Wednesday, August 29, 2007

Death Tax - Estate Duties

Estate Duties are basically "Death Tax" levied by the government. My ambition is to be able to reach the stage where I can pay such a tax. Do you have the same wish?

What assets are liable for Estate Duties?
If Deceased died domiciled in Singapore
Estate Duty is payable on the market value of all Singapore property (immovable and moveable property) and movable property outside Singapore of the deceased person at the date of death. His land and buildings (immovable property) outside Singapore are not liable to estate duty.

If Deceased died domiciled Outside Singapore
No estate duty is payable on his movable property in Singapore. Only his immovable property (real estate) in Singapore is liable to estate duty.

Certain gifts are not liable to tax
Under the Estate Duty Act, the following gifts made by the deceased during his lifetime are not liable to estate duty:
(1) A gift made 5 years after his death
(2) A gift for public or charitable purposes made twelve months after his death
(3) A gift made in consideration of marriage
(4) A gift not exceeding $1,000 in value

What assets are exempted from Estate Duties?
(1) Dwelling Houses - up to the value of $9 million
(2) All other property (including CPF Balance) - up to the value of $600,000
(3) If the CPF balance exceeds $600,000 - the excess CPF monies above $600,000

What are the rates?
(a) For every dollar of the first $12 million - 5%
(b) or every dollar exceeding $12 million - 10%

Monday, August 27, 2007

Hungry Ghost Festival

We can see many people performing street rituals over the past 15 days. Today happens to be the 15th Day of the 7th Lunar Month. What actually is this Hungry Ghost Festival about? Let me share with you today.

The Hungry Ghost Festival, also known as Zhongyuan Jie, spans the entire seventh lunar month. No one can recall when the Festival actually started, but there are two theories about its origin.
The first theory is that the festival originated in Taoism. The celebration marked the birthday of Di Guan, the God believed to have power over the land. Sacrifices were offered on this day to thank Guan for his crop protection.
However, most people tend to associate the festival with the Buddhist story about Mu Lian, the eldest monk under the discipline of Buddha. Mu Lian's mother committing many terrible crimes, including murder and was sent to the 18th level the very bottom of Hell, where she became a hungry ghost.

Mu Lian learned of her suffering and went down hell to try alleviate her pain with rice and water, but he failed, as the food quickly caught fire before it could reach his mother's lip. Mu Lian then asked Buddha for advice. He was told to perform rituals with sincerity on the 15th day of the seventh month and prepare food for other ghosts as well. The gods were so emotionally moved by his act that they finally let his mother go.
Since then the date has been known as the Hungry Ghost Festival. It is thought that the gates of Hell are opened on that day, releasing hungry ghosts into the world. On the last day of the month, all of them must return back to hell.

Saturday, August 25, 2007

Tackling aging problem in Singapore (2)

I have the following views after my 1st posting on this issue last Thursday.

1. To help Singaporeans work Longer
a) The measures to help older Singaporeans stay employed by giving incentives to the companies and through legislation is a good.
b) However it does not look into why Companies are not willing to employ older workers. Is it the large pool of foreign workers easily available in the workforce or the local workers are simply not re-inventing?
c) There should be measures in the system whereby a company trying to employ a foreign worker proves that they have made due effort trying to recruit a similar local talent before they are allowed to recruit a foreigner.

2) Improving returns on CPF savings.
a) Singaporeans are simply not smart enough to make good returns with their own investments and not willing to admit it. The best way is to force them invest and the fund adminstered by CPF board, managed by well known pension fund managers.
b) Pegging the SMRA with long term bond rate reduces the risk government take by guaranteeing the 4% interest. Smart move by the government to ensure they win everytime.

3) Making Savings last for life.
a) Don't really welcome the drawdown age to 65. In another word, they are forcing people to work before they can see the money. For someone with poor health and those who cannot get a job in their twilight years will find themselves seriously short of money.
b) The annuity is a good move to ensure all Singaporeans have money beyond 85 yrs old. However, the government should support this measure by contributing some money into the annuity account of those who don't even have half the minimum sum at age 55. Example, Citizen contribute $10,000, Govt contribute $5k.

4) Conclusion
a) Don't ever think of retirement unless you are out of the rat race.
b) Be smart enough to invest and save adequately when economy is good.
c) There must be enough measures to ensure Singaporeans are investing under good hands.
d) Government only take care of the Super Poor. If you are not one of them, you must learn to fend for yourself.

Friday, August 24, 2007


Just to deviate from my last posting. It was middle of the night as I'm writing this. I was rushing for a report when this happens.

My printer low ink indicator suddenly blink when I'm trying to print a report. I tried in my computer to identify which ink went low. I wasted 10 minutes trying to figure out. I failed. The program simply doesn't works this time.

Out of no choice, I used to trial and error method.
I changed the black ink first. The light still on
I changed the yellow ink next. The light still on
I changed the blue ink next. The light still on.
I changed the red ink last. The light went off.

I was damned furious. Why I so unlucky!!!

The black ink cost me $16 and each colour ink $13.
I wasted $42 over a span of 15 minutes.

Now got to keep the other inks. Hope next time, still can use.

Thursday, August 23, 2007

Tackling aging problem in Singapore (1)

Our PM Lee announced several solutions to the aging problem during the National Day Rally on 19th Aug. More details shall be announced in Parliament next month. Before I pin my comments, I share what they are first.

1. To help Singaporeans work Longer
a) Institute re-employment legislation by 2012, to require employers to offer re-employment to workers reaching 62, up to age 65, and eventually to 67
b) increasing the Workfare Income Supplement (WIS) for older workers

2. Improve returns on CPF savings
a) Extra 1% CPF Interest Rate on 1st $20k on OA and on up to $60k on OSMRA
b) Pegging SMRA to long term bonds rate

3. Make savings last for Life
a) Raising the draw-down age from 62 to 65 by 2018
b) Making annuities compulsory for those aged 50 and below with payout starts at age 85.
SMRA = Special / Medisave / Retirement Account
OA = Ordinary Account

Monday, August 20, 2007

Hybrid Savings Plan - Revosave

NTUC Income launches a new Endowment Plan with a big bang at Ritz Carlton Hotel this afternoon.

NTUC Income CEO, Mr Tan Suee Chieh, invited all insurance advisers including Independent Finanical Advisers and Journalist from all major Newspaper for this product launching.

Mr Tan announced that this is the first of its kind and will be the revolutionary way of savings for Singaporeans. What plan is it exactly?


Basic Product Features
Type: Participating Endowment Policy
Term: 15 to 25 yrs
After 2 yrs, 5% of Sum Assured will be given out as coupons
Eg, if you save $3,000/yr x 20 yrs, $1,800 of funds can be taken out as coupons from the Cash value

You have 3 choices for this $1,800
a) To take out and we give you a cheque yearly
b) To leave in the Endowment Policy and earn a projected returns of 3.5%
c) To invest the money into a large diversified fund with zero charges

If you take option 1, you may have taken $79,382 over 20 yrs inclusive all coupons
If you take option 2, you may have 87,475 after 20 yrs
If you take option 3 and investment earns 5% pa, you may have $88,803 after 20 yrs
(Above figures are projected)


My Opinion after Analysis
* It is a new marketing concept, suitable for low risk savers who are half sure about savings through ILP and not sure of their financial obligations over 20 yrs.
* The investment option for the coupon is attractive. We are able to invest at Bid Price which means zero charges. UTs in the market charges 2-3% bid offer spread.
* The returns are modest over 20 yrs period as flexibility comes with some cost
1) Option 1 yield - ~2.14%
2) Option 2 yield - ~3.80%
3) Option 3 yield - ~4.04% (Basis 5% investment returns)
For someone who are able to invest the whole $3,000/yr closely, he's more likely to get a better returns.

Appreciation from a Client

I received a pleasant surprise last Friday when I reach my doorstep after a hard day of work.
This fruit hamper was put outside my house.

It was from a client of mine whom I helped with her hospital claims recently. She met with an accident and was hospitalised for 3 days.

Her hospital bill was fully covered and she was given another lumpsum being hospital and MC benefit. She got the plan from me in May 07. Merely 2 months of premium paid, she claim around $2k plus.

I'm happy that she appreciates my effort and such appreciations are important to us. We are often frustrated when people treated us like a nuisance as if we are desperate for their business. I will continue to give good advice and serve my clients best interest in the long run.

Friday, August 17, 2007

My Organic Day

I had 2 Organic Meals today. I had a very tasty bowl of noodle full of vegetables in this Organic Vegetarian Resturant along Chinatown for Lunch. It only cost me $4.50 for that bowl. I did not take a picture of the soup noodle. It was real tasty.

I went into another Organic Resturant in the evening for dinner after my hard day work at Tampines. It was a cod fish dish full of vegetables and Potatoes. It was really yummy too. Look at the Alfafa Sprouts! I simply love them.

Since its my Organic Day, I decided to write something about Organic food in my blog. What exactly is it and what benefit it gives us?
What is Organic Food?
Organic foods are food that are produced according to certain production standards. They were grown without the use of conventional pesticides, artificial fertilizers or human waste, and that they were processed without ionizing radiation or food additives. Even the soil the food are grown are certified free from Pesticides. For animals, it means they were reared without the routine use of antibiotics and without the use of growth hormones.

Benefit of Organic Food?
Most studies — including a 2002 meta-analysis, which is a review of all past studies on the subject — found no proof that organic food offers greater nutritional values, more consumer safety or any distinguisable difference in taste. However there are some studies that says differently. Therefore, there are actually no conclusion.

But what the Organic Sellers say?
* Their food is safer, more nutritious, and better than non-organic food
* Israeli researchers have linked symptoms such as headaches, tremor, lack of energy, depression, anxiety, poor memory, dermatitis, nausea, indigestion and diarrhoea with dietary intakes of pesticides
* Belgian research found that women diagnosed with breast cancer are six to nine times more likely to have the pesticides DDT or hexachlorobenzene in their bloodstreams compared to women who did not have breast cancer.
* American toddlers eating mostly organic food have been found to have less than one sixth the pesticide residues in their urine compared to children eating conventional foods
* Artificial colorings and preservatives in food and drink contribute to hyperactivity in pre-school children
Organic Food and me
I will not purposely eat Organic Food. I think having a Balanced Diet is more important. I also don't believe in letting Children eat Organic food because it may reduce their tolerance for other food. Lastly, I feel they are too expensive for me.

Thursday, August 16, 2007

Bus and MRT fare rising again???

The Public Transport Council (PTC) has given public transport operators until August 2007 to apply for any fare revisions they wish to make. If approved, it will start in October and it will be the 7th Fare Hike in 8 years.
For a Chronology Fare Adjustment since 1990, you may see here.

Transporation Companies in many developed countries, including Singapore are run by private companies. Privatisation ensure competition, innovation and increased productivity.

Privatisation itself is good, but when it happens in a small country like Singapore, it seems to become monopolisation. Our Government tries to create competition by making SMRT running bus services and SBS Transit running the MRT. To me, it don't seems like competition for better services but rather competition of who makes better profit from the public.

I like to share the profits of SMRT and SBS Transit over the years with you today.

In the years 2003 to 2007, SMRT’s profit after tax are as follows:
FY 2007 = $135.8m
2006 = $103.6m
2005 = $126.6m
2004 = $90.2m
2003 = $72.2m

For SBS Transit, its profit after tax for the years 2003 to 2006 are as follows

2006 = $56.1m
2005 = $51.5m
2004 = $49.2m
2003 = $19m

So. Lets see if the fare hike will be approved next month.
If its not approved when the economy is good, when unemployment rate is low, then when will they approve it? Cannot be before election, rite?

Monday, August 13, 2007

Visiting the Dentist

August is our Singapore Oral Health Month. Being a typical Singapore good boy, I complied with our Government calling and went for my Dental Checkup cum Cleaning today.

My last checkup was nearly 2 yrs ago and todays experience is as usual a painful one. I clenched my fist tightly throughout the 15 minutes ordeal. My checkup, cleaning and filling cost me $135.

Since its the Oral Health Month, I like to share with you the correct way to brush our teeth.


Holding your Toothbrush Correctly
Using just a pea size amount of toothpaste, hold your toothbrush comfortably at about a 45 degree angle.

Back and Forth Motions

In gentle, short strokes (about as wide as your tooth), move your toothbrush back and forth, brushing the outside areas of your upper and lower back teeth.

Brush Outside Surfaces In the same gentle back and forth motions, brush the outside areas of your upper and lower front teeth.

Brush Chewing Surfaces

Brush the biting (chewing) surfaces and the inside (the side facing your tongue) of your upper and lower back teeth with the back and forth brushing motion.

Inner Surfaces

Brush the inside areas (the side facing your tongue) of your upper and lower front teeth with the tip of the brush using gentle up and down strokes.

Brush your Tongue
Brushing your tongue freshens your breath and removes bacteria.

Thursday, August 9, 2007

Happy 42nd Birthday!!! Singapore

I watched the NDP alone at home tonight. Quite sad, being alone on a holiday, but I enjoyed the parade and celebration on TV.
As we celebrate Singapore's 42nd Birthday, I like to share something regarding our National Anthem with you.

Our National Anthem was written over 1956-57 just before Singapore gained self-rule from the British.. The composer, the late Encik Zubir Said, wrote the anthem around the two words, "Majulah Singapura" or "Onward Singapore". It was launched on 3 December 1959 together with the National Flag.

Majulah Singapura (sung in Malay)
Mari kita rakyat Singapura
Sama-sama menuju bahagia
Cita-cita kita yang mulia
Berjaya Singapura
Marilah kita bersatu
Dengan semangat yang baru
Semua kita berseru
Majulah Singapura
Majulah Singapura

Onward Singapore (English translation)
We, the people of Singapore
Together march towards happiness
Our noble aspiration
To make Singapore a success
Let us all uniteIn a new spirit
Together we proclaim
Onward Singapore
Onward Singapore

Wednesday, August 8, 2007

The Rabbit Poster

Being a Rabbit Lover, this picture of a rabbit among old toys and books easily caught my attention. My initial thought is to hug and kiss the rabbit when I saw this poster but when I look closer, it talks about abandoning of animals.

In 2006, animals brought in to SPCA numbered at 2,727 dogs, 5,309 cats, and 1,215 domestic small animals.

A lot of people thought that they can give their animals to SPCA when they are tired of it, but statistics shows that only 2 out of 10 animals are successful adopted. The rest are put to sleep.
SPCA receives around 900 animals every month which equates to an animal every hour of the day.

When you surrender your pet to SPCA, there is a chance that it will be put to sleep within 24 hours and they will not inform you of the outcome.

Pets bring a lot of joy, but a lot of work too. If you are ready for the work and take good care of the animal, then get the pet. Don't get it on impluse.

Monday, August 6, 2007

Why stock markets dives within days?

The investment bubbles I mentioned are already in the system. Many people knows the risk but why do stocks market dive within days when these news are already known to investors?
I try to analyse for you...


The Domino Effect of Funds sell-out in 3 levels

1) Funds managers sell together on 1st day
Many Institutional Fund Managers set a target to sell their stock at a given price or if a certain event transpires. The sales are in large volume. They are willing to sell at slightly lower prices as they usually had made profits from the smaller investors.
This resulted in large supply of shares available for sale (after the event transpires) and it depresses the share price.

2) Weak shareholders forced to liquidate 3-4 days after the 1st Dive
When stock market is down, there are fewer buyers. Weak shareholder on margin are forced to sell their shares at a depressed price within a few days. They are not able to come out with a lumpsum to pay their existing shares.

3) General Investors Psychology after 1-2 weeks
The power of Herd Effect that cause economical panic. In the peak of a bull or bear markets, investors do not follow economic theories. They buy and sell based on emotions. Such irrational investments causes irrational market fluctuations. They are usually the slower movers and find chances to sell over the 1 week.

The 3 levels of selling should be over. The Institutional Fund Managers are probably looking for chance to enter the market now, pending favourable announcements that boost the market.

I believe its a good time to accumulate funds for long term investments now. Act Fast...

Friday, August 3, 2007

Investment Bubble 3 - Catastrophic Oil Prices

Goldman Sachs Group previously mentioned that oil may be at US$100 by 2009. Now that figure may just well be only a few months away. Last Friday, oil price is at US$77.02/barrel. In Jan 07, Oil prices was below $50/barrel.

Why Oil prices rise?
Demand increase is largely led by the recovering US economy, China and India where more cars, trucks and factories are burning oil fast. The cost of finding and pumping oil is also rising steadily due to shortage of deepwater drilling rigs and skilled workers to run them.

Under what circumstances will oil prices rise sharply?
1) If US pull its troop out from Iraq and Iraq went into Civil War.
2) If Nigeria break into another Civil War
3) If there are any military strike against Iran
4) If Opec cut production for some currently unknown reason

What happens if oil prices rise?
1) All your electricity, transportation expenses rise
2) All your food prices rise due to rise in Transportation
3) When all basic amenities rise, you have less money for other things
4) When you spend less on other things, businesses make a loss.
5) When businesses lose money, they retrench people
6) When more jobless people, less money pumped into economy
7) When less money into economy, the country may goes into recession
8) So, can you see the effect now?

So whats the conclusion?

Wednesday, August 1, 2007

Investment Bubble 2 - Yen Carry Trade

Stock markets had surged over the past few years. One reason is the aplenty liquidity in the market. Other than the oil nations pumping in billion of dollars, there are people doing "Carry Trading" in the market. What am I talking about? Let me share in this short posting.

What is Carry Trade?
It is a situation when investors and speculators borrow a currency with low interest, such as Yen, to buy a higher returns assets such as equities, commodities or even currencies with higher interest. One classic example is the "Yen Carry Trade"

Why is Yen so popular?
Japan has for many years suffered from deflation. To stimulate growth and revive economy, they kept short-term interest rate at nearly 0%.
This low interest rate policy means ultra low borrowing cost. Hence investors all over the world flock to borrow the cheap Yen.

What can cause the carry trade to unwind?
If Yen appreciates sharply and abruptly for whatever reason or the Government decides to raise interest rate sharply in a short period of time.

What will happen if the Yen Carry Trade unwind?
When the Yen appreciates sharply, investors may be forced to sell the assets or currencies which they purchased with their borrowed Yen.

So whats the conclusion?
If there are no control on the Yen Carry Trade and for whatever reason the Yen changes direction and strengthens, it can cause a large global imbalance that could destablise the financial markets.
This risk is factored in the current stock market. Though we don't expect the Yen Carry Trade to unwind that soon, the risk is that it may happens anytime without warning.