichever is higher.
REPLY
Some people think that Gold has already gone up very high. If you invest in Gold, be aware about the risk that it may fall down to a lower level. However, if you hold this investment as part of a diversified portfolio, then it may be all right.
Apart from the administrative fee (which is quite low), you should also be aware that Gold does not earn any recurring income.
Some people prefer to buy shares of Gold mining companies as it produces an income. But they have to look at other factors, such as leverage and cost structure.
I have been pondering whether to park some of my savings in a gold savings deposit account. I saw it being offered by a local bank. But there's an administrative fee (in grams of gold) as low as 0.12 gm per month or 0.25% p.a. on the highest balance per month, whichever is higher.
REPLY
Some people think that Gold has already gone up very high. If you invest in Gold, be aware about the risk that it may fall down to a lower level. However, if you hold this investment as part of a diversified portfolio, then it may be all right.
Apart from the administrative fee (which is quite low), you should also be aware that Gold does not earn any recurring income.
Some people prefer to buy shares of Gold mining companies as it produces an income. But they have to look at other factors, such as leverage and cost structure.
Effect of deduction
Hi Mr. Tan
I purchased a ILP 10 mths ago. Based on the postings in your website so far, it seems like ILP is highly unrecommended. Now, I realize I didn't really understand the meaning of effect of deductions.
Based on the plan projected for me (below), after 25 yrs, will I get a decent return? i.e, if the return is good (9%), will I get a lump sum of 111700?
Another thing is my agent told me that at end of 25 years, I can actually stop putting in money and then use the bonus or dividends to pay and cont to earn? Is this true, so can I get the 417200 then? I am feeling quite lost, please help me, thanks.
REPLY
It is not realistic to expect a gross yield of 9% in the future. I suggest that you take the average between the yield of 5% and 9%.
More important, you should study the effect of deduction. If the deduction takes away 2.5% from the gross yield, then it is an expensive policy.
I purchased a ILP 10 mths ago. Based on the postings in your website so far, it seems like ILP is highly unrecommended. Now, I realize I didn't really understand the meaning of effect of deductions.
Based on the plan projected for me (below), after 25 yrs, will I get a decent return? i.e, if the return is good (9%), will I get a lump sum of 111700?
Another thing is my agent told me that at end of 25 years, I can actually stop putting in money and then use the bonus or dividends to pay and cont to earn? Is this true, so can I get the 417200 then? I am feeling quite lost, please help me, thanks.
REPLY
It is not realistic to expect a gross yield of 9% in the future. I suggest that you take the average between the yield of 5% and 9%.
More important, you should study the effect of deduction. If the deduction takes away 2.5% from the gross yield, then it is an expensive policy.
Term and critical illness
Hi Mr Tan,
I am one of many grateful (and faithful) readers of your blog. Thank you to much to being ever so obliging in answering our questions. I got a quote for a term policy as follows:
Sum Assured Term Yearly Premium
Term Basic 100,000 35 years 315.00
Disability 100,000 35 years 49.00
Crisis Cover 100,000 35 years 580.00
Crisis Waiver 12.05
However, I am not sure if I need the crisis cover and the disability riders. They cost more than the basic itself! My agent highlighted that death benefit would continue even though a claim had been made under crisis cover, so the cover becomes $200 000. Is this a necessary and fair quote?
REPLY
In my view, the critical illness premium should be about 1.5X of the term premium. I find the premium to be somewhat high (i.e. 1.8X). You do not need such a large amount of critical illness cover. Maybe, it is better to have $150,000 in Term and $50,000 in critical illness. You should also consider buying a decreasing term insurance, as the cost is reduced by more than 50%
I suggest that you should get a quote from another insurance company on the term and critical illness cover. You can contact them as follows:
http://www.tankinlian.com/faq/termd.html
I am one of many grateful (and faithful) readers of your blog. Thank you to much to being ever so obliging in answering our questions. I got a quote for a term policy as follows:
Sum Assured Term Yearly Premium
Term Basic 100,000 35 years 315.00
Disability 100,000 35 years 49.00
Crisis Cover 100,000 35 years 580.00
Crisis Waiver 12.05
I compared it to the benchmark rates on your site and found that the basic policy is very close to the benchmark rate.
However, I am not sure if I need the crisis cover and the disability riders. They cost more than the basic itself! My agent highlighted that death benefit would continue even though a claim had been made under crisis cover, so the cover becomes $200 000. Is this a necessary and fair quote?
REPLY
In my view, the critical illness premium should be about 1.5X of the term premium. I find the premium to be somewhat high (i.e. 1.8X). You do not need such a large amount of critical illness cover. Maybe, it is better to have $150,000 in Term and $50,000 in critical illness. You should also consider buying a decreasing term insurance, as the cost is reduced by more than 50%
I suggest that you should get a quote from another insurance company on the term and critical illness cover. You can contact them as follows:
http://www.tankinlian.com/faq/termd.html
Insurance agents
Insurance agents play a useful role. They need to have good value products that can sell easily. They do not mind earning a modest rate of commission, if it is commensurate with the effort. To bring down the cost of insurance, we have to reduce the time taken by the agent to sell the insurance. We need to improve productivity.
CPF Dependent Protection Scheme
Dear Mr Tan,
DPS (Dependants' Protection Scheme) is an optional term insurance which covers CPF members for a maximum sum assured of $46,000 up to age 60. Is this a good value term insurance to have ?
http://mycpf.cpf.gov.sg/Members/Gen-Info/FAQ/Insurance/INS-DPS.htm
The premium payable depends on your age at your last birthday. Premiums can be paid from your CPF Ordinary and/or Special Account(s). The yearly premiums, based on age and regardless of gender, are as follows:
Age(Last Birthday) YearlyPremium
34 years and below $ 36
35-39 years $ 48
40-44 years $ 84
45-49 years $144
50-54 years $228
55-59 years $260
REPLY
You can compare it with the benchmark premium rates shown in my website:
http://www.tankinlian.com/faq/benchmark.html
My quick comparision shows that the premium rate for DPS is quite attractive for the customer.
DPS (Dependants' Protection Scheme) is an optional term insurance which covers CPF members for a maximum sum assured of $46,000 up to age 60. Is this a good value term insurance to have ?
http://mycpf.cpf.gov.sg/Members/Gen-Info/FAQ/Insurance/INS-DPS.htm
The premium payable depends on your age at your last birthday. Premiums can be paid from your CPF Ordinary and/or Special Account(s). The yearly premiums, based on age and regardless of gender, are as follows:
Age(Last Birthday) YearlyPremium
34 years and below $ 36
35-39 years $ 48
40-44 years $ 84
45-49 years $144
50-54 years $228
55-59 years $260
REPLY
You can compare it with the benchmark premium rates shown in my website:
http://www.tankinlian.com/faq/benchmark.html
My quick comparision shows that the premium rate for DPS is quite attractive for the customer.
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