Success Takes Effort

Recently, this thought has struck me deeply. Success does not come easy and it certainly takes a bit of effort. Most people spend their entire lives slogging it out before success comes their way. They spend easily 20 to 30 years of their life before reaping the fruits of their labour.

I was looking at the CV of a person I respected and was amazed at the amount of things and posts he has held. I looked at his age and wondered whether I could ever achieve such things by that age. Only time will tell and if God willing, I still have twenty years of my life to either surpass him or equal him.

Success takes effort and hard work. Often, it involves years of just working at a desk, carrying out your daily job. Just some food for thought.

AXA FutureProtector High Lapse Rate

It was reported in the Straits Times today that AXA, an insurance company, is trying to claw back $7 million from local financial advisory firm Finexis.

Last year, Finexis had a promotion where they were giving away free 1 year term insurance to its customers and potential customers. This free 1 year term insurance was AXA's FutureProtector policy. Most probably unknown to AXA, Finexis gave away all these insurance policies without asking customers to pay a single cent.

This was my personal experience:

Financial Planner from Finexis: "I got free insurance to give you. Just sign it here and after 1 year cancel it. Free, why not just take it. $200K coverage."

Me: "Okay lor"

I readily signed up for the free insurance from Finexis with the mindset to cancel the policy after 1 year. Afterall, that was what I was told to do. In fact, just this year, the agent sent me a giro cancellation form so that I could cancel off the policy as agreed upon. But I had no use for the form as I had already informed the bank beforehand to cancel off the giro agreement at the start of the year.

So now we know the repercussions of giving away free insurance. I am pretty certain that many of those who took up the free insurance just lapsed their policies as they saw no need for that protection at all in the first place. The only reason they took it up was because it was given totally free of charge without them having to purchase any other policy at all. We Singaporeans love free stuff =)

Salary Discussion

How much does a normal or average Singaporean earn? Based on median income, that is supposed to be $2,400 per month and raised to over $3000 by 2020 (Government's projection). I am not sure whether that is the actual case and have created a poll. Hopefully, more people will take part in the poll and "reveal" their salary.

I guess it will also useful for people who are thinking of switching jobs and are too afraid to ask others what their pay is like. Based on a recent survey published in Straits Times, people looking for jobs tend to view salary and career progression as fairly important factors when considering a job. In addition, they are looking for "work-life balance".

Here are some "statistics"of gross monthly salary that I know of based on conversations with friends and family:

1. Trained Teacher ($4000 plus, degree holder)

2. Stat Board (fresh grad, $3000)

3. Ministries (fresh grad, $3000 ++)

4. Secretary for SME (fresh grad, <$2,500)

5. Engineer (fresh grad, $3000)

6. Teaching Assistant, NUS (fresh grad $2,500)

7. Recruitment consultant (with commissions, $4000-$5000 after 1-2 years)

8. DXO in Mindef ($3200, fresh grad)

9. Tuition Teacher ($1000 to $10000+, depending on level taught and no. of students)

10. Bancassurance in bank ($4000 with experience)

11. Insurance agents ($2000-$15000, depending on commissions)

12. Property agents ($2000 - $20,000 , depending on sales)

13. Pastor ($3000)

14. Taxi Driver ($3,500)

15. Admin staff in MNC ($2,600 fresh grad)

16. Secret agents ($5000, fresh grad)

17. A*Star (fresh grad, $3500)

18. Sales Engineer ($4000)

19. Big 4 accounting firm (fresh grad, <$3000)

The figures above are "hear-say" figures and might not be entirely accurate. These are based on my conversations with people and what they accidentally reveal over the years when they complain about pay or are discussing about changing jobs.

Of course, there are a whole slew of other factors like performance bonus and yearly increment. But I guess the "wisdom" about all these matters are really out there in the market and only known by those who are working in that particular industry.

Perhaps people will feel free to share anonymously on their income and the qualifications they hold (including no. of years worked).

Surrendering Insurance Policies?

I read the news article a few weeks back about insurance agents/financial planner shifting around the various companies in Singapore with handsome buyout clauses and stuff. These insurance agents get paid lots of money just to jump ship from one insurance company to another company.

While that might be a concern to most people, it is important to note that if your insurance agent has switched companies, he or she is not supposed to induce you to lapse or surrender your existing insurance policies and buy a new policy from them. This unethical agents are just out to earn extra commission as they no longer earn the trailer commissions that they would have earned if they had stayed with the same company. When they join a new insurance company, they start from ground zero all again and have to start building up their client base all over again. The fastest and easiest way that they go about doing this is to ask their previous clients to take up new policies with them, often citing the benefits of doing so.

Some of them might even suggest that they can continue to "take care" of you. That is not the case as the insurance policy contract that one purchases and owns is an agreement between the insurance company and you. The insurance agent is just a distributor and does not own the clients in a legal sense. When your insurance agent leaves the industry or leaves the company, the insurance company will get another insurance agent to "service" you. If all else fails, just call the customer service hotline. That is the usual way I find out information and it is much faster than going through your insurance agent.

In the insurance industry, this malpractice of replacing old policies with new policies has led to agents being caught and fired. Many have also been disillusioned by the unethical conduct and have left the industry or lamblasted the industry. However, the practice is still very widespread. I have met with many insurance agents before and all of them have at certain points in time asked me to surrender one of my existing policy to buy a "better and newer" policy from them. This happens even when I have met IFAs.

This point has been elaborated by Mr Tan KL before at his blog. In most cases, surrendering your insurance policy does not make sense. This is especially so if you are asked to buy a similar insurance policy to replace the policy that you have surrendered or lapsed.

From a monetary point of view, it is very difficult to justify surrendering a policy for another policy. Always remember to get a 2nd or 3rd opinion when in doubt so that you can make a more informed decision. Better still, ask people like me who are not in the industry and you will probably get a more informed and independent opinion. Of course, you will have to buy me coffee =) .........Just kidding..

Does Studying a Masters Help?

I have been wondering the past few days whether studying a masters would be useful in my career progression and open more doors to me. I currently only have a bachelor's degree and was thinking of doing a masters in one of the local university.

Of course, cost is one of the main factors that I choose to do it locally. Besides, I cannot afford to do it on a full-time basis and most probably will have to pursue it on a part time basis.

I was just wondering whether doing a masters in my related field of work will bring about a better career progression for me. Besides, I have also been wanting to do a masters for the longest time but I just don't know whether it is worthwhile to spend the time and money on something unless there are potential benefits. The other option will be to wait for a few more years, save up enough money and then go overseas to do my masters.

Decisions, decisions, decisions....

Poll Results: Which is the most toxic investment product

In a poll that I recently conducted on this blog, I asked the simple question to readers:

Which is the most toxic investment product?

All investments are subjective are their investors believe that they will rise in value and thus invest in them. Toxic investments or assets are simply things that lose their value such that there is no way to liquidate them for any money. Whether investment products are toxic........we can only tell based on hindsight I guess. On hindsight, we are now certain that subprime mortgages are toxic assets. But whether other investment products are toxic or not, we can only wait and see.

Poll Results - A total of 22 votes were cast

1. Land Banking (54%)

2. Insurance Products (18%)

3. Wine Investment (27%)

4. Shares (0%)

Analysis of Results

The poll showed that more than half felt that Land Banking was a toxic investment product. Wine Investment was next followed by insurance products. Nobody felt that shares is a toxic investment.

The reason why Land Banking got so many votes is perhaps due to the recent Straits Times article on it being unregulated. Mr Tan Kin Lian has also highlighted the pitfalls of investing in land banking on his blog. The low liquidity of this investment product coupled with the risk involved makes this a fairly risky product to a certain extent.

Interestingly, noone rated shares as toxic or risky even though there have been cases or debacles of shares becoming worthless overnight. Just think of China Print and Dye, etc. These shares just lost value overnight and became totally without value. Isn't that toxic?

Generate Income from Your Property

A few days ago, I wrote about HDB's Lease Buyback Scheme. I was just exploring the various options that might be available to people for generating income from their biggest asset: Their Homes or HDB flats.

I have been thinking about it for some days and I do feel that the Lease Buyback Scheme ought to be further improved if possible. For one, they should perhaps extend it to all Singaporeans to make it easier for older Singaporeans to liquidate the tail-end lease of their HDB flats. After all, not many people are ready for retirement in Singapore.

Renting Out

Another way that people can generate income from their property or HDB flat will be to rent out the entire flat or rent out certain rooms.

A person is allowed to rent out the entire flat after living in it for a certain number of years. (5 years if subsidised and 3 years if unsubsidised). Approval is required from HDB to rent out the flat. A higher property tax of 10% will be chargeable if you rent out your entire flat.

Alternatively, one can also rent out one or more rooms in your property or HDB flat with no change to the property tax payable.

Generating income from your property during your retirement years is fairly easy. However, one should realise that there are also certain risks and downsides involved:

1. Bad tenants (illegal immigrants, overstayers, people who don't pay rent, tenants who spoil your property).

2. Conflicts when living with tenants.

3. Lack of privacy.