Posted by: Akhiat | January 28, 2011

Too Little, Too Late…

On 23rd January 1:02am, I received an sms from one of my policyholder’s brother-in-law. He informed me that MG had passed away in Tan Tock Seng Hospital due to a sudden cardiac arrest. MG was 33 years old, perfectly healthy and fit, active in Lion Dance. He left behind his elderly mother, 3 years old son and his wife. MG was referred to me in 2006 through his brother-in-law, who also happens to be my policyholder. Back then, MG was a storeman, working in a logistic firm, earning around $1,300/mth.

He was interested to get a medical insurance for himself. After 2 meetings in 2006, he purchased an incomeshield plan Basic. Half a year later, he told me that he wish to start some savings with a budget of $50+. I told him that he might as well get a basic Life coverage with Critical Illnesses first than to save a mere $50 back then. He eventually signed up a $30,000 Life insurance in early 2007 which is within his $50 budget.

In late 2007, he had a newborn son and we met again in Jan 2008 when his wife purchased the same Incomeshield for her son. I tried to convince him to increase his cover and plan for his son but he only agreed to top up with only $50k Personal Accident coverage.

I follow up several times in 2008 but failed to meet up till I relooked into his case in May 2010. I know that his cover and salary is low and it is my wish to help him with more coverage and to plan for the child. We did not managed to meet in May10, I again contacted him on 15th Dec 10, 02nd Jan 11 and the last time I spoke to him was 11th Jan and last sms on 17th Jan. He died on 23rd January. The frequent recent contacts made me so shocked when I knew of his demise.

I was guilt stricken over the next few days as I blamed myself for not pushing a term plan for him back in 2007. I find myself shameless for delivering a $30k cheque for the family. He was looking out for a savings plan when he contacted me and the next thing in my mind was to give him a plan with more cover and less savings. My mindset was just like a typical insurance agent back then. “Close the case he wants and move on later.”

 I attended his funeral wake over 3 days with one of the day watching the night till morning. I’ll be helping out with the claims of which the Personal Accident plan will be disputable. Over the 3 days, many of his relatives asked me how much Insurance MG purchased and how the money will be distributed. I do not wish to divulge any information to them and they started speculating and say things like “Must be quite a few hundred thousand”, right? etc. I keep mum and I find it so hard to disclose to his mother that he only has $85k cover, including DPS.

 I am still feeling the guilt and asked myself, “Why I never call him more often and why I never push him harder for higher coverage when I have chance to meet him, etc”. Being a financial Adviser, I could have done so much more for the family and I failed in my job for my death claim. I hope NTUC Income will ne compassionate and offer an ex-gratia payout to his family for his disputable accident policy, which by old 2008 accident definition, very unlikely to pay…

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Posted in Personal Thoughts

Posted by: Akhiat | January 14, 2011

Papaya measures to curb property prices

This is a good piece of news to me as a concerned Singaporeans and probably to many of our fellow friends who are looking towards buying their first property and yet being deprived by the speculators. The measures taken in September last year are too soft which in my opinion are not effective. The measures taken back then only reduce the crazy mode to a less crazy mode.

Previously it rose at a rate of 30% a year and it reduces to around 20% a year. Back then, the private housing market had resisted rounds of cooling measures and surged 38.2% in June last year, exceeding the historical peak of 1996. Property, in my view is best to grow at a moderate rate near to the overall inflation of the country. So what are the changes?

1) The holding period for imposition of Seller’s Stamp Duty (SSD) will be raised to four years from the current three. Singapore’s homeowners who sell a property within a year of purchase will now have to pay a tax of 16 percent, from 3 percent before. That drops to 12 percent in the second year, 8 percent in the third, and 4 percent in the final year.

2) The Loan-To-Value (LTV) limit would be lowered to 50 per cent on housing loans for property buyers who are not individuals. The LTV limit would also be lowered to 60 per cent for individual property buyers with one or more outstanding housing loans.

********
Singapore’s three-month interbank rate fell to 0.43751 percent on Jan. 3, the lowest since Bloomberg began compiling the data in 1999. It was at 0.43779 percent as at 13th January. It created a false impression that credit will always be so cheap and many people continue to max their loan limit to buy properties. There was simply too much liquidity in the market and over optimism about properties.

The long term implication for individuals and economy will be bad if such trend of property prices continue and the bubble continue to build up. This is a good move by the Papaya and will be assured a few more votes especially from the younger population in the next coming elections.

Papaya had shown boldness and creditibiity in their governance and I believe property prices for the mass and mass affluence market will drop for a while and rise moderately over the next few year. Creditibility because they show that they are serious about this issue and keep acting on it till results are seen.

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Posted in Property

Posted by: Akhiat | January 3, 2011

3 minutes investment updates – 01/2011

First of all, I’ll like to wish all of you a very happy new year. May 2011 be a blessed and fruitful year for all of you.

 In my first day at work back in office, I’ll like to give you some updates on the indices movement for this year and my personal views for 2011. Pls note that whatever I wrote will be my personal opinion and not from any firm that I may represent. Pls regard me just as a member of public, innocently giving opinion..

First Minute – Let me summarise on the indices that I monitor on regular basis.

1) December is generally a positive month for most economies with Russia and Korea rising strongly and closed the year with a 20.8% and 22.5% increment respectively. They are the best performers among the indices I monitor.
2) Emerging Markets and Asia Ex-Japan did relatively well especially in South East Asia like Indonesia and Thailand which performed rose as much as 40% in 2010. Surprisingly, China HS Mainland 100 Index had dropped 0.2% for the whole of 2010.
3) Developed nations like US and Europe, despite all the sovereign debts crisis and straggering unemployment numbers, still rose in excess of 10% for 2010.
4) Gold is the best asset class in 2010, having rose nearly 30% in 2010 alone
5) Oil Prices spiked in Nov and Dec to end the year with nearly 19% increament for whole of 2010.
6) US Consumer Sentiments had not changed much during the year and unemployment remains stubbornly high.
7) Investor’s fear, using Vix index as a reference shows that fear had dropped compared to a year ago
8) The Baltic Dry index which is used to measure shipping demand and transportation cost have been volatile over the year had dropped to 1773 since Dec last year.

2nd Minute – What I see from the Indices?

1) Russia and Korea, despite rising over 20% this year is still considered relatively attractive. Their 2011 PE ratio remains attractive at 7.3 and 10.3 respectively. Russia is heavily reliant on its Oil money and Korea is driven more by technology and industrials.
2) South east Asia nations like Indonesia and Thailand had rose significantly and I suspect the spike is largely due to the large foreign funds inflow. Net inflows are at high levels and an outflow will likely cause the market to fall, if it happens in 2011.
3) US is using quantitative easing measure to boost the economies compared to Asia and Emerging nations who are trying to stem growth. If US succeed in boosting their economy, it will have a good chance for funds to flow back to America.
4) Europe is using quantitative discipline to rein the Eurozone soveriegn debts issues. They are solving problems by the painful way and not like US who are adding problems to their  problems. However it was uncertain on how much more the Eurozone is willing to spend and how fast they will act whenever their eurozone nations faces problems.
5) Gold had spiked when US continue to print money but it cannot be denied that the spike be likely caused by speculations in the financial market. In my view, its over valued for the moment and gold price can drop when funds flow out of gold into other financial instruments which gets more attractive.
6) Oil prices rose partly due to the cold winter, it should normalised back to the $80+ after the winter but prices will still be reliant on the strength of the global economies
7) I do not expect the consumer confidence to grow much in 2011 as unemployment remain high and the debt level of the Americans are dropping too slowly.
8) Volatility will remain high in 2011 and shipping cost will increase with an increase in demand and commodity prices

3rd Minute – What you can consider

1) I believe Equities will likely do better than bonds in 1H2011. There are still a lot of money sitting on the fence, waiting to be invested due to fear. Valuations are still below long term fair value for most economies and companies are expected to announce good profits in 2011 with increased revenue and reduced expenses. I recommend a neutral to slight overweight position in equities, at least for the moment.
2) Emerging markets, especially North Asia are expected to do better than South East Asia where market had run up quite a fair bit. China are using slow administrativre meaures to stem inflation of which result are very uncertain. Nevertheless, China, being the laggard of 2010 gives good opportunities, esp if RMB is to appreciates vis-à-vis other currencies. I will recommend Greater China funds which will include Hong Kong, Taiwan and Korea.
3) There is a good chance that resources especially oil, will increase in 2011 but Gold may lose its lustre for this year. We may look into Resources for 2011 as well.
4) Asia currencies are expected to remain stronger compared to US and Euro because Asia is stemming growth by keeping more money and the developed nations are spending more money to grow. With positive inflow of funds, Asia currencies are expected to increase their dollar value. Pressure is specially high for the RMB. Hence for bonds portfolio, I will suggest Asia Bonds
5) Last of all, I will like to highlight that there are always risk involved in investments. What if the Fed loses its power and creditibility and cannot exercise another round of quantitative easing in future? What if Asia, especially China fails in their policies to rein inflation, either over-do or under-do. What if the Eurozone soveriegn debt crisis worsen?
6) 2011 will remain volatile, the recovery in US will be slow and painful but this is the type of opportunities I see when people see uncertainties.

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Posted in 3 minutes investment updates, Investments

Posted by: Akhiat | December 22, 2010

CPF Life, MSS or Annuity?

I was approached by one of my client to do some calculation on the difference between CPF Life, MSS and Annuity. She is currently 57 yrs old and wants me to use $100,000 as a basis for comparison.

Assumptions
1) Mrs X – Female (16th Aug 1953)
2) Has exactly $100,000 when she was 55 yrs old in her Retirement Account
3) With interest of 4%p.a, she probably have around $108,160 in her Retirement Account now
4) Property Annual Value – $6k to $11k / Annual Income – $24k to $54k (for calculation of bonuses given for taking up CPF Life before end Dec 10)
5) Assuming house are not used as pledge at 55 yrs old
6) Will withdraw the money at age 64 (DDA – Draw Down Age)

How much will she get per month?
==> Under her current MSS, she will $858 at age 64 for about 20 years

==> Under the CPF Life Scheme, she will get
a) CPF Life Income – $736 to $803 (No Bequest for family)
b) CPF Life Plus – $713 to $781 (Scheme with Least bequest)
c) CPF Life Balance – $696 to $762 (Money grow to ~$138k on DDA and average bequest)
d) CPF Life Basic – $671 to $736 (Money grow to ~$145.5k on DDA and most bequest)

==> Under the NTUC Income Annuity Scheme
a) The guaranteed payout is $547.50 and projected to grow at 2.0% p.a
b) At DDA, estimated annuity are projected to grow to $137,042 and monthly income is $628.90
c) For the annuity plan and with projected bonuses given, for it to hit the upper projected payout of the
* Life basic plan, she will be 72 yrs old
* Life Balance plan, she will be 74 yrs old
* Life Plus plan, she will be 75 yrs old
* Life Income, she will be 77 yrs old
* CPF MSS Scheme, she will be 80 yrs old

Assuming person pass away at age 84
==> Assuming the person passed away at age 84 (Average Life expectancy for female)
* MSS, the person gets $205,920
* CPF Life Income, the person gets $192,720
* CPF Life Plus, the person gets $187,440
* CPF Life Balance, the person gets $182,880
* CPF Life Basic, the person gets $176,640
* NTUC Income Annuity, the person gets $194,598

************************

In summary, I like to offer a few observations:
1) If the person lives till the projected life expectancy of 84, the MSS scheme will be the most attractive. It can leave behind the most bequest for most of the 20 years and yet get the most money over the period of 20 years.
2) If the person lives beyond the life expectancy of 84, the NTUC Income annuity will seems most attractive. It leaves behind a fair amount of bequest and the annuity amount had exceeded all the CPF Life schemes by the time she reaches 80 yrs old. She will get even more as the projected payout compounded.
3) In my opinion, there is a fair risk that NTUC Income may not hit the projected rate of returns and cut bonuses at certain years. Such action will affect the annuity amount and the projected monthly payout. However, risk may work to its advantage too and the projected annuity and monthly payout could be higher as well.
4) Lifewise, the monthly annuity from the CPF Life may not consistently hit the projected upper interest at all years. They can be lower or even higher. In my view, the chance is low for CPF Life to hit the lower range.
5) The currently  most popular CPF Life Scheme is the Life Plus plan where 100% of the premium are put into CPF Life and there will not be any interest earned once you put the money in it.
6) For most clients, I may not recommend the CPF Life Income and the CPF Life Plus.
* For Life Income, we risk losing the maximum $108k if we are to pass on before 64 yrs old. Compared to CPF Life Balance, we only get an extra  of around $40/mth.
* For Life Plus, the difference is a mere $18/mth with CPF Life Balance. Why give up all your interest just because you want to get that mere $18 extra per month when as much as $30k of interest can be generated over the years compared to the CPF Life Balance.

***************

What do I suggest then?
1) For those who don’t think he/she can live beyond 84 yrs old, choose the MSS. You should be able to get the most money and most bequest(in the nearer terms) till you finish the funds.
2) For those who believe they can live long and willing to take some risk, choose the NTUC Income Annuity. The returns depends on the performance of the NTUC Income Life Participating Fund. They may or may not hit the projected returns of 5.25%.
3) For those who believe they can live long and not willing to take risk, choose the CPF Life. CPF Life with the economy of scale and low cost, they can afford lower risk and yet gives relatively good yield on the funds for sustainability.
4) For those who prefer CPF Life, I will likely recommend the Life Balance Plan.
5) Another option is to delay the DDA for the MSS. Every year you delay the payout, you can extend the payout by around 1.5 to 2 additional years. This option is probably for those who are either still working or have sufficient personal savings for the early stages of retirement.

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Posted in CPF, Retirement

Posted by: Akhiat | December 13, 2010

The problem about regular investments (RSP)

I recently received an email from one of my client, asking if he should stop and sell his RSP investments because he is currently sitting on a 10% profits and like to take it. Requests to stop and sell RSP is common in good and bad times. The liquidity offered by an RSP gives investors the impression that they should cash out when its at a profit. The same liquidity also offers the temptation to withdraw the funds whenever they have a short term need of cash like getting a new car or going for a long holiday. Many RSP investor forgot their objectives for such a savings and do not have a target date which they wants to withdraw the funds. They cannot differentiate that a lumpsum and regular investments are different in nature and the returns are viewed differently as well. I like to share a few pointers about RSP with you today…
 

An RSP stands for “Regular Savings Plan”. It is a way of investing whereby we put in a fixed amount of money on a monthly, quarterly or any fixed regular period. For example, putting in $500/mth into a Asia Ex-Japan fund every month. Such investment technique is to help reduce one’s risk compared to putting a lumpsum of money.

Such investment technique is good where we REMOVE OUR EMOTIONS while investing because when emotions are involved, we tends to take cue from market movement on when to buy and sell our investments and where the market is notoriously difficult to time. We may miss the best days or meet the worse days of investings.

RSP is a wealth accumulation strategy. It is to give us the “DISCIPLINE“ to invest for mid-long term. It is like paying yourself first before you spend the money. We have to look a bit longer term when we start a RSP.

Average Buying Price Vs Current Price is a critical factor for measuring profits in an RSP. At any specific point of the RSP, we may face times of profits or loss. When the current price is above the average buying price, we will see a profit. When the current price is below the average buying price, we will see a loss.
We must not use the Previous Buying Price at start of RSP to compare with Current Price for RSP investing as several of my clients had asked me before why their investments are making returns like 5% when the market had rose 10% from the day he started the investment.

The effect of RSP will be best demostrated if it go through 1-2 MARKET CYCLES where we must resist the temptation to sell during bear markets. That is the reason we recommended at least 5-10 years for RSP savings. We should also avoid cashing out the funds when we make some profit because we never know how far the investments can go. If we go through 1 market cycle where the current actually is same or lower than the price we started the RSP, we could possibly had still made a good profit.

As for when to stop our RSP, then we must first understand why we need to save this fund in the first place and what our Time Horizon is. If we know the time horizon, we can set our WINDOW OF EXIT. The problem is that a lot of people do not know why they are saving and due to the liquidity of such investments, they tends to redeem their funds whenever they need the money.

In summary, I’ll like to highlight the keywords that I mentioned above:
1) Discipline – RSP is a forced form of savings out from your regular income. It is a mid-long term wealth accumulation strategy.
2) Average buying Price - Average buying price must be used to compute profits and not the price when we first started the investment when comparing with current price.
3) Removal of Emotions - Marketing timing is preferably avoided as it is extremely hard to tell when is high and when its low.
4) Market Cycle - In an RSP, our objective is to ride market cycles through peaks and toughs and not ride on trends within a cycle.
5) Window of Exit - As we get nearer to the time we need to use the funds, we should gradually adopt a wealth preservation strategy and find chance to exit the market. The window of exit can be around 1-3 years before the need of redemption.

In reality, a lot of people give up their RSP during the bear market. They cannot take the fact that their investments are in a loss after investing for a relatively long period like 5-7 years. They will cite RSP as an unworthy investments eventually. If they can have the same mentality as if they are buying into a fixed term(15 or 20years) endowment plan, they they should be able to ride through several market cycles.

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Posted in Financial Planning, Investments

Posted by: Akhiat | December 7, 2010

Covering our needs with Term Insurance

During the NTUC Income 40th Year anniversary dinner held in October this year, Senior Minister Mr Goh Chok Tong encouraged the insurance industry to place more emphasis on term insurance plans while he addressed the protection needs of Singaporeans. His words came timely because according to a research conducted by Nanyang Technological University in 2009, Singaporeans has an average cover of only $165,628 upon death, after taking account of mortgage insurance payout and CPF savings when their average needs should be $494,851. It was revealed in separate surveys that Singaporeans have the perception that getting insurance protection is costly and beyond their affordability.

If cost is really a concern, then term insurance can be a good way to address this problem. Through term insurance, we can get our immediate needs covered at affordable premium which means freeing up more financial resources towards other needs such as saving for retirement and children education expenses. I will like to share on the common types of term insurances available in Singapore and some of their basic features.

Level Premium Term Insurance
In a level premium term plan, we determine the sum assured and the period of cover from the moment we took up the plan. The premium and coverage generally remains the same throughout the term and the insurer will guarantee to pay the benefits if the insured event is to occur. At the end of the policy’s term, the policy will cease and no benefit will be paid.

Convertible Term Insurance
This plan is similar to a level premium term plan except that we have the option to convert it into a “Whole Life” plan for up to the same sum assured without the need to provide evidence of good health at point the of conversion. It is suitable for those who wish to have coverage through a whole life plan but due to limited budget, takes up such a term plan temporarily, with the intention to convert it in the future.

Renewable Term Insurance
In a renewable term plan, we can renew the insurance at the end of the term and roll it over into a new period without the need to provide evidence of good health. The initial premium for such plan is low but will rise every time we renew and hence, it can get quite costly especially when we enter our senior years. It is suitable for those who seek short term coverage but are unsure if they need to continue the cover when the policy term ends.

Decreasing Term Insurance
In a decreasing term plan, the sum assured reduces throughout the term to cover a decreasing need over time. For example, our financial needs in the event of death will reduce as our liabilities decreases or when our children grow nearer to adulthood. The premium is lower compared to a level term plan of similar sum assured but it cannot be renewed upon maturity

Mortgaging Reducing Term Assurance (MRTA)
Such a plan is designed to cover an outstanding mortgage debt when we purchase our dream home in the event of death or disability. It is similar to a decreasing term plan except that the rate which the sum assured reduces depends on the interest rates charged by the financial institution over the period of the loan.

Group Term Insurance
Such a term plan can be taken when we belong to a “Group” which can be an organization, a school or club. They collaborate with the insurance company to give group premium discounts to their members or employees. The group is the master policyholder and the members can renew the plan yearly based on the agreements between the insurer and the group. The premium for such a plan is usually the lowest among all other term plans.

Implications in using Term Plan as Wealth Protection Strategy
Despite the many benefits offered by term insurances, it will be worthwhile to take note of the implications when using it in our overall wealth protection strategy.

1) A wrong estimation on the length of insurance needed may result in coverage ending at the time when our actual need is still high.
2) There might be certain type of coverage that we hope to maintain beyond end of the allowable insurance term. Strategies might be needed to ensure such continuity of coverage.
3) A term insurance plan can lapse in the event of non-payment of premium after a specific grace period. It is unlike a whole-life or investment linked plan where the cash value of the policy can be temporarily used to pay for the outstanding premium.
4) If we use a group term plan, it is important to to know if the plan is portable when we are to leave. If it is not portable, we may have to evaluate our chance of leaving.

Considering that each of us has different needs and we can get confused by the myriad of insurance plans available in the market, I’ll encourage you to work with an honest and competent adviser, who has your best interest at heart, to discuss your options and to make wise choices.

(Above article was supposed to be sent to Sunday Times but due to a unnecessary delay in my company’s compliance department, it never have the chance to meet the print. Lorna Tan had written an almost similar article on 5th December 2010)

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Posted in Uncategorized

Posted by: Akhiat | November 10, 2010

The “WANTS” of Investing

Prior constructing an investment portfolio for my clients, I will normally access the “WANTS” for them. This “WANTS”, not only implies what they wants in their life, it is actually my Acronym for their 
“Willingnesss”,
“Ability”,
“Needs”,
“Time Horizon” and
“Suitability”

Only after determining the WANTS, will I be able to ensure what I recommend will be suitable for them in their long term financial interest.

Willingness…
I often hear how my clients lament on how they lost in their previous investments and swear to themselves that they will never invest again. It is also not uncommon to see people putting all their money in banks and cite the need for emergency use. Everyone have different experiences and upbringing with regards to investments and hence we cannot put all in one single category in term of Willingness to take risk.
“Willingness” is more of a psychological part of investing. Some people need to be counselled on why they have to be more willing to take sime risk. They either have to see the needs or they have to understand why investing is not that risky all the time. Contrary, some people are too willing to take risk when they don’t have the ability or the need.

Ability…
I remembered that during schooling days, I received a lumpsum of money from my scholarship. I had put them safely in fixed deposit earning about 3%p.a. for a year or two before the technology bubble comes about. I was not earning an income yet at that time and was not satisfied with low interest. I subsequently heard from my friend about the potential of the technology shares and I threw all these monies into one technology shares, hoping to earn some pocket money for myself…
2 years down the road, I lost nearly half of the funds and I decided to break my bond and a need to repay the scholarship monies. I can still remember how mad my Dad was when I told him that I need him to pay the scholarship monies for me and I offered to give him all the shares in return…
Obviously, I don’t have the ability to take such high risk at that time. I was down with greed that I invested into this particular technology share…

Needs…
Everyone have their unique financial needs. Some people chose a very simple life and some people have great aspirations on what they want to be. Example of needs like savings for a desired retirement, savings for Children’s education funds, savings for a long awaited holiday, etc.
To achieve a needs, there must be a source of savings and a rate of returns. The source of savings can be increased by spending lesser and the rate of returns can be increased by taking more risk. If you have less funds, then you need to take higher risk and alternatively, if you have more, then you can afford to take less risk.
If you have insufficient funds and yet not willing to take risk, then you have to adjust your aspirations. Its actually a no-brainer formula…

Time Horizon…
This refers to the time we will need to withdraw the investments. If its 10 years, it means that I have at least 10 years that I will most likely not required to withdraw this funds. I am able to allow the market cycle to tide me through in the event of a market downturn, recession or Crisis.
If my clients tell me that their time horizon is 2-3 years and wants to take high risk, I’ll make sure that they knows the consequences of a loss by that time and if they have other source of funds to replace the losses by then. If they insisted to take high risk, I will have to document it properly in all my files to state on their insistence…

Suitability…
After knowing the above “WANT”, I’ll need to access the “S”, which is whether the plan I recommend is suitable for my client. What are their investment experiences, education level and understanding level of the plans recommended. Is it too complicated that no matter how I explain, they simply cannot understand and not comfortable with it… It is important that they know what they are investing into and why they are doing so

Okay. Just back to Basics for a while. Hope its good info for some of you.

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Posted in Financial Planning, Investments

Posted by: Akhiat | October 31, 2010

Letter to ST Forum – Review agents commissions

Review agents’remuneration system to align consumers and adviser’s interest

I wrote the below last night. Wonder if it will be published next week. I’ll be in China from 1st Nov to 7th Nov and hence will not know even if they do…

I refer to Ms Pearlyn Koh’s letter on 28th Oct (Insurance Clients have different needs) and Mr Tan Kin Lian’s letters on 27th Oct (Why insurers, agents may turn a deaf ear to SM Goh’s appeal).

The role of an agent is to determine the financial needs, situation and aspirations of their clients before making a recommendation and different plans may be used to address needs of each unique individual to make the portfolio robust. However, some agents may be tempted to adopt more costly ways to earn higher commissions while addressing similar needs. Such irresponsible advice may in turn affect their clients’ long term financial interest negatively.

A likely reason could be the current practice of most insurers paying all or nearly all commissions to their agents in their first two to three years upon policy inception. This encourages agents to sell more policies in the short term than to regularly review their client’s interest over a longer period.

I will like to urge the Monetary Authority of Singapore, the Life Insurance Association of Singapore and the leading insurers to review the remuneration system that agents be incentivize for their long term advisory and servicing work than largely on the transaction itself. A high transactional commission system will benefit sales advisers and not professional advisers who value long term client’s interest. With a shift of more advisers valuing long term client’s interest, there will eventually be a reciprocal shift of client’s perspective of their agents to become an advisory than a sale one.

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Posted in Current Affairs, Personal Thoughts

Posted by: Akhiat | October 20, 2010

Do more money brings happiness?

I just read an article by Laura Rowley about money and happiness today and I like to discuss if more money really brings happiness?

http://sg.promotion.yahoo.com/MaxInvestSave/expert/post/expert/7/how-much-money-do-you-need-to-be-satisfied.html

Do money really buy happiness?
From 2 surveys; one by Gallup on 136,000 respondents in 132 nations and the other by Gallup-Healthways Well-Being Index on 450,000 respondents, I will like to draw a few points…

1)  Money can buy life satisfaction but not happy feelings…
2) Life satisfaction is a judgement of life. People spend most of their time making and spending money, and it is one of the big long-range goals for most people, hence making money affects their satisfication in life.
3) People in developed consumer economies value both material achievements and competitions more than developing nations. They feel satisfied if they have more than the Joneses.
4) Being satisfied through monetary achievements do not necessarily bring happiness to them.
5) Having more money does not increase the positive feelings such as enjoyment of kinships, friendships, to smile or laugh more.
5) It also does not reduce their negative feelsings such anger, sadness, depression, worries in life, etc…
6) It also does not necessarily give them more opportunity to do what they do best, to learn something new and to choose how their time was spent.
7) It was found that people in developing nations such as Latin America, Philippines and even Afghanistan are happier and smile more than the World Average.
8) However the survey does shows that having less money do bring about increased emotional pains such as poor health, divorce and being alone, especially when basic needs are not met.
9) The survey shows that US$75,000 is the threshold level where peoples’ positive emotional well-being is constrained by other negative factors in their life circumstances.
10) In summary, Satisfaction of monetary achievements does not equates to Happiness.

The Happy Planet Index
The Happy Planet Index (HPI) is an index of human well-being and environmental impact that was introduced by the New Economics Foundation (NEF) in July 2006. The index is designed to challenge well-established indices of countries’ development, such as Gross Domestic Product (GDP), which are seen as not taking sustainability into account. In particular, GDP is seen as inappropriate, as the usual ultimate aim of most people is not to be rich, but to be happy and healthy

The greens indicate where the happy people are

According to this Happy Planet Index, the Costa Rican are the happiness people on Earth through surveys done in 2009. Singapore was ranked no. 49, below our neighbouring countries like Indonesia, Thailand, Vietnam and Burma. The Vietnamese are the happiest people in Asia, ranked no. 5.

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Posted in Personal Thoughts

Posted by: Akhiat | October 11, 2010

3 minutes investment update – 10/2010

First Minute – Lets look at the indices
1. Emerging Markets and Asia-ex-Japan index rose about 11% for the month alone. The Kopsi did well with 11.3% rise.
2. Year to date, Asia-ex-Japan and Emerging markets did well with an increase of 11.3% and 9.8% respectively.
3.Gold is the best performer of the year so far having appreciate 19.2% to a high of 1,309 at end of September. It reached US$1,364/oz on 8th Oct, which translate to an increase of nearly 25% Year to Date. It is also the more consistent and less volatile than equities in performing such a feat.
4. China, surprising did relatively badly for 2010, having rose a mere 1% for the HS Mainland 100 Index compared to its fellow emerging markets.
5. Developed economies like USA and Europe rose 1.4% and 2.8% YTD so far and Japan dropped a whopping 11.2%.
6. Oil prices remain stable, Baltic Dry fluctuates within a fair range, VIX indexs looks stable, US Consumers are not getting much confidence with their starting their purchasing plans as yet…

Second Minute – Lets discuss on the indices
1. September is a good month for the global equities. It seems that time into the market do play certain factor in giving the investor really good returns. However, it is extremely difficult to get the exact right timing. We will risk losing the good trading days by waiting at the sidelines.
2. The economic situation in the US is not exactly picking up. The job market is still weak and the consumer confidences/sentiments are not that good.
3. The US national Bureau of Economic Reaearch announced in Mid-September that USA is out of recession in June 2010.
4. The rise in Gold Price is likely the immediate result of the weakening US Dollar and speculations that the US government is going to print more money to stimulate the economy.
5. It is a vicious cycle of government printing money to stimulate economy, increase its deficits, consumers unwilling to spend and unemployment remains stubbornly high and now affecting its currency. All these don’t seems able to bring the economy out.

Third Minute – My Opinion
1. It is within my expectation that the market remains volatile on an upwards bias but I did not expect such extremes of over 10% monthly gain or losses.
2. The rise of the indices from Mid-Aug till today is largely a result of improving corporate results, announcement of US out of recession and economic situations where general views improved from “Very bad” to “Bad”. i.e, it is still bad, except less bad.
3. My view is that a double dip recession is relatively low with possibly 5% chance. Chance will increase with the time if the US Economy remains weak.
4. Gold prices should comes down back to $1,250 to $1,350 range for the next 1-2 months as US$ strengthens again but good chance of reaching $1,400 by the end of the year.
5. The US government is likely to announce plans to stimulate the economy further. They commented that low growth, high unemployment and risk of deflation is not acceptable.
6. Stock and Gold prices may rise in the short term but oil prices will likely grow when sustainable growth are seen.
7. My take is still in Asia Ex-Japan, particularly in China. Vietnam and Japan are worth considered for long term investing exploration. Gold Equities can be considered as well.

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Posted in 3 minutes investment updates

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