Millionaire Mind Intensive

Hope that you find this video useful. It shares some insights from T Harv Ecker regarding the Millionaire Mind that one should have.

What I found useful was the part where he talks about the need to get to the root of the issue. Wealth and money are just RESULTS. They are the fruits in a tree. It is however the roots that caused these fruits to appear. Likewise, when one is poor, you should look at the inside (your mindset), to remedy the problem.

Another thing he mentions about is to Quit Complaining. Complaining is what so many people do best. By complaining less, we take responsibility for our own financial destiny and stop putting the blame on others.

StarHub Cable TV - Upgraded to Basic Plus

Over the new year, I discovered a promotion by Starhub that allowed me to upgrade my basic group channels to the basic plus at no additional cost for 6 months. Finding that this was too good an opportunity to miss, I immediately signed up for it through the telephone.

Within a few days, I got all my Basic Plus Channels on my Starhub Cable TV.

This included ALL these channels like:

1. Crime & Investigation Network
2. NatGeo Adventure
3. NatGeo Wild
4. AXN Beyond
5. Animax
6. Channel V
7. FoxCrime
8. Sci Fi
9. Universal Channel
10. BBC Entertainment
11. BBC Lifestyle
12. FX
13. MGM
14. The Style Network
15. Turner Classic Movies

Wow, a total of 15 extra channels for no additional cost!

Of course, I am sure Starhub was just interested in retaining me as my customer after they lost the rights to the ESPN channel to SingTel.

Anyway, it was too good a deal to miss for paying $25.68 only. I get the additional 15 channels to my existing basic group.

Switching my News Basic Group to Lifestyle Basic Group

I also realised that I did not watch much of the news so I switched my news basic group for the lifestyle basic group. Yes, you should do the switch too if you are not watching the news.

So my 3 basic groups now are Education, Entertainment and Lifestyle.

Just a question to readers:

What are your basic groups that you subscribe too for StarHub Cable TV?

Do you intend to switch over to SingTel's Mio TV?

Shell Escape Card

I finally applied for a Shell Escape card. That is after many years of driving and pumping petrol at Shell petrol stations.

I do not know why I always had the misconception that the Shell Escape Card works like a credit card. I finally found out that it doesn't!

Instead, it is just a card to collect points which I can then redeem free gifts and vouchers for.

My oh my....I have missed out on so many points. Wasted if you ask me..... Really silly of me not to clarify with people.

On average, I pump around 40litres of petrol per week. Multiply by 52 weeks and then by 3 years.. I have basically lost lots of points.

I have my eyes on a $20 Ben and Jerry's voucher. I think I should be able to get it in 20 weeks.

Oh well, the good thing about it is that I have time 20 weeks to burn some fats before redeeming my points.

What I Consume In A Day

Our consumption habits are really interesting to track. Afterall, don't you find it interesting to know what of planet earth's resources you have consumed for the day?

So let's look at what I have consumed today and the companies that are involved in bringing these products to me:

7.30AM - Throat itchy, ate 1 x lozenges bought from Guardian
8.30AM - Bought breakfast comprising duck kway teow and teh si ping (iced milk tea)
9.00AM - Used the internet (Starhub Cable)
10.05AM - Received phone call from home (SingTel Fixed line)
11.00AM - Received phone call on mobile phone (StarHub)
11.15 AM - Checked email (Hotmail)
11.45AM - Worked on webpage using Dreamweaver Trial version (Adobe)
1.13PM - Ate lunch (Char Siew Rice)
2.00PM - Popped another 1 x lozenges
3.00 PM - Took a hot shower (PUB provided water and electricity)
4.00PM - Drank a packet of Pokka White Chrysanthemum Tea
5.30PM - Watched Television (Starhub Cable)
6.00PM - Ate dinner downstairs
8.00PM - Switched on the Airconditioner (PUB again?)

I know the above list makes for a boring read =)

But hopefully it enlightens you to know what are the things you consume and what are the companies involved in bringing that product to you.

AIA Achiever - Good or Bad?

In my previous article, I compared an endowment plan with an ILP. Many might think that an ILP is a silly way to save for my child's education. After all, there are much superior ways like "Buy Term Invest the Rest".

Today, I will share with you my personal experience with one ILP that led me to be a little more accomodating towards ILP amidst the anti-insurance stance taken by most people.

AIA Achiever

I bought the above mentioned plan some years back. I believe that it is no longer in the market. Some insurance agent sold it to me as an investment plan and conveniently left out some important details about the "downside" of this policy.

Anyway, for the first few years, I hated the plan. I thought that it was the worst plan that I could have gotten. Afterall, I had to pay premiums for 7 years before I could withdraw the amount out. (When I bought the plan, I thought that I could withdraw the money out once the policy has been incepted for 7 years)

I was really thinking of surrendering the plan very early on as I felt that the 7 year waiting period was simply too long and I could put my money to better use elsewhere. However, the high surrender charges before 7 years made me think twice.

In the end, I continued servicing the plan and recently, I just crossed 7 years of premium payment.

What I Like About Achiever


Now that the 7 year waiting period is over, I have discovered that I actually do LIKE this ILP. When I look at the amount of money inside, I am amazed that 7 years of consistent saving have actually yielded me with results that I am quite pleased. I took up this plan as a means to fund my retirement. It has served me well thus far and the actual cash value is much higher than that shown on the benefit illustration for 9% compounded annual returns.

In addition, I get to log into AIA eCare easily to check on my monthly statements and can do my fund switches easily too.

What I Don't Like

It is of course obvious that there are aspects I do not like about the plan. Here are a few:

1. Policy charges every month.
2. Supplementary benefit charge based on face value of policy. This is payable for 10 years.

However, when I consider this to any endowment plan or whole life plan, I find that it suits my overall portfolio very well. It gives me the necessary protection and savings.

Would I have done things differently now?

I am still torn between the "Buy Term Invest the Rest" strategy and the other whole life approach.

If I had bought term insurance and invested the rest using something like the Share Builder's Plan by Philips Capital, I might have gotten higher returns. I might also have gotten worst returns.

If I could turn back the hands of time, I seriously do not know whether I would have bought this plan.

I know many people have complained about the bad returns or low surrender values from their ILPs. I am perhaps the minority that have actually sticked through with my ILP instead of surrendering it. As such, I now see the "fruits" of my labour. It gave me a disciplined way to save for my retirement and gives me protection as well.

Endowment versus ILPs for Education Fund

Over at another blog, we had a discussion on the chatbox whether an endowment or an ILP would serve better as an education fund for our children. I personally chose an ILP to save for my child's education so I will be harping on all the good points about it here. Nevertheless, I will try my best to give a fair comparison in this piece.

An endowment policy and ILP are quite different in nature.

An endowment basically provides coverage / insurance protection only for a term (e.g. 20 years) and gives back money at maturity. This maturity cash amount comprises guaranteed and non-guaranteed components.

An investment-link plan (ILP) provides lifelong coverage (up to age 99 years actually) and also allows you to draw out money as long as you leave a certain minimum sum within. There are NO guaranteed components.

As a basis for comparison, I have chosen to look at the following factors (these were actually the considerations I had when I decided to get an ILP over an endowment):

1. Protection. In terms of protection, an ILP trumps the endowment hands down. For the same amount of premiums, I can get a much higher protection for death, TPD and critical illness for my child. In addition, while the endowment protection amount is fixed throughout the policy term, you can vary the protection requirements for the ILP.

2. Premiums. When I look at premiums wise, an endowment actually allows you to pay lesser in terms of premiums because most (if not all) ILPs require a minimum $100 per month in premiums. Of course, we know that saving $100 per month for your child's education would most probably be never enough to afford a university education 18 to 21 years down the road.

3. Waiver of premiums. Nothing to compare. Both plans allow riders to waive future premiums should both parents become critically ill, die or get TPD.

4. Premium Holiday. This is something that was important to me. If I am not able to afford the premiums due to a change in job, etc, I needed the flexibility to go on a premium holiday. An endowment does not allow that (correct me if I am wrong). For endowment, the premium holiday period is treated like a policy loan on the existing cash value. This interest can range around 6% interest.

5. Emergency Withdrawal of Cash. The ILP allows me to draw out money from it as long as a certain minimum sum inside (usually $1000). For an endowment, withdrawal of cash before maturation of policy is considered a policy loan (at the interest rate of around 6%).

6. Returns. The endowment will give GUARANTEED plus NON-GUARANTEED returns whereas the ILP only gives NON-GUARANTEED returns. In illustrations, the ILP always shows higher absolute returns because of the 5% or 9% returns showed compared to the endowment 3.25% or 5.25%.

CONCLUSION

To me, the only advantage that an endowment has over an ILP is this thing called the GUARANTEED component. In terms of all other factors, the endowment loses out to the ILP.

I can choose to surrender my ILP in one lump sum when the 20 years are up or I could slowly draw down the amounts in the 20th year, 21st year, 22nd year and 23rd year or I can don't draw out the amount (maybe my child does not make it to university at all)

Some argue that if the market is not doing well when I need the money, the ILP will fare badly. My strategy however is to increase the allocation in bond and fixed income funds as the date draws closer to my child's entry to university. Even so, I can chose to withdraw the funds over the 4 year period and hopefully the market recovers correspondingly.

THINGS TO NOTE:

Please do not take this as an advice or recommendation to buy an ILP for your child's education fund. The reason why you buy it is more IMPORTANT than which to buy.

For me, I have paired my ILP with a POSB Kids Savings account. So in that sense, the "guaranteed" component will come from the money in the bank account.

Also, my primary reason for buying the ILP is for PROTECTION and not savings. (Okay, maybe about 60% protection and 40% savings). That is the reason why I chose an ILP over an endowment as it gives me better protection. I did not consider term insurance as I wanted a plan that would guarantee the insurability of my child even after his university (if he chooses to continue with the plan)

Lastly, I think I know what I am doing. The most important thing is to know what you are doing with what you have. Only time will tell whether what I have chosen is a wise decision when the time comes for the money to be withdrawn. I'd like to think that I have got a strategy in place.

P.S. I know Mr Tan Kin Lian (ex-NTUC Income CEO) is a strong opponent to ILP and advocates a "buy term invest the rest" strategy. While I can agree with his argument intellectually, I find it hard to execute a "buy term invest the rest" strategy. These are due to practical reasons, emotional failures and psychological thinking. But this is better left for another posting.....

10 Things to Do With Your CPF (Part 2)

So I started a post on ten things you could do with your CPF. And I listed down one of the things that you could do was to buy your own housing.

Here is a list of the other 9 things you could do with your CPF

2. Purchase hospitalisation plans to enhance your basic medishield coverage

3. Purchase the home protection scheme which provides coverage for outstanding mortgage loans.

4. Transfer money from your Ordinary Account to Special Account to enjoy higher interest rates.

5. Top up your special account (SA) with cash.

6. Contribute to your retirement account (RA)

7. Invest your money in your CPF-OA and CPF-SA

8. Use CPF to pay for child's education

9. Nominate your CPF monies to your dependents

10. Sign up for CPF Life if you are age 55