Financial issues affecting Singaporeans

You can read the key financial news affecting Singaporeans in the FISCA website, http://easyapps.sg/assn/Org/Information.aspx?id=5

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Agent Provocateur| woman(s).. know the power of your Underwear

if this stands true, we need to rethink marketing 3.0

Power of Subliminal Messages

Channel Four's Derren Brown takes two ad execs for a short car ride. During that ride, Derren subliminally implants images/ideas that will be used for his ad campaign, then pitches the product and lets them unknowingly reproduce it. Read more on Subliminal Messages in Internet Marketing here

Power of Subliminal Messages- Derren Brown from Michael Arbach on Vimeo.

Emergency Fund

Every person should build up an emergency fund of 6 months of earnings. If you earn $5,000 a month, the emergency fund should be $30,000. This fund should be invested in a liquid form, e.g. keep in the bank account, fixed deposit, money market fund or invested in short term bonds. The return is low, but it is more important to have the flexibility to withdraw the savings in an emergency, without any loss.

This emergency fund is needed to meet your cash needs during unemployment, unexpected medical bills or other emergencies. If you have an emergency fund, you will not have to borrow money on your credit card and incur 24% in interest charges.

This tip is important for young people. You should build up the emergency fund early. Do not spend all of your income away. Put aside savings for this emergency fund. It may mean that you should not buy your car or pay too much for your flat.

Tan Kin Lian

Gini index

The United Nations measure the Gini index as the ratio of the average income of the top 10% (richest) compared to the bottom 20% (poorest) in the country. A higher index shows a bigger inequality of income. Here are the findings:

High income countries
Japan            24.9
Germany       28.3
Canada         32.6
France          32.7
Australia       35.2
UK               36.0
Israel             39.2
USA             40.8
Singapore      42.5
Hong Kong   43.4

Low income countries
Indonesia       34.3
Russia            39.9
China             46.9

We have seen unrest in China and Israel about the high cost of living. Both countries have high Gini index. I have included Australia and Canada as these countries are rated to provide a good standard of life for their people.

America is considered to have high income inequality. Singapore is worse than America.

Source: http://en.wikipedia.org/wiki/List_of_countries_by_income_equality

Impact of Income Inequality

Let us look at two hypothetical countries, X and Y

X - 90% of the population earn an annual income of $40,000 while 10% earn an average of $120,000 (3 times).
Y - 90% of the population earn an annual income of $40,000 while 10% earn an average income of $240,000 (6 times).

In X, the top 10% earn 25% of the total income. In Y, the top 10% earn 40% of the total income.

Which country give a better life to its people? Most people would probably say that country Y is better - as 90% of the people l earn the same income as X, and it gives the opportunity for the remaining 10% to earn much more.

But this reasoning is wrong. The higher income earners of Y can afford to pay higher prices for property and other products and services and push up the cost of living - which creates a negative impact on the remaining 90%. This is why "the rich gets richer and the poor gets poorer".

A country with a greater income equality will allow more people to earn enough to meet the cost of living and raise a family. This is why a low income country with greater income equality gives a better life to the people, rather than a high income country with greater income inequality.

It is the inequality of income and the high unemployment rate (a main contributor to the inequality) that leads to unrest that has been seen in many countries during the past year.

Read this article about income inequality in America.

This article compares the Gini index of Singapore with other familiar countries.

Tan Kin Lian

Income inequality in USA

I wish to quote the following article from Wikipedia about income inequality in America, and explain in a separate article why it cause greater to people at the lower income level (compared to a society where the income distribution is more equal). I will also show the how Singapore fare in the Gini index, i.e. it is worse than America.

Quote from Wikipedia:
Income inequality is the extent to which income, most commonly measured by household or individual, is distributed in an uneven manner. While there seems to be consensus among social scientists that some degree of income inequality is needed, the extent of income inequality and its implications on society continue to be a subject of great debate, as they have been for over a century.

A study by the Southern Economic Journal found that "71 percent of American economists believe the distribution of income in the US should be more equal, and 81 percent feel that the redistribution of income is a legitimate role for government." 

Data from official sources indicate that income inequality has been increasing since the 1970s. As of 2006, the United States had one of the highest levels of income inequality, as measured through the Gini index, among the high income countries.

In 2010, the top 20% of Americans earned 49.4% of the nation’s income, compared with the 3.4% earned by the roughly 15% of the population living below the poverty line. This earnings ratio of 14.5 to 1 was an increase from the 13.6 to 1 ratio in 2008 and a significant rise from the historic low of 7.69 to 1 in 1968. 

Looking back even further to 1915, an era in which the Rockefellers and Carnegies dominated American industry, the richest 1% of Americans earned roughly 18% of all income. Today, the top 1% account for 24% of all income.

Tips on life insurance

Someone wanted to know about  asked about life insurance. Here are the options:

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