Sunday, January 24

2 weeks hiatus

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I will be going on a trip for the next 2 weeks so I will be not be updating my site. Meanwhile, the recent correction in the market may prove to be a fantastic time to add on to new positions so do stay focused on the stock market.

Saturday, January 16

Car insurance premium

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I saw a very useful post on the Hardwarezone forums under the Cars & Cars section on what factors will contribute to the premiums for car insurance.

How premiums for car insurance is calculated

Premium is calculated based on the following factors

1) Age Group This refers to the age of the car owner. Most company has similar age group factors.

18 to 21 - super expensive
21 to 25 - quite expensive
26 to 30 - a bit expensive
31 to 65 - safe zone

2) Driving Experience This refers to how long have you had your driving license and has nothing to do with your actual driving experience. This is measured in number of years.

0 to 1 - super super expensive
1 to 2 - super expensive
2 to 4 - quite expensive
more than 4 - safe zone (most insurance companies will charge the lowest rate for drivers with 4 or more years of driving experience, though some other insurance companies will give the lowest rate for drivers with 3 or more years of experience - eg. OAC under Great Eastern)

3) Job occupation (Indoor/Outdoor) This refers to the nature of work such as desk bounded jobs or sales jobs.

Indoor - cheaper
Outdoor - more expensive

4) NCB Discount This refers to No Claim Bonus discount or some insurance companies may term it as NCD (No claims Discount). You will get 10% NCB for every year which you do not have an accident. The maximum NCB that you can get is 50%.

For example, your car insurance premium cost $2000 (before NCB) and you have 40% NCB, your premium would be $1284 {[2000 - (2000 * 40)] * 1.07} with GST. Hence the higher the NCB, the lower your premiums will be.

5) NCB Protector This is applicable to people with 50% NCB. In the event of 1st accident in that policy year, your NCB will remain at 50%. After which, the 2nd accident will cause your NCB to be reduced to 20% (50% - 30%) . If you are very unlucky and meet with a 3rd accident in a year, your NCB will be reduced to 0% (20% - 30%, you cant get -10% so it will be 0%)

It is important to note that NCB protector is only effective if you renew your car insurance with the same insurance company. If your car insurance is with company A and your NCB is 50%, after the 1st accident which is due to your fault, you will still get 50% NCD as you got the NCB protector upon the renewal. However, instead of renewing my insurance with company A, you go with company B, you will only be entitled to 20% NCB.

6) Safe Driver Discount This is an additional 5% discount if you do not have any traffic offense or demerit points for the past 2 years. You only get this additional 5% when you have a minimum of 30% NCB.

For example, your car insurance cost $2000 (before NCB) and you have 30% NCB and safe driver discount, your premium would be $1423 {[2000 - (2000 * 30%)] * 0.95 * 1.07} with GST.

7) Engine Capacity (cc) This refers to the capacity of your car engine in cc. The lower the cc, the lower the premium.

8) Year of Manufacture This generally means the year which your car is made/registered. Generally, the older the car, the cheaper the premium

9) Body Type This refers to the type of vehicles such as saloon, MPV, SUV etc. Some insurance companies will charge a higher premium for a certain type of vehicle.

10) Engine Type This usually refers to normal or turbo car engine, It's important to know that most car insurance company will impose a higher car insurance premium on turbo cars. Some insurance companies will even reject cars with turbo engines.

11) Gender This is dependent on different insurance companies. Some insurance companies will charge a lower premium for male drivers while others will charge a lower premium for female drivers. For some other companies, the rate remains the same.

11) OPC Car OPC also know as off peak car (red plate). Some companies give a 5% discount for OPC (eg. NTUC) while other companies does not.

There are a few implications about this factors. Firstly, one should always try to secure a driving licence as early as possible since the number of years that you had your licence irregardless of your actual driving experience plays a part in the premiums. Secondly, it is advisable to get a car after 30 since any age below the age of 30 will result in an increased premium. Thirdly, getting a car with a lower engine capacity will not only lower your insurance premiums, but it will also result in a lower road tax, resulting in savings for both areas.

Tuesday, January 12

Always pay yourself first

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Always pay yourself first. This is something which we can do as a start to manage our finance prudently. I do think that the majority of us tend to spend their salary first once they receive it. Only at the end of the month, the remaining amount will then be transferred to a savings account. If you actually think of it, we are actually using the money to pay others first before we pay ourselves. In some cases, the savings account is not really one since funds are frequently transferred from it to cover for the shortfall that may occur in any month or to spend on big ticket items. Thus in the long term, the savings is likely to remain at a stagnant level.

As such, it can be hard to pay yourself first. However, there are a few steps which you can do. Firstly, you should make your savings account as inaccessible as possible. Preferably, there should be no ATM card linked to this account so there will be no chance of you withdrawing cash from the ATM from this account. Secondly, establish only one link to your savings account to other accounts and that account should be the account which your salary will be credited to. Thirdly, reduce the transfer limit of this savings account to the minimum so that you will not be allowed to transfer a large sum of money from this savings account. Lastly, you should set up an automated instruction in your internet banking to transfer a set amount of money from the account which your salary will be credited to, on the payday itself. This ensures that you get to save a sum of money first before you get a chance to spend your salary. Hopefully, this ensures that your savings will grow to a substantial amount.

Tuesday, January 5

S'pore investors more upbeat

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S'pore investors more upbeat
Koh Hui Theng
5th Jan 2010, my paper

SINGAPORE residents are welcoming the new year with new-found confidence, thanks to an improving economic outlook and positive market sentiments.

Instead of parking their savings in cash, many are turning to high-yield equity products like stocks, mutual funds and unit trusts - suggesting a return of risk appetite.

The third annual Citi Financial Quotient (Fin-Q) Survey 2009 - which polled 400 Singaporeans online in October - showed four in 10 who stopped investing during the financial crisis have either resumed doing so or intend to be back once the right opportunity arises.

Another four in 10 had stayed invested during the tough times.

And equity instruments top these investors' wish-list. One in two opted for stocks in their portfolios while three in 10 zoomed in on mutual funds and unit trusts.

In contrast, only one in five said they would continue to hold their savings in cash or near-cash equivalents like term deposits and Treasury bills.

Despite the robust property scene here, just one in five said they intend to buy real estate for future sale or rental yield.

If given extra cash, one in two added that they would pick stocks, shares or unit trusts to up their net worth.

Citibank (Singapore) head of wealth management Shrikant Bhat said the increased risk appetite indicates that confidence and stability are returning to the markets.

"Investors who had sought refuge in cash and steady-yield products are now seeking higher returns and ways to better grow their money," he said.

Three in five said they were quite confident about the country's economic future despite their finances being affected by the crisis.

The improved outlook resulted from across-the-board growth in 2H09, as various stimulus packages kicked into effect and risk aversion ebbed.

But he expects uneven growth this year as emerging markets and sectors like healthcare and pharmaceuticals outperform their counterparts.

Still, people seem to have learnt lessons from one of the worst recessions in history.

Despite being more willing to invest, they are proceeding with greater care.

A quarter of those polled said they are a lot more cautious about making investment decisions now, compared to a year ago.

Two in five said they are a little more cautious.

Two in five also admitted they have saved more in the past year.

Meanwhile, many are concerned about rebuilding their savings, meeting monthly expenses and accumulating greater retirement savings.

Two in five reported that their retirement savings suffered serious losses.

A vast majority, seven in 10, felt their Central Provident Funds (CPF) are insufficient for a comfortable retirement.

Of these, a quarter said that CPF will provide very little retirement income.

Almost half said their CPF will offer only some income to fund their golden years.

kohht@sph.com.sg

HDB resale prices climb 3.8% to hit record high in Q4 2009

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HDB resale prices climb 3.8% to hit record high in Q4 2009
By Cheryl Lim/Wong Siew Ying, Channel NewsAsia 04 January 2010

SINGAPORE: Prices of resale Housing and Development Board (HDB) flats rose 3.8 per cent in the fourth quarter of 2009, reaching the highest level since 1990, when records of such data began.

The Resale Price Index of public flats stood at 150.7 in the fourth quarter of last year. But some said that spiralling prices will not deter potential buyers.

Despite the record high prices, one real estate consultant said prices of most of the larger HDB units have not increased dramatically.

Donald Han, managing director, Cushman & Wakefield said: "If you look at the overall pricing for the four- and five-room flats, they are all still within the norm, and very much far apart from the kind of headline transaction news that you get of about S$700,000, S$800,000 in that sense."

According to some others, resale flats have strong potential to rise further due to demand from newly formed families and permanent residents.

Nicholas Mak, real estate lecturer, Ngee Ann Polytechnic said: "Going forward the case of price growth is not going to be 3 to 4 per cent every quarter. Otherwise, we could see very high unsustainable levels for the HDB resale market.

"It is more likely going to grow at a pace of between, perhaps eight to maybe as high as 15 per cent for the whole of 2010."

The HDB said it will continue to launch more Build-to-Order (BTO) projects this year, if there is a sustained demand for new flats. And it said it will continue to ensure that there is an adequate supply of flats to meet the prevailing housing needs.

For a start, 1,300 BTO flats in Choa Chu Kang and Hougang will be offered for sale on Tuesday. But it will take up to four years before the BTO flats are ready.

So for those who cannot wait, resale flats are one option, thereby, driving up demand and prices.

The HDB will release its detailed resale price data and public housing data for the fourth quarter on January 22.
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