AK is a panelist at InvestX Congress 2015.

Although I have said that I would try to organise another "Evening with AK and friends" before the year ends, I might not be able to.

From now till end of the year, most of my Saturdays are booked by family and friends. I will also have a few official engagements. So, if there should be another session, it would probably be the last session for the year. No promises though.

However, something is certainly happening in the near future and AK will be a part of it. This is one of the few official engagements I mentioned in the last paragraph. The event is InvestX Congress.

Remember, last year, AK made his first public appearance (in disguise, of course) as a speaker at InvestX Congress in Suntec City? This year, AK has been invited by the organiser again but, this time, he is going to be part of a panel of investors who will be taking questions from the audience.

I hope it is more cushy a job. Oops. Shhh. You didn't hear me say that.

InvestX Congress is organised by The Fifth Person, of course. Many of us know that they are the same guys who brought us "Dividend Machines".

For those who don't know, InvestX Congress is about sharing, sharing and more sharing without any hidden agenda. The speakers are there to share their knowledge and answer questions on stage. They are not there to sell any financial or investment products. The event is not a preview. Those who have been to last year's event would know this.

So, if you do decide to go to this year's event, bring a pen and some paper. OK, for those who are IT savvy, bring a laptop, notebook or tablet. (You happy can already.) Be prepared because there will be lots of notes for you to take that day, I am quite sure.

For more information on the event, follow this link: here.

Date: 
17 October 2015, Saturday.

Time: 
9am to 6pm (Registration starts at 8.30am).

Venue: 
Suntec Convention Centre, Level 3, Summit 1.

Price of ticket: 
S$129.00 each.

Early birds pay less at S$99.00 each. 

You hear AK talking about investing for income all the time but that is not the only type of investing available out there, of course.

At InvestX Congress, you would also learn about stocks of growth companies and hear the speakers share case studies from their own portfolios. Invest for growth and income? Why not? I like the idea.

I definitely feel that this is another value for money activity by The Fifth Person.

So, if you don't have anything planned for 17 October 2015, Saturday, you might want to consider spending a day in Suntec City with some brilliant investors at InvestX Congress and, quite possibly, level up.

Remember, don't pay the full price, get your tickets early: here.

Related posts:
InvestX Congress 2014: Closing thoughts.

Important things to do before we start investing.

It might come as a surprise to some but it is very common for me to see people who are very excited about starting their journeys as investors and neglecting matters of personal finance. Of course, regular readers would know that I always tell people that they must get their personal finances in order before thinking about investing in the stock market.

So, the question is whether we have overlooked essentials in financial planning in our haste to invest? What could possibly be the most overlooked area of financial planning? Not surprisingly, it is the area of insurance. Insurance is an expense that many would like to dispense with but we really shouldn't.

Many people are attracted by the high returns investments could potentially provide but fail to understand enough what it takes to become an investor. Many jump into the sea of investments and end up drowning. Fear strikes me when my peers get overly excited about “investment opportunities” or when they are too eager to begin investing before taking care of the essentials.

As with everything in life, we should prioritise and take care of what are most important first:

Debts - In our financial plans, we know that we first have to take care of our debts. (Do you know that many Credit Cards effective interest rate is at 24.9% per annum now?) It would not be logical for us to invest before clearing these debts, loans and cash lines with high interest rates that we might have. How could we achieve 24.9% investment returns per annum?

Emergency Savings - Emergency savings of at least 6 months of our monthly expenses is recommended. This is important in case of a stoppage of our income which could happen, for example, in a retrenchment. Emergency savings is also critical to cover unexpected expenses such as medical expenses for our loved ones, household, vehicle repairs and other unfortunate events.

Essential Expenses - If we expect some essential expenses to come our way such as hosting a wedding banquet, having our home renovated or planning to have a child, then, we should save up for these expenses. These are all expenses which could end up being five figure sums. This is money we should not invest with because it is money we cannot afford to lose. We do not want to have to liquidate our investments at a time and price not of our own choosing.

Insurance - We must get sufficient insurance coverage where it matters. Bad things do sometimes happen in life and we should not think that bad things happen only to other people. Without proper insurance coverage, we could see plans for retirement adequacy or financial independence derailed.

Examples of Financial Risks

Medical bills:  How would we deal with hefty medical bills if we did not have sufficient savings?

Loss of income due to medical crisis or death: If we should die or be disabled due to some illness, who is going to provide for our dependents?

These are all real issues which have to be dealt with. The good news is that it is possible for us to be adequately insured at a low cost if we purchase the right insurance products.

If you are wondering what kind of coverage and what type of insurance you should be buying, have a look at the following table:

Seems like there are many types of insurance we have to buy. Does it have to cost an arm and a leg? No, it is possible for a person aged 35 years old to be adequately insured for as little as S$200+ a month.

Where & How to Plan for Insurance?

You could easily calculate your insurance needs:
Click here to find out your life insurance needs
and
Click here to find out your critical illness needs.

To compare and purchase insurance, DIYInsurance –Singapore’s First Life Insurance Comparison Web Portal by Providend Ltd aggregates products from various insurance companies and provides 30% commission rebates in addition to ongoing promotions.

Staff from DIYInsurance are all paid a fixed salary and do not participate in sales-based compensation or incentives of any kind. Not being remunerated on a commission-basis means they are independent and there is no hard-selling and over-selling.

If you require any advice on your insurance needs, do contact them and seek their expertise. Visit www.diyinsurance.com.sg and request a quote for what you require.

Have you planned for the above must-dos?

If you have not, please do so as soon as you can. We do not want to risk having our savings and investment gains wiped out due to our carelessness when it comes to personal finance matters. We have to protect our assets and also plan ahead for any unexpected events.

It probably pays to be patient before diving into the stock markets. We will not only be doing ourselves a favour but a very important favour for our loved ones as well.

The is a sponsored blog post by the good people at DIYInsurance.

Related post:
6 questions to ask about your insurance.

A second chance to create your own Dividend Machines.

I received this message last month from a reader who is very interested in learning more about investing for income:

"... dividendmachine is no longer accepting members. Aiayh!!!! Your advertorial too good already lar, every time sell out. The dividendmachine is mostly modules that are done at the member's own time. Can ask them if possible to open just the module part if they are too busy to organize life classes as well as the weekly discussion? Merci!!!"

No longer accepting members?

OMG!

How come like that?

Well, there is good news for the reader and others out there who missed "Dividend Machines" the first time round. Yes, the second round is now full steam ahead and they are ready to accept new applications!

I have said before that my methods are more opportunistic than structured. For readers who wish to have more guidance and who feel that they would benefit from a more structured learning environment on how to more successfully invest for income, signing up for "Dividend Machines" is the best value for money option that I know of.

AK at one of Dividend Machines' workshops.

So, if you are thinking of investing for income, you might want to sign up for "Dividend Machines" and, in case you are wondering, no, you don't have to pay $X,XXX for this. It is unbelievably affordable.

Don't take my word for it. Find out more for yourself by following the link provided below and I think you will be pretty amazed just like I was. Go to: Dividend Machines.




Dividend Machines by The Fifth Person.

I have been told that the deadline for application is 24 July 2015 and, after that, Dividend Machines will not be available again for the rest of the year. So, if you are interested, you want to act fast too.

Regular dividends are not just comforting for regular folks like me. They are necessary if we wish for greater peace of mind in a world where goods and services are getting more expensive by the day.

Building our own Dividend Machines will help us move towards financial freedom more quickly. Yes, financial freedom could be closer to us than we think.

Remember, if AK can do it, so can you!

Related post:
Listen to AK and create Dividend Machines!

Six questions to ask about your insurance.

My dad bought for me my first life insurance policy when I was just 18 years old. When I started life as a working adult, of course, it was only right that I took on the responsibility of paying the quarterly premium. It costs me slightly more than $1,000 a year for what I now know is a miserable $50,000 sum assured on my life plus coverage for critical illnesses till age 50.

My dad bought the policy for me from a friend who said that he should get a policy for his teenage son because because it was cheaper to buy whole life policies at a younger age. This, I know now, is quite a standard sales pitch. The fact that his friend was a high achiever (ahem, made a lot of money) who led a team of agents meant that he must be dishing out advice that was right for us.

If I had known the stuff I know today, I would have stopped my dad from buying that proposed insurance product for me. $1,000 a year was a lot of money almost 30 years ago. I know that my dad bought the policy for me because he loved me but, really, all my dad had to get for me was Hospitalisation and Surgical (H&S) insurance in case I was hospitalised.

See what I mean?
Taken from DIYInsurance on Life Stage Planning.

Anyway, I am glad to say that things have changed over the years and for the better too. Matters regarding personal finance which were once regarded as esoteric have become clearer as the internet removed barriers, making information readily available to the general public. Many who are in the know willingly share their knowledge and experience in cyberspace. This is a good thing because, till today, I still hear horror stories from people regarding insurance agents.

To be fair, there are good insurance agents out there who are ethical and genuinely care about their clients' welfare. Hard to find but not impossible. If we have to rely on someone, make sure that someone is trustworthy. This, of course, requires us to take a leap of faith.

So, the best thing to do is still to be educated. With education, we will know very clearly what are the options available to us and which options will best serve our needs at different stages of our lives. Then, the next thing to do is to go online and buy the insurance products we need at lower prices. What? Is this possible? Sounds too good to be true?

When I read about DIYInsurance, I thought that this service should have been available sooner. They aim to educate the public, helping them make better choices and save money in the process. What's there not to like?

The good people at DIYInsurance start by asking us to ask ourselves 6 questions:

6 questions you MUST ask yourself about your insurance.

1. Did you purchase Term insurance instead of Whole-life insurance?

The only way to be sufficiently covered by insurance is to purchase Term insurance.  Term insurance is a low-cost insurance in which you only pay for the amount of coverage you require, providing maximum protection at a minimum cost. Most of us will require at least $500,000 and up to $1million when we have a family with kids.

Purchasing term insurance means we are able to sufficiently provide for our dependents livelihood on our unfortunate demise. Not having sufficient coverage means our dependents may have trouble paying off our housing loan, education fees and to maintain their lifestyle. Having $1million coverage would cost less than $200 per month with term insurance. Find out how much life insurance coverage you need here. Compare term insurance products from different insurers here.

2. What is break-even point?

The “Break-even point” is widely referred to in Whole Life and Endowment Insurance (Savings) plans as a point of time in future (Eg. 20 years) when the:

Total amount of premiums paid = Cash value which can be obtained if the policy is surrendered.

While this may seem that we are getting “free” insurance coverage at the break-even point which could be in 20 years time, it is vital to note that the same amount of money now will differ significantly in value in 20 years due to inflation. Which means the value of us paying $10,000 in insurance coverage over 10 years cannot be compared to the value of $10,000 which you only receive in 20 years time. The value of $10,000 is much smaller in year 2035. Our chicken rice used to cost $1 and the same plate may cost $6 in 20 years time. Hence, we have not “broken-even” and are in fact paying for additional commissions, insurer’s costs, insurance coverage and savings element from the loss in insurance coverage in whole-life insurance plans.

3. Have you compared?

Comparing allows you to purchase an insurance product at the best value. The cost savings can be significantly higher.  Insurance web aggregators are popular and widely used in the United Kingdom and Australia. Singapore’s 1^st Life Insurance Comparison Web Portal, DIYInsurance, allows you to compare products for your Protection, Savings and Retirement needs from a wide range of companies. Learn more about using web aggregators, there is a complimentary event by DIYInsurance, Plan, Compare & Save on Insurance: Using Web Aggregators on 25 April 2015. Register here.

4. Have you received commission rebates?

Insurance agents are paid a handsome sum of commissions for insurance products they sell. Up to 1.5 years of the cost (premiums) you pay may have contributed to the fees of your insurance agent. This means you are insufficiently insured for the large sums you may be paying. DIYInsurance rebates 30% of the agent’s commissions back to you in cash, providing greater cost savings to you.

5. Do you know how is your insurance agent paid?

Singapore’s insurance industry is predominantly remunerated by commissions. Earning by commissions for a living means your financial planner may have a greater tendency to sell you products which provide them with higher commissions. This means you may be exposed to products which you may not need and pay a higher cost for them. A large part for what you are paying for is channeled to the fees for your financial planner. Buying through DIYInsurance and for you to receive 30% commission rebates means you will know how much DIYInsurance is paid.  DIYInsurance is transparent with every product's commission’s structure so that you know exactly what you are paying for.

6. Do you know how independent your insurance agent is?

To ensure there is no conflict of interest, it is important to ensure that your financial planner is paid on a fixed fee and not by commissions based on their product sales to you. All staff from DIYInsurance are paid a fixed salary and do not participate in sales-based compensation or incentives of any kind. Not being remunerated on a commission-basis means the staff at DIYInsurance are independent and are able to focus on doing their best to fulfill your needs. There is no hard-selling and no over-selling.

Pay less for your insurance today.

AK agrees.

Tea with Solace: A review of Dividend Machines.

The following is a voluntary review by a guest blogger, Solace, who signed up for the income investing course, Dividend Machines.

Solace says:

Disclaimer : I am not paid or given free access to the course materials to do this review. Solace has paid $XXX USD like everybody else to take a look at the course content. These are my personal views and readers should make their decision on whether the online course is value for money.

The online course has 4 Modules:

- Personal Finance (Covers the mindset, psychology and own personal financial situation.

- Dividend Machines (Covers 8 checklists/steps in screening for dividends stock)

- REITs (All about REITs, business, valuation, financial, management etc)

- Portfolio Management

In addition, there are also:

1. Video lessons

Where they do in depth case studies and how to screen for stocks based on their methodology.

Video Lessons will commence from 25 March 2015, Wednesday onwards.

2. Q & A session

You can post your question in this segment. The Trainers have been rather prompt in answering your queries. All questions are usually answered within 24 -48 hours from observation.

Website: Dividend Machines.

I leave it readers to read more about it.

Who is the course suitable for?

In short, this course is excellent for all who are looking for insight and a consistent method to screen for dividend stocks.

This is especially so for beginners who are still trying to find their way. Even for seasoned investors, time to time we might need to defrag all knowledge we have in our mind and this course helps to do that. It helps to streamline our thought process.

While many of the fundamental concepts are not new to me, I still look forward to the case studies where I can exercise my brains to practice analyzing. I am also attracted to the Q&A section where there will be interesting discussion with fellow investors and trainers.

In my interactions with many people who are starting out with investment, I would recommend them to read different kinds of investment books. This has worked extremely well for me. However, there are people who have difficulties digesting the content inside the book and find it hard to apply them. Another group might be overloaded with many schools of thought and do not know which methods work best for them.

This particular group will always wonder: 

"What is the essence of investing? Is there an easy method which I can follow?”

What the Fifth Person has done is basically summarize the key points and presented them in a very clear, easy to understand and easy to follow manner. And there we have it, the very “essence” to dividends investing.

If you can follow the method well and are able to identify a good dividend stock that will serve you well for many years, then, paying a course fee of $XXX USD would well turn out to be a “multibagger investment” for you.

There is still slightly more than a day to sign up for the course and have a workshop session thrown in for free. Please go to the related post below for the link to sign up for the course.

Dividend Machines by The Fifth Person

Related post:
Listen to AK and create your own Dividend Machines.

Have fun as the whole family improve on financial literacy!

Some people get invited to be beta testers for really cool online games like Diablo III but AK was invited to be a beta tester for a board game! Yes, a board game! Just nice for low tech AK. Roll dice, move a counter, get money, buy stocks, buy properties etc. Sounds like something that would appeal to AK, right? Exactly!

AK also provided feedback on how the game could be improved and when he was invited to play the game again, the kinks were ironed out. The game in AK's opinion is good enough for him to put a little testimonial on the box. In case you are wondering, no, AK was not paid to do all these. Then why did AK do it? I did it because I thought it was fun.

However, the fact that I was the only beta tester not in his 20s was not fun. Old brain in its mid 40s had to try to keep up with much younger brains. Not easy. Oh, I wasn't the winner in the game. ASSI's resident guest blogger, Matthew Seah, won. Brilliant fellow (and really good dice throws too).

Anyway, what is this game?

Fine looking game and proudly Made in Singapore!

This is taken from the official media release by its creators:

ASSET FINESSE™ (AF) is for anyone who hopes to gain a deeper understanding of Singapore’s economy and endeavors to learn more about the world of finance in a fun and interactive manner.

Singapore has adopted unique policies, enabling her to thrive even as a country with limiting circumstances. Through the AF board game, players will be introduced to common Assets in Singapore and the various characteristics of each Asset. Assets under the AF boardgame include Stocks, Bonds, CPF, Properties, Unit Trusts, Insurance and Businesses.

This game also seeks to equip players with investment pointers that can potentially prevent him or her from falling prey to investment scams and find out what constitute illegal practices in Singapore. 

Players can learn basic accounting treatments and will grasp the importance of insurance when making sound financial decisions. In addition, the game will simulate market behaviours and various financial calamities. This serves to shape the mental model of players before they attempt to deal with real-life challenges that arise from the unpredictable nature of economic cycles.

The main objective is for the player to be financially free by accumulating a level of net assets, while fulfilling certain conditions. Ultimately, it aims to evoke a desire in participants to attain financial freedom.

Recommended for ages 13 and up, this could definitely be a fun family game. Remember I said something about making financial freedom a family affair before? This could be a fun way to get everyone in the right frame of mind.

The game usually retails at $118 per set. You can get this cheaper if you use the discount code "AK71". How much cheaper? You get a 10% discount. Aiyoh, so little? I also say.

Want more discount? Easy, scan a student card and email your order to:

onestop@diverselearning.com.sg

If you do this, you will get a 30% discount! Student card more powerful than AK's face.

What is in it for AK? Every set that is sold, he gets an OCK curry puff. Really, I am telling the truth. Don't believe me, when ordering the game, ask the vendor.

Anyway, for those who are more cautious and unwilling to jump into a purchase right away, you might want to try out the game by joining a competition and you might win Apple products and I don't mean those growing on trees. Oh, you know har?

Date: Saturday, 21^stMarch 2015

Time: 0930 to 2000 hrs

Venue: Great Eastern Centre for Excellence, Raffles Place

Registration Fee: $10 per participant

They will also provide a mass training session. So, everyone will be on a level playing field.

A mass training session will also be conducted for all participants one week prior to the actual event day. The details are as follow:

Date: Saturday, 14th March 2015

Time: 0900 to 1200 hrs (Secondary School Category)

          1400 to 1700 hrs (Tertiary/Open Category)

Sign up now by clicking on the link below:

http://goo.gl/forms/11Y2VlllER​

Registration deadline: 12 March 2015, 2359 hrs.

For more updates and details, visit 

https://www.facebook.com/joinNCF​ 
or 
http://ntu-iic.org/ncf/​.

Hope you have fun. I know I did.

Oh, I hope you win that Macbook Air too!

Related post:
Financial freedom is a family affair.

Listen to AK and create your own Dividend Machines.

By now, some of you would have heard an interview I gave quite recently on the topic of Income Investing. I didn't share the interview in my blog earlier because I thought I didn't do such a good job, on hindsight, and I kind of let slip my thoughts on my FB wall.

Well, for many of us, it is very often like this, isn't it? "Aiyoh, I could have done better."

So, who requested for an interview? They are my friends from The Fifth Person and those of you who attended InvestX Congress middle of last year might remember them. I also mention them every so often in my blog. They are good people who are bent on providing quality education at very reasonable prices.

The interview I gave ties in with the latest program by The Fifth Person on Income Investing and, just now, they asked if I would like to be an affiliate to promote the program?

I am too lazy to conduct a course on investing for income and here is a low cost option for anyone who might be interested to learn and need some guidance. So, why not? Of course, I would be happy to promote their program.

So, if you are interested in more structured learning about Income Investing, you might want to consider what is being offered by The Fifth Person. See if you agree with me that it is value for money. I think you will be pleasantly surprised because I was. 

Note: Don't spoil the surprise by scrolling quickly all the way to the bottom of the page after clicking on the link provided below. I think some of you will do it anyway. So, never mind lah. You happy can already.

Dividend Machines by The Fifth Person

Do the right things and the right things will have a higher chance of happening for you!

Remember, if AK can do it, so can you!

Rakuten Singapore: Overseas delicacies at a bargain!

This is an advertorial about Rakuten Singapore.

Rakuten is Japan's No. 1 Online Shopping Mall and they are now here in Singapore!

Rakuten offers a unique shopping experience, bringing the best of Japan to us in Singapore. The reward program which lets shoppers get more value for money makes Rakuten even more attractive.

We know how online shopping is growing rapidly in the area of durables but I watched a TV program recently on how Rakuten Singapore collaborates with local food suppliers to bring fresh sea food to consumers who shop online here. Quite fascinating.

So, I took a look:

Pretty amazing!

Well, if you are interested, follow this link and explore their online store:
Discover Both Local And Overseas Delicacies At Up To 55% OFF


Hope you find some good deals for a yummy Chinese New Year feast or just have a feast with your family and friends for no particular reason! Huat ah!

Disclosure: AK will get a 5% commission from your purchases. Ang Bao for AK. ;p

AK talks to an expert on Investment Linked Policies, ILPs.

I was offered a chance to do a sponsored blog post on ILPs and instead of just the same old newsletter style or a cookie cutter interview, I decided to do it like a talk show.

So, we have AK, the host of the show, and a guest who is an expert in the industry taking questions from callers (who are actually my blog's readers). The questions were put forward by readers on my FB wall recently, in case you are wondering.

Anyway, here goes:

AK: Welcome to the "Accredited Kay Poh Also Can Show". I am AK, an accredited kay poh and your host for the show. With me today is Mr. Brendan Yong who will be doing all the work answering questions related to Investment Linked Policies or ILPs. Welcome to the show, Brendan, and let us start by asking you what are ILPs and how are they different from regular whole life policies, for example?

BY: In the case of regular whole life policies, your premiums (less commissions) for regular whole life (we call participating plans) along with others are collected into a "Life Fund", and the insurer is responsible to invest the premiums wisely,  to produce a return which is shared with the policy holder. Claims are paid out of this common pool in addition to other expenses.

For ILPs, your premium (less commissions, sales charges) buys into unit trusts (therefore the responsibility of investing lies with you). Periodically, insurance charges are deducted to provide the coverage stipulated by your insurance contract, other charges include: policy fees and management fees. Insurance charges rise with age. 

In other words, whole life policy returns are outsourced to the insurer. Insurance claims are deducted from common pool of invested funds.

ILPs investment returns and risk are borne by the consumer. ILP imposes insurance charges, which are deducted by selling units. Claims are paid by insurance company from another pool of Life Fund for ILPs and Term.

AK: Thanks for that clear explanation. Recently, when I asked my readers on FB what would they like to know regarding ILPs, I received a long list of questions. So, we would like to pick your brains here. Allen Allen asks "Is it advisable to take on ILP? I am currently having a ILP for 7 years and am considering to surrender it as I don't see it breaking even anytime soon." What would you say to that, Brendan?

BY: The main issue is ILPs are not suitable after age 55, as insurance costs increase exponentially. So if it was implemented thinking it covers life time for death, and critical illness, it is potentially a time bomb. If it's implemented for investment returns, you may be disappointed with the returns due to the high charges and fees. Every situation is unique, we have to compare the option of surrendering vs buy term invest the difference to give a proper recommendation.

AK: Sounds like Allen Allen might have to get in touch with his financial adviser after the show. Next, Spencer would like to know "What will happen once the mortality rate / cost of insuring is higher than investment returns?"

BY: The insurance charges are to be deducted from units by selling them. Imagine you are paying $3,000, after paying 5% charges, the remaining $2,850 is invested into funds. But your insurance charges at age 70 is say $8,000. Then you have to sell $8,000 worth of units to pay for the charges. Provided you have enough units to deduct, you coverage continues, while the accumulated fund depletes. If it depletes to zero, your cover is terminated.

Some agents say the returns will pay for the charges, but seriously, at the older age, you'll have to reduce the risk of the portfolio, settling for a lower return. So there is a high chance that it will start to deplete despite returns, due to the rising insurance charges. The effect will hit you after 55 ...

AK: That is quite a revelation! Older viewers/readers might want to take note! Next, Thomas asks "have u bought an ILP for yourself? If yes, is it a big portion (%) of your investment portfolio? And would u strongly recommend it to your spouse, and also to your parents? If so, did they buy it and what's their objections if they didn't."

BY: No ILPs for me. Not for my spouse, definitely not for parents (anyone above 50 is literally a mis-sell). Buy term invest the rest instead of ILP.

In my ebook, I mention only 2 situations it may still have some merit:

1) Newborn baby or very young kid. The long term plan is to cash in before age 55, making use of lower insurance charges when young.

2) Young working adult with little or no fiscal discipline. Same long term plan.

AK: Some very clear guidelines there as to when ILPs might make sense. Now, Gabriel wonders "if there are any ILPs which have beaten the STI index returns? Or has any ILP beaten the highest unit trust returns?"

BY: ILPs refers to the policy not the fund. So I would suppose the reader means the ILP fund. ILP funds are the same thing as Unit Trusts. There is also no sense talking about ILP funds beating Highest UT returns, as they maybe from different sectors, regions or asset type. There is no sense comparing any fund to STI, if the fund is not bench-marked against STI. A China/India ILP beating STI returns says nothing for the fund.

So allow me to re-phrase the question. Is there any difference between ILP funds and Unit Trusts? Has ILP funds beaten their index?

ILP funds are essentially unit trusts that are subscribed into by insurance policy holders. One advantage of ILP funds is the large pool of "dollar-cost-average" policy holders that will buy into the fund regularly, through good and bad time. This may explain some out-performance vs similar UTs. Let's take for example STI benchmarked funds:

NTUC Singapore equity invests 60%+ into STREETTRACKS STRAITS TIMES INDEX FUND, and manages the remaining portion. See that they just slightly outperformed STI (mainly due to reinvested dividends). Some attribution perhaps to Dollar-Cost-Averaging. 

AXA Fortress A Fund has consistently outperformed STI in fact by a large margin. Some impact may be due to dollar cost averaging, but most of it because of the capable fund manager: First State Investments Singapore. 

Finally Aberdeen Singapore is a pure UT. So AXA ILP outperformed, but NTUC ILP underperformed pure UT. 

Conclusion: Some UTs beat their benchmark, many don't. Some ILPs beat similar UTs with same benchmarks, some don't. At the end of the day, the choice of the fund can make a big difference. The short-coming is that ILPs may be sold and left alone, disregarding crisis or opportunities. It's the same issue with buy and holding UTs. This doesn't work. Even UTs that beat benchmarks need to be monitored for fund manager movement, and market cycles. 

I have many research on this area... working on another ebook... akan datang.

AK: Another e-book? I am sure you will be keeping me in the loop. Next, Lee Jiahui is "interested to know the market players income/revenue distribution/proportion of ILP products vs the traditional products".

BY: Unfortunately, there is no public data about this.

AK: OK, that was a fast one. Next person on the line is Derek Lim and he asks "What is your timeframe in holding a ILP? Is there a maximum age where you would advise against buying a ILP? Do you cutloss or do a fund switch if your ILP is doing badly? Similarly if your funds has done well, how do u lock in your gains? How do u balance between investment and coverage e.g. should I strive for minimum coverage and maximum investment?"

BY: Insurance charges rise exponentially after 55. So my time-frame is to cut at 55 if I'm holding to one (provided you have adequate cover from other policies). Anything above 50 is mis-selling. Any starts of regular premium ILP above age 40 is not cost-effective.

Cut-loss have to benchmark with buy term invest the rest to decide. In general most comparison will lead to the conclusion that BTIR is better. No manner of fund switching will solve the rising insurance charges problem.

AK: "Similarly if your funds has done well, how do u lock in your gains?" 

BY: Same with UTs, if some funds have "done well", you can choose to switch into bonds to lock it in. However you give up any potential upside. You can also switch into funds that have been beaten down severely, and buy them at a low price. This is one of the strategies that I teach investors who have little time to manage their UTs.

How do u balance between investment and coverage e.g. should I strive for minimum coverage and maximum investment?"

If ever I'm forced into an ILP, I will go for Maximum cover, min investment, and terminate before 55. If you are going for investment, forget about ILPs with "some" insurance coverage.

AK: So, I repeat, go for maximum cover, minimum investment and terminate before turning 55. Derek, I hope you are taking down notes. Next, Talen Blackburn Terence asks whether "ILPs are better than buying shares directly? Which are the better ILPs? What percentage of our salary should we invest in ILP? what % of our portfolio should be in ILP?"

BY: ILPs and UTs cannot be compared with direct shares. Totally different issue. To invest in shares, you will need: (1) some time, (2) a reliable method (e.g. Value Investing, GAARP, etc) (3) that works for your psychology (4) and accumulate experience over at least one complete cycle beating the STI index. If stocks work for you, stay with stocks. The only reason why some stock investors work with us, is to access bond funds. If you are not a good stock investor, you can consider UTs.

ILPs are same as UTs. So I rephrase the question: Which are better UTs? Answer: Whatever that's going to make good money for you in the next 5 years. If I had a crystal ball, I'll let you know.

What am I saying? "THERE IS NO SUCH THING AS THE BEST OR BETTER UT or ILP". You need a strategy to make some money in UTs. 

What percentage of our salary should we invest in ILP? what % of our portfolio should be in ILP?

None preferably, if he's talking about  ILPs.

AK: Brendan, if you manage to get a crystal ball that works, let me know. I only have a bowling ball and it is not very cooperative most of the time. Here is another question from Gabriel, "why are ILP costs so high while the returns are non-guaranteed? Are there any upsides at all for holders of ILP?"

BY: There is no why... That's how they are structured. The only remote upside I see compared to BTIR, is that term has a specific expiry date, ILP doesn't. Example you have a term cover till age 65 thinking you'll not need it when children are all grown up. If you had an ILP instead for the same cover, you can CHOOSE to continue beyond 65. Say you already have an early stage of Cancer, before 65. It might be a good idea to continue coverage ...

Having said that, if you design your insurance portfolio well, you should have some other option to fall back on like a 99-year Critical Illness cover or a Living-type Policy.

AK: That is a good point on how ILPs might be a positive for certain people. OK, The next one is a biggy or several biggies from long time reader, Jimmy Ng. Buckle up or you might fall off your seat. Here comes the first question, "Why are distribution cost & expenses so high that it take a very long time (i.e. over a decade), on projections of guaranteed & non guaranteed, to break even, let alone generate positive returns?"

BY: There is no why... That's how they are structured. Insurers have costs. They calculate that this is how they can still make some profit after giving out commissions.

Instead of asking why, just compare the alternative and make a decision.

(1) Can I afford not to be insured? If Yes, at least have a good hospitalization plan. If you cannot afford not to be insured, but you still don't want any: eat healthily, exercise, hope you don't have bad genes and pray.

(2) If you want to insure adequately, use a competitive term insurance to cover Family Dependency Needs, and a Living or 99-year term to cover Critical Illness. Compare this option with ILP if you must.

AK: Is there any low expense version of ILP ?

BY: Not significantly. Even the cheapest may not compare well with BTIR. Between insurers, ILPs can differ A LOT!

This was from The Straits Times:

AK: How does the insurer split shared costs - like overheads - between the policyholders' and the shareholders' funds? How can a policyholder know if the split is fair?

BY: You might want to visit this site: http://www.moneysense.gov.sg/understanding-financial-products/insurance/types-of-insurance/life-insurance/types-of-life-insurance/participating-policies.aspx

Shareholders can only take a maximum $1 for every $9 distributed to policy-holders, this is regulated.

Other than that it's totally insurer's discretion. It's a free market. If their product is not competitive, they can't get market share.

You have a choice. So, explore the alternatives.

AK: In the Singapore context, can the ILP gives similar or better returns than CPF OA & SA ?

BY: ILPs = UTs. Yes, if the market allows. Yes, it you hang on to it for 20 years. Yes, if you employ a good strategy. No if you choose the wrong fund. No if you are expecting it to do wonders within 3-5 years.

AK: Will it be street smarter to buy a term policy getting the same mortality coverage of ILP and invest the rest into ETF or REITs or AK Investment fund (Jimmy's words, not mine)? My feel is that the returns from these investment could generously help to pay for the term insurance cost, do you agree ?

BY: Yes, generally speaking. Still... shop around. Term insurance rates can differ by 20%.

AK: What determines the Premium Allocation, Insurance Charges, Policy Fee & Funds Bid-Offer Spread ? Are these charges fair to policy holders or could be significantly reduced ?

BY:  Let's not visit the fair issue again... The market will drive charges. One insurer cuts Bid-Offer spread or Premium allocation and comes up with a super competitive product, the rest will have to change soon. The Law of Economics will take care of excessive profits.

AK: What can be done to reduce the premiums & expense payable while increasing the coverage and ROI ?

BY: Nothing. Make a decision: (1) Cut-loss, replace with BTIR or (2) decide to hold and surrender before 55. Increasing Coverage and ROI cannot happen at the same time. It's either one of the other.

AK: Brendan, you have answered all of Jimmy's questions but we are not quite done yet. Just a few more questions from other readers to go. Elvin wants to know "If I suck at money management and am not savvy.. Is the ILP the right product for me? Does the ILP give me a peace of mind in terms of financial protection and is my capital guaranteed while receiving coverage? Are there embedded risks in ILPs?"

BY: If you suck at money management, go and learn. No one will be more responsible about it than you. If you REALLY cannot manage, and have poor fiscal discipline, then maybe you'll be better with ILP off than nothing at all. Risk are the market risks, capital non-guaranteed. If you want some guarantee, buy 99-term or a traditional living plan.

AK: Next, Kenji asks "how do u make money from ilp when u r in a losing position now?and is switching fund the only way?"

BY: If you are talking about a Single Premium ILP, meaning it's not a monthly or yearly premium plan, then SELL the ILP, buy an equivalent UT or in a potentially better one. You'll recover it faster because of the ILP charges.

AK: Jieren Azrael Zheng wants to know if it makes more sense to buy a similar or underlying ETF instead of an ILP?

BY: I think we are talking about single premium again. Yes, UT or ETF is better than ILP.

AK: Clement Wong wants your opinion on his 3 year old ILP. "i bought an ILP 3 years ago without knowing any better. how now brown cow..."

BY: Evaluate vs BTIR. Make a decision. Consult a proper financial planner before doing anything.

AK: Zaw Oo asks "Given your current knowledge, would you encourage anyone to take up ILP as a form of long term investment?"

BY: flat NO.

AK: Very emphatic! GW Samzel says "I own both Golden Regional China Funds and India Equity Fund from Manulife and it seems like my current buy price is always higher than it's sell price (selling a fixed amount monthly as charges for the policy). Even though the chart is slowly going up (it's only been 4 yr since I got the funds), high buy price is forever higher than sell price. Would i really make any gain eventually? Also, how do I evaluate that these 2 recommended funds by my financial planner is really the most suitable fund she could offer for me?"

BY: Buy is always higher than sell due to bid-offer spread of around 4-5%.

How to evaluate a unit trust ... (perhaps that's the title of my next ebook) ...

Step 1: Go to https://www.dollardex.com/SG/?current=investUTgraph/home&previous=investUTgraph/home

Unselect show funds only sold at DollarDEX, so that you can see all funds (even so some are not listed on DollarDex)

Step 2: Click and Select funds to compare:

Step 3: Decide: cut ILP, buy equivalent UT or something else

How to determine if you insurance agent or financial planner is competent to advise you on investing UTs:

1) Did they make their wealth (significantly) with UTs?

2) Have they gone through one full economic cycle?

3) Can they answer questions convincingly about markets, fund characteristics etc?

4) What is their strategy and rationale of fund selection?

5) Do they only look at performance ? And only last 3-4 years? 

6) Did they show you how bad it can get? The downside?

AK: Brendan, I really like these 6 questions that you have listed. Very telling! I want to thank you for patiently answering all our questions and, to all my readers, if you would like to have a copy of Brendan's e-book, go to: https://ut200.isrefer.com/go/ILPTB/sgstock/

Remember, nobody cares more about our money than we do. So, take charge and ask questions. Make sure we understand what we are getting ourselves into each and every time. If we don't understand something, walk away. Don't commit.

With that, the show has come to an end.

How to get better than the best deals?

Get the best DEALs in town from DEAL.com.sg.

Now, for 48 hours only, get another 10% off all DEALs!



Remember to key in the Promo Code when you shop from 29th September 00.00 hrs till 30th September 23.59 hrs.

AK likes value for money deals. I hope you like them too!

One day flash sale at BetterWorldBooks.

If you have yet to get your copies of "The Little Book that Still Beats the Market", "One Up on Wall Street", "Buffettology", "The Millionaire Next Door", "Rich Dad, Poor Dad" or "The Cashflow Quadrant", now, there is a chance for you to get them pre-owned and shipped free to your home at much lower prices:




I saw Kinokuniya selling "One Up On Wall Street" at $26.00 a copy. I paid about $8.00 for my pre-owned copy that's still in very good condition.

See "Food For Thought" in the right sidebar of my blog for more recommended titles and take advantage of the sale at BetterWorldBooks.

A chance to win a $15,000 start-up fund!

Here is a chance to win a $15,000 start-up fund.

Yup, that is what the GRAND PRIZE WINNER at the end of the contest period wins!

10 others will also be given the opportunity to have interview sessions with successful ladies from top international companies.

So, sick of working for someone else?

Find out how your could be a winner at:
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Pre-owned books Flash Sale!

How do these sound to you?

1. Free shipping worldwide.

2. Save on cost. Save the environment.

3. Help promote literacy amongst the disadvantaged.

Buy pre-owned books from BetterWorldBooks and we will be doing all of the above.

Now, till 31st July, BetterWorldBooks is running a DOUBLE DONATIONS FLASH SALE!



Shop the Better World Books Double Donations Flash Sale, save on used books and double your impact on literacy, all with Free Shipping Worldwide!

Related post:
1. Donate a book to the needy.
2. ASSI is a BetterWorldBooks affiliate.
3. Bought another book from BetterWorldBooks.

CheapOair means more options for cheap travel deals.

CheapOair. The name gives me the impression that it is a place to find cheap air tickets.

A friend's dad told me about them recently and, quite coincidentally, while checking my messages over the weekend, I found a pending offer from them to become an affiliate. Get good deals and maybe make some pocket money by spreading the word? Sounds like a fair enough proposition. I decided to check it out. Link:

Book Cheap Air tickets with CheapOair & Save Big on Travel.

I searched for air tickets to Osaka for the month of August and was offered a round trip ticket from US$499.00. Not bad.

What about Melbourne? Lowest fare was US$478.00 by AIR ASIA X.

Remember what I said about ZUJI (ZUJI Flights Home Page) before, we want to buy only when we get good value for money. There is no guarantee that CheapOair will get us the lowest prices for air tickets but having one more option for comparison guarantees a higher chance of getting a good deal.

If you get a good deal using the text link above, AK gets a small commission:

Win-win. Kamsiah you. Yeah!

Related posts:
1. Macarons from ZUJI.
2. Planning to travel? Check out ZUJI.