How to reply in difficult situations
http://tankinlian.com/admin/file.aspx?id=556
http://tankinlian.com/admin/file.aspx?id=556
Thursday, September 1, 2011
Quebec City Magic Festival
Creative Director / Copywriter: Luc Du Sault
Art Director: Vincent Bernard
Account Managers: Sandie Lafleur, Eve Boucher
Production Company: Nova Film / David Poulin, Charles Burroughs, Dominik Beaulieu
Production: Quatro Design / Enseignes Otis Image In
Medishield beyond age 85
Medishield insurance (provided by CPF) stops at age 85. The annual premium payable at age 85 is $1,123. I believe that this is subsidised by the younger members and the true cost should be higher.
So far, the Ministry of Health is unwilling to extend Medishield beyond age 85. If it is extended, the premium is likely to be $1,500 to $2,000 a year for the next 10 years. This is likely to be beyond the budget of the elderly people. When the premium is so high, those who are healthier are likely to stop the insurance. Only those who are in poorer health will continue. The cost could increase more sharply, due to the small pool.
What can the elderly consumers do? Beyond age 85, most people have so much health problem that it may be impossible to fix them. I know of many elderly people who prefer not to go to hospital, and to let their medical conditions be untreated. They know that their time will be up soon - it is called ageing, and that there is very little that can be done by medical science.
If they want to be treated, they can still reduce their cost by going to subsidised wards, and pay from their Medisave account, or from their children's accounts. They can also try to minimise the cost by staying for short periods and only when necessary.
Tan Kin Lian
So far, the Ministry of Health is unwilling to extend Medishield beyond age 85. If it is extended, the premium is likely to be $1,500 to $2,000 a year for the next 10 years. This is likely to be beyond the budget of the elderly people. When the premium is so high, those who are healthier are likely to stop the insurance. Only those who are in poorer health will continue. The cost could increase more sharply, due to the small pool.
What can the elderly consumers do? Beyond age 85, most people have so much health problem that it may be impossible to fix them. I know of many elderly people who prefer not to go to hospital, and to let their medical conditions be untreated. They know that their time will be up soon - it is called ageing, and that there is very little that can be done by medical science.
If they want to be treated, they can still reduce their cost by going to subsidised wards, and pay from their Medisave account, or from their children's accounts. They can also try to minimise the cost by staying for short periods and only when necessary.
Tan Kin Lian
Low default risk in ETF
Dear Mr. Tan
I am a retiree. I intend to buy STI ETFs with my savings instead of buying annuities.I would also like your advice on what happens if we put our life savings into ETFs and the company behind it goes bust. Are there any other ETFs worth considering now?
REPLY
The ETF is a trust fund invested in the top 30 companies in the SGX. The fund manager is DBS or State Street. If they go bust, another fund manager will take over to manage the underlying assets (shares of SGX). The risk is very small and it is safer than investing in any single share.
I am a retiree. I intend to buy STI ETFs with my savings instead of buying annuities.I would also like your advice on what happens if we put our life savings into ETFs and the company behind it goes bust. Are there any other ETFs worth considering now?
REPLY
The ETF is a trust fund invested in the top 30 companies in the SGX. The fund manager is DBS or State Street. If they go bust, another fund manager will take over to manage the underlying assets (shares of SGX). The risk is very small and it is safer than investing in any single share.
A person's perspective of minimum wage
I asked my blog reader, Hang Lian, about how the minimum wage impacts business and people in New Zealand. Here is his reply.
Hi Mr. Tan,
I did not look into the minimum wage in details. What I know is it's $13 an hour (about $500 a week on 40 hrs). The exchange rates between Spore and NZ is about 1:1.
In Spore, for those very low income earners who earn less than $1000 a month and in some cases, working more than 10 hours a day, I can't see how this group of people make ends meet. I suspect their quality of live would be greatly compromised.
Hi Mr. Tan,
I did not look into the minimum wage in details. What I know is it's $13 an hour (about $500 a week on 40 hrs). The exchange rates between Spore and NZ is about 1:1.
As far as I can see, although minimum wages have been applied, the cost of living is not as high as one would expect. Many employers here are SMEs, so I also don't see how a minimum wage could add a lot of burden to businesses, let alone the MNCs.
I think the most important advantage I see is that as long as a person is willing to work, even if he earns the minimum wage, he will be able to live a reasonably comfortable live (without the need to spend too much time working as well). I lived alone for a while when I first came here, and I can say that the minimum wage is quite sufficient to support a person's basic expenses of accommodation, food, transport, etc (in some cases even 2 people).
In Spore, for those very low income earners who earn less than $1000 a month and in some cases, working more than 10 hours a day, I can't see how this group of people make ends meet. I suspect their quality of live would be greatly compromised.
There are some employers who try to work around the minimum wage policies by paying less, which is against the law.
Of cos a lot of things are also a result of a combination of various other factors, like the general environment, working culture, lifestyle, taxes, labour laws, etc.
Hope that helps.
Hang LianFinancial Planning Talk by Sam Goh
Here is a new financial planning talk organised by FISCA. The speaker is Sam Goh, who has experience in delivering this talk to several government agencies. Do attend his talk and widen your knowledge. Details can be found here.
Danger for the property market
The property market has gone up too high, due to low interest rate. When interest rate increases in the future after quantitative easing is over, it will cause a drop in the property market. The impact is more severe in a place like Singapore, where property are financed on short term interest rate. When interest rate rises, the impact will be severe.
Let me quote a simple example. Suppose the buyer pays for a property on a 20 year loan at an interest rate of 2% per annum. With a monthly repayment of $5,000, the borrower can afford a property worth $981,000. When interest rate increases to 4%, which is a more realistic interest rate (given that inflation is now 2% to 3%), the monthly repayment will increase by 17%. Some borrowers cannot meet the higher payment, so they have to sell the property. The next buyer can afford to buy the property at 17% lower. So, the property market will drop by 17% due to the increase in interest rate.
What can you do now - to prevent this financial disaster? You should have a 20% buffer. If you can afford a monthly payment of $5,000, buy a property that requires payment of only $4,000. The additional $1,000 is to meet higher repayment in the future.
You may not be able to get the property if you pay 20% less. In that case, it is better to wait for the property market to correct. Meanwhile, you can rent a property. Even if the rental is high, you are paying for it one year at a time. You can wait for two or three years, to see the correction in the market. It will come!
Tan Kin Lian
Let me quote a simple example. Suppose the buyer pays for a property on a 20 year loan at an interest rate of 2% per annum. With a monthly repayment of $5,000, the borrower can afford a property worth $981,000. When interest rate increases to 4%, which is a more realistic interest rate (given that inflation is now 2% to 3%), the monthly repayment will increase by 17%. Some borrowers cannot meet the higher payment, so they have to sell the property. The next buyer can afford to buy the property at 17% lower. So, the property market will drop by 17% due to the increase in interest rate.
What can you do now - to prevent this financial disaster? You should have a 20% buffer. If you can afford a monthly payment of $5,000, buy a property that requires payment of only $4,000. The additional $1,000 is to meet higher repayment in the future.
You may not be able to get the property if you pay 20% less. In that case, it is better to wait for the property market to correct. Meanwhile, you can rent a property. Even if the rental is high, you are paying for it one year at a time. You can wait for two or three years, to see the correction in the market. It will come!
Tan Kin Lian
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