Monday, June 15

ATM guide to right issue

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There was a full page advertisement made by CapitaCommericial Trust on their coming rights issue on the Straits Times and there was a useful step by step guide on how to use the different ATMs for the different banks to apply for the rights so I thought that it will be useful to reproduce it as a reference.

1. Navigation Guide for DBS/POSB ATMs
-Insert DBS or POSB ATM Card
-Enter PIN
-Select "More Services"
-Select "ESA-IPO Share/SGS/Investments"
-Select "Rights Appln"
-Select the counter which you want

2. Navigation Guide for OCBC ATMs
-Insert OCBC ATM Card
-Enter PIN
-Select "Other Services"
-Select "Shares"
-Select "Rights Appln"
-Select the counter which you want

3. Navigation Guide for UOB ATMs
-Insert UOB ATM Card
-Enter PIN
-Select "Cashcard/Other Trans"
-Select "Other Trans"
-Select "Rights/Warrant Application"
-Select the counter which you want

For ATM applications, please note that you have to enter the exact number of Rights Units you wish to accept and/or the exact number of Excess Rights Units you wish to apply and not the number of board lots you wish to accept and/or apply. Applications through ATMs may be made from Mondays to Saturdays between 7am and 930pm.
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Friday, June 12

Why buy insurance ?

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Why should one buy insurance ? The answer to this question seems to be pretty obvious to each and everyone one of us but the answer can varies. Some may see it as a form of investment such as buying life insurance that will give you some returns and coverage together while others may see it as a form of savings.

The main reason why one should buy insurance is to protect you and your loved ones from any catastrophic financial losses as a result of any unforeseen mishap or circumstances that may arise. How about considering the situations below ?

You are driving a car on the highway and you crashed into the back of the car in front. It turns out that the repair cost of the car in front is significant and you are deemed to be liable for it. Do you have the money to pay for the damages ?

You are the sole breadwinner of the family and due to some unforeseen mishap, you passed away. Will your family's quality of living change if no one in the family is able to replace your income ?

As such, do keep in mind the reason on why you are buying insurance. And if you keep it in mind, you should always consider the amount of coverage you are getting and getting a sufficient amount of coverage. Don't think of insurance as a form of investment where you are supposed to get some profits back at the end of the day. Consider it as a small amount of expenses that will hedge any unforeseen huge financial losses arising from unforeseen circumstances. In fact, you should separate your insurance needs from your investment goals.
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Monday, June 8

We want to retire here, but can we afford it?

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We want to retire here, but can we afford it?

By Lediati Tan
(Taken from the New Paper on June 07, 2009)

YES, I would love to grow old in Singapore, but it's too expensive.

These sentiments were revealed in a study released yesterday on public perception and attitudes towards ageing and seniors.

The study, commissioned by Council for Third Age (C3A), covered 2,000 Singaporeans and permanent residents, aged 16 and above, between last 28 Nov to 23 Dec.

A majority - 74 per cent - expressed their wish to grow old and retire in Singapore, but only 56 per cent felt that it was affordable to do so. (See report on right.)

Significantly, only 47 per cent of those aged 65 and above - the lowest among the six age groups - felt it was affordable to grow old here.

Respondents told The New Paper that medical cost is their top concern. Handyman Bob Lee, 52, said it was a case of 'can die but cannot fall sick'.

He said: 'The cost of living here is very high. When you grow old, there will be more than once when you end up in hospital. The medical bills are very expensive.'

Based on his own experience, Mr Lee said that when he sought treatment at a private hospital, he ended up with a $30,000 hospital bill, of which half was covered by his insurance.

However, marketing communications executive Lee Junxian, 25, and retiree Peggy Chang, 60, felt that Singapore is generally affordable.

Said the younger Mr Lee: 'There's a perception here that it's quite expensive to grow old. But I think that if you plan for retirement, government subsidies are quite sufficient.

'It's really about being prudent. If you are responsible, retiring in Singapore shouldn't be a problem.'

He said that it was important to plan for old age by having adequate health insurance and savings.

He added that insurance coverage and government subsidies helped cover 80 to 90 per cent of his grandfather's dialysis cost.

Agreeing, Madam Chang said: 'You must be prepared. You cannot depend on your children or the Government.

'Those who are not medically fit and are without health insurance, the medical bills can be really expensive, and it will be a problem.'

The older Mr Lee, however, felt that it will be difficult for the average Singaporean to plan for retirement if they are already struggling to make ends meet.

He said: 'For the average person, it's a struggle to make a comfortable living. You can't really think of retirement, unless you are wealthy enough with lots of reserves.

'I look at my friends, and see a lot of people struggling, especially with home mortgage and other things. They cannot make retirement plans themselves.'

Commenting on the results, C3A chairman Gerard Ee stressed the importance of reaching out to all age groups and educating them on retirement planning.

He said: 'People now live a lot longer - which means they need to have a strategy and an idea of the quality of life they would like, and how much they will need to set aside for it, and then save adequately.'

SURVEY RESULTS

Those who want to retire in Singapore:

Overall: 74 per cent

Those who think it's affordable to retire in Singapore:

Overall: 56 per cent

Breakdown by age group

16-24 years old: 50 per cent

25-34 years old: 56 per cent

35-44 years old: 59 per cent

45-54 years old: 59 per cent

55-64 years old: 61 per cent

Above 65 years old: 47 per cent
Singapore is a good place to retire indeed as it is a rather cosmopolitian and safe place to live in. The level of healthcare is also excellent here. However, it may be too expensive for us to retire comfortably due to the high cost of living here and the social welfare support, which is only available at the basic level, is not helping too.

To put things in perspective, we can make a simplfied calculation on how much it cost for us to retire in Singapore. For example, you are 30 now and you would like to retire at the age of 60. The average male life expectancy in Singapore is 78 years old currently so it is expected that you will live for another 18 years. You aim to have an income of $5,000 every month to fund your retirement thus you would need a total of $5,000 * 18 years * 12 months = $1.08 million by the time you turn 60. The question now is are you adequeately prepared and taking an initiative to achieve this amount of money by the time you retire ? If not, do you have any plans to generate an amount of passive income that support you in your retirement ? If not, it is time to start taking action now.

Thursday, June 4

50% profits from buying near bottom

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This is one of the accounts which I'm looking after. I purchased a modest amount of the STI ETF near the market bottom and the current price is somewhere off the initial purchase price already so. I'm not doing this to show that it is possible to pick the bottom as I think it is almost impossible for anyone to time the market precisely. But I do think that buying in when the stock market is undervalued is something which can be done. And this is also the time where the majority of the market players are too fearful to buy but it is also possible for investors to overcome their natural instinct of fear during a market plunge and buy in. Unfortunately, my initial purchase price for my own account is not that low although I'm still sitting on a decent amount of paper profits.

I'm sure there are quite a number of investors out there who are sitting on a sizable amount of gains which are much greater than mine after taking the contrarian approach for past few months. The market rewards the brave indeed.

Wednesday, June 3

Selling HDB below valuation

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Given that the property market is softening now, it is more common to see HDB flats selling near or at their valuation. In fact, it is possible to see that there are HDB flats selling below valuation. If you are contemplating to sell your HDB flat below valuation and you have used CPF funds to finance your HDB flat, do keep in mind that you may be required to refund back any shortfall in your CPF refund if the sales proceed is insufficient to pay back this refund. This CPF refund is the amount which you have drawn out from CPF to service your housing loan plus accrued interest. This can be illustrated by a simplified example below.

Valuation       : $400,000
Sale Price       : $380,000
Outstanding Housing Loan     : $300,000
Amount left        : $80,000

CPF refund with accrued interest : $120,000
Shortfall         : $40,000

The sales proceed received will be used to pay off the outstanding housing loan first, which can be from HDB or the banks. The amount left after paying off the loan will be used to pay off the housing levy if there is any to be paid before it is being used to pay the CPF refund as explained earlier. In the example, the seller of the flat was left with $80,000 after paying off the outstanding housing loan. However, the seller of the flat is required to pay $120,000 back to the CPF board. As such, there is a shortfall of $40,000. Since the flat was sold below valuation, the CPF Board may ask the seller to top up the CPF shortfall by the amount sold below valuation. Thus, do think carefully about the consequences and whether you will be affected by this if you are planning to sell your HDB flat below valuation.
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