AN OPINION.
We are a wasteful world. We bring people from the rural areas into crowded, congested cities. They spend several hours each day commuting to and from work. A lot of time and energy is wasted in this commuting.
We produce material goods that are excessive for a comfortable life. We have too many products and choices. We buy too many things that we do not use, to be thrown away. We keep producing more, and use up the limited materials and minerals.
We work too many hours in an excessively competitive environment. We compete to survive. We destroy our competitors and take over their assets. We have too little time to enjoy leisure.
No wonder - we are short of oil, minerals and food. We see the huge spike in prices. It will lead to more hardship on the poor. It may lead to unrest.
The capitalist, free market system has not given people a good life. It is time to re-think of a new model for the world.
Friday, June 6, 2008
AUD Fixed Deposits
I searched the Internet to find out the interest rate on 3 month fixed deposit offered by various banks in Singapore.
Note: Large deposit is usually for SGD 200,000 or more. But it differs according to the bank.
Tip: Source the internet to get an idea about the interest rate offered by the bank on the deposit. Usually, 3 month is a good period to invest, unless you wish to take a longer term view. You can convert your SGD to the foreign currency with a online stockbroker and transfer the foreign currency to the bank that offers the best interest rate.
Small Large
deposit deposit
ICICI 8.29% 8.34%
ANZ 7.58% 7.58%
RHB 7.3% 7.3%
DBS 6.99% 7.21%
UOB 6.38% 6.58%
HSBC 6.2% 6.5%
Note: Large deposit is usually for SGD 200,000 or more. But it differs according to the bank.
Tip: Source the internet to get an idea about the interest rate offered by the bank on the deposit. Usually, 3 month is a good period to invest, unless you wish to take a longer term view. You can convert your SGD to the foreign currency with a online stockbroker and transfer the foreign currency to the bank that offers the best interest rate.
Get a better yield on your savings
Singapore banks make huge profits, or $1 billion or more. Their profit come from the following sources:
> High margin between the interest rate that they charge to borrowers and the interest rate that they pay to depositors
> High charges on conversion of foreign currency, e.g. spread of more than 0.5% (compared to 0.15% charged by efficient online brokers).
> High fees for bank transfer and other services.
I hope that the banks can give a better deal to their customers, as follows:
> Pay higher interest rate on fixed deposits
> Reduce the spread on currency conversion
> Reduce their bank charges
There are many online portals that can offer lower charges and fees, and better conversion rates. If you search the internet, you can also find banks that offer better interest rate on fixed deposits. I advice consumers to be more active in searching for the best deal through the internet.
> High margin between the interest rate that they charge to borrowers and the interest rate that they pay to depositors
> High charges on conversion of foreign currency, e.g. spread of more than 0.5% (compared to 0.15% charged by efficient online brokers).
> High fees for bank transfer and other services.
I hope that the banks can give a better deal to their customers, as follows:
> Pay higher interest rate on fixed deposits
> Reduce the spread on currency conversion
> Reduce their bank charges
There are many online portals that can offer lower charges and fees, and better conversion rates. If you search the internet, you can also find banks that offer better interest rate on fixed deposits. I advice consumers to be more active in searching for the best deal through the internet.
FAQ: Traded Endowment Policies
1. What is a traded endowment policy?
A traded endowment policy is a policy that is sold by the policyholder to an investor. The investor pays a sum that is higher than the surrender value offered by the insurance company.
The investor will continue to pay the premium under the policy and will collect the death or maturity benefit on the policy.
The investor expects to get a good rate of return on the amount paid to buy over the policy, and the future permiums paid.
2. Is it advisable to invest in a fund of traded endowment policies, where the fund manager undertakes to manage these policies?
It depends on the following:
> Is the fund manager reliable and trustworthy?
> What are the charges taken away by the fund manager?
> What is the underlying gross and net yield of the fund, after deducting the charges?
> What is the underlying risk of the traded endowment policies?
3. What is the underlying risk of the traded endowment policies?
These traded endowment policies carry the following risks:
> The future bonuses paid under the policies may be reduced. This will reduce the expected yield.
> The insurance company may become insolvent
> The fund manager may overlook to keep the policy in force, leading to its termination
These risks have to be factored in considering the net yield on the fund.
4. What is a satisfactory rate of return, considering the risk?
If the investment is in the UK, you should compared the expected yield on the traded endowment fund with the yield from UK Government Bonds.
You should expect to get at least 2% to 3% higher than the bond yield of similar duration, to compensate for the higher risk.
If the fund has a duration of 5 years and the UK bond yield for 5 years is 5%, you should expect to get a net yield (after deducting the fund manager’s fees) of 7% or 8% from the traded endowment fund, to make it worth the risk.
5. Do you invest in traded endowment policies?
I avoid investing in this type of product as I am not familiar with the risk, the yield and the integrity of the fund manager.
I prefer to invest in Government bonds or equities, as these products are traded on the exchange and there is liquidity. flexibility and price transparency.
Tan Kin Lian
A traded endowment policy is a policy that is sold by the policyholder to an investor. The investor pays a sum that is higher than the surrender value offered by the insurance company.
The investor will continue to pay the premium under the policy and will collect the death or maturity benefit on the policy.
The investor expects to get a good rate of return on the amount paid to buy over the policy, and the future permiums paid.
2. Is it advisable to invest in a fund of traded endowment policies, where the fund manager undertakes to manage these policies?
It depends on the following:
> Is the fund manager reliable and trustworthy?
> What are the charges taken away by the fund manager?
> What is the underlying gross and net yield of the fund, after deducting the charges?
> What is the underlying risk of the traded endowment policies?
3. What is the underlying risk of the traded endowment policies?
These traded endowment policies carry the following risks:
> The future bonuses paid under the policies may be reduced. This will reduce the expected yield.
> The insurance company may become insolvent
> The fund manager may overlook to keep the policy in force, leading to its termination
These risks have to be factored in considering the net yield on the fund.
4. What is a satisfactory rate of return, considering the risk?
If the investment is in the UK, you should compared the expected yield on the traded endowment fund with the yield from UK Government Bonds.
You should expect to get at least 2% to 3% higher than the bond yield of similar duration, to compensate for the higher risk.
If the fund has a duration of 5 years and the UK bond yield for 5 years is 5%, you should expect to get a net yield (after deducting the fund manager’s fees) of 7% or 8% from the traded endowment fund, to make it worth the risk.
5. Do you invest in traded endowment policies?
I avoid investing in this type of product as I am not familiar with the risk, the yield and the integrity of the fund manager.
I prefer to invest in Government bonds or equities, as these products are traded on the exchange and there is liquidity. flexibility and price transparency.
Tan Kin Lian
Investing in foreign currency deposits
Here are my tips for investing in foreign currency deposits. They are based on my personal experience:
1. Get a good rate when you convert from Singapore dollars to the foreign currency. Find out the buy and sell rate for the currency. Take the middle of these rates (which is usually the interbank rate). Find out the spread charged by the bank, which is the rate that you pay, compared to the interbank rate. A good spread is 0.15%. If the spread is more than 0.2%, you should take the trouble to convert the money elsewhere.
2. You can convert the money with an online stockbroker, such as Phillips, and pay a spread of 0.15%. You may have to pay some bank charges, but the amount is quite small. You can compare the total cost, i.e. the spread and the bank charges, to decide which is the best option for you.
3. You can call a few banks to check the interest rate that they pay on the fixed deposit. If you tell your bank about the rate quoted by other banks, they are likely to match it.
4. On withdrawal of the fixed deposit, you can convert the foreign currency into Singapore dollar in the same way, i.e. move the foreign currency to the online stockbroker to get a better conversion rate.
Here is an example. You wish to convert SGD 100,000 into Australian dollars. The bank quotes the buy and sell rate as 1.3015 and 1.3210. The middle rate, or interbank rate is 1,3112 (i.e. mid-way between the buy and sell rates). The spread charged by the bank is 0.75% (i.e. 1.3201 divided by 1.3112).
If you convert the money at Phillips (through POEMS), you are given a spread of 0.15% above the interbank rate. You will be charged 1.3132. However, as the interbank rate changes each few seconds, you will find this rate changing as well.
If you are converting $50,000, you will be able to save $390 by converting with Phillips. You may have to pay $100 or less in bank charges. You can still make a saving by taking some trouble. If you are converting a larger sum, say $100,000 or more, your saving will be more.
If you convert the money at Philiips, you can transfer it to another bank to earn a better interest rate on the fixed deposit.
1. Get a good rate when you convert from Singapore dollars to the foreign currency. Find out the buy and sell rate for the currency. Take the middle of these rates (which is usually the interbank rate). Find out the spread charged by the bank, which is the rate that you pay, compared to the interbank rate. A good spread is 0.15%. If the spread is more than 0.2%, you should take the trouble to convert the money elsewhere.
2. You can convert the money with an online stockbroker, such as Phillips, and pay a spread of 0.15%. You may have to pay some bank charges, but the amount is quite small. You can compare the total cost, i.e. the spread and the bank charges, to decide which is the best option for you.
3. You can call a few banks to check the interest rate that they pay on the fixed deposit. If you tell your bank about the rate quoted by other banks, they are likely to match it.
4. On withdrawal of the fixed deposit, you can convert the foreign currency into Singapore dollar in the same way, i.e. move the foreign currency to the online stockbroker to get a better conversion rate.
Here is an example. You wish to convert SGD 100,000 into Australian dollars. The bank quotes the buy and sell rate as 1.3015 and 1.3210. The middle rate, or interbank rate is 1,3112 (i.e. mid-way between the buy and sell rates). The spread charged by the bank is 0.75% (i.e. 1.3201 divided by 1.3112).
If you convert the money at Phillips (through POEMS), you are given a spread of 0.15% above the interbank rate. You will be charged 1.3132. However, as the interbank rate changes each few seconds, you will find this rate changing as well.
If you are converting $50,000, you will be able to save $390 by converting with Phillips. You may have to pay $100 or less in bank charges. You can still make a saving by taking some trouble. If you are converting a larger sum, say $100,000 or more, your saving will be more.
If you convert the money at Philiips, you can transfer it to another bank to earn a better interest rate on the fixed deposit.
Thursday, June 5, 2008
Adequate Wage in Singapore
Extracted from http://www.theonlinecitizen.com/
http://theonlinecitizen.com/2008/06/giving-equal-access-to-social-benefits/
I wish to say a few words on why there should be a minimum wage. It is necessary to ensure that the weakest members of our society, i.e. the poor and lower educated, are given a wage that is sufficient to meet the cost of living and raise a family. They should not be required to work 12 hours a day or two jobs, just to earn enough.
Most countries in the world has a minimum wage, including the low income and high income countries. Even the USA, which is the worlds biggest proponent of the free labour market, has a minimum wage.
A minimum wage may not increase the business cost significantly. It just reduces the huge profit earned by the business owners, salaries of the top management and the rental costs. The share of business cost of the minimum wage earners is probably not significant, except for labour intensive industries.
There is less economic pressure for a minimum wage policy in a big country. If necessary, a person can move to live in a low cost part of the country. Some people can go back into farming, for example.
But in a small country like Singapore, the choices are limited. So a minimum wage policy is necessary.
The argument against a minimum wage is that it will drive jobs to other countries. Let us look at the facts. Are our jobs going overseas? Hardly!
We have the opposite situation. Many jobs are created in Singapore, that have to be filled by low wage workers from other countries.
I am surprised at the large number of these foreign workers. They increase the demand on our public infrastructure and facilities and increase the congestion in Singapore. Is this good for Singapore?
These low cost foreign workers compete with our local workers. Many of our local workers cannot find jobs and have to be unemployed. The unemployed are criticised for being “choosy”. Is this true? Many of our elderly are willing to take menial jobs as cleaners just to survive. I respect them. I hope that we can give them a decent wage for their work.
We must remember that there is a high cost of living in Singapore. More so, for a worker who has a family to feed. We cannot expect them to accept the same wage that is adequate for a foreign worker who feeds a family in a low cost country.
Tan Kin Lian
http://theonlinecitizen.com/2008/06/giving-equal-access-to-social-benefits/
I wish to say a few words on why there should be a minimum wage. It is necessary to ensure that the weakest members of our society, i.e. the poor and lower educated, are given a wage that is sufficient to meet the cost of living and raise a family. They should not be required to work 12 hours a day or two jobs, just to earn enough.
Most countries in the world has a minimum wage, including the low income and high income countries. Even the USA, which is the worlds biggest proponent of the free labour market, has a minimum wage.
A minimum wage may not increase the business cost significantly. It just reduces the huge profit earned by the business owners, salaries of the top management and the rental costs. The share of business cost of the minimum wage earners is probably not significant, except for labour intensive industries.
There is less economic pressure for a minimum wage policy in a big country. If necessary, a person can move to live in a low cost part of the country. Some people can go back into farming, for example.
But in a small country like Singapore, the choices are limited. So a minimum wage policy is necessary.
The argument against a minimum wage is that it will drive jobs to other countries. Let us look at the facts. Are our jobs going overseas? Hardly!
We have the opposite situation. Many jobs are created in Singapore, that have to be filled by low wage workers from other countries.
I am surprised at the large number of these foreign workers. They increase the demand on our public infrastructure and facilities and increase the congestion in Singapore. Is this good for Singapore?
These low cost foreign workers compete with our local workers. Many of our local workers cannot find jobs and have to be unemployed. The unemployed are criticised for being “choosy”. Is this true? Many of our elderly are willing to take menial jobs as cleaners just to survive. I respect them. I hope that we can give them a decent wage for their work.
We must remember that there is a high cost of living in Singapore. More so, for a worker who has a family to feed. We cannot expect them to accept the same wage that is adequate for a foreign worker who feeds a family in a low cost country.
Tan Kin Lian
Call hotline for the best quote
Hi Mr. Tan,
I read from your blog, you mentioned that X offers competitive rates for motor insurance. For many models of cars, the rates are up to 15% lower than our competitors.
How can this be, when I was quoted a higher rate compared to another insurance company? I was quoted $518 for my next renewal with X, 50% NCD + 5% loyalty discount. A good friend recently renew his motor insurance with another company and he was quoted $460 for his renewal on the same terms.
I emailed and called X for clariffication. No one could give me a satisfactory answer. When I asked a customer officer if X could give me a better requote, she said NO and its not negotiable.
How wonderful. Seems like i have no incentive or reason to stick to X anymore, as X is now charging more than others. That's all I have to say for now. Thank you for reading this email.
AT
REPLY
In past years, X offered competitive quotes. I understand that the increased their premium rates by about 20% (or more) this year. They are no longer the most competitive.
I now advise consumers to call the hotlines of insurance companies to get the best quote. Read this FAQ:
http://www.tankinlian.com/faq/motord.html
I read from your blog, you mentioned that X offers competitive rates for motor insurance. For many models of cars, the rates are up to 15% lower than our competitors.
How can this be, when I was quoted a higher rate compared to another insurance company? I was quoted $518 for my next renewal with X, 50% NCD + 5% loyalty discount. A good friend recently renew his motor insurance with another company and he was quoted $460 for his renewal on the same terms.
I emailed and called X for clariffication. No one could give me a satisfactory answer. When I asked a customer officer if X could give me a better requote, she said NO and its not negotiable.
How wonderful. Seems like i have no incentive or reason to stick to X anymore, as X is now charging more than others. That's all I have to say for now. Thank you for reading this email.
AT
REPLY
In past years, X offered competitive quotes. I understand that the increased their premium rates by about 20% (or more) this year. They are no longer the most competitive.
I now advise consumers to call the hotlines of insurance companies to get the best quote. Read this FAQ:
http://www.tankinlian.com/faq/motord.html
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