15 Scoops of Money for Your Purse

8/6/2019 15 Scoops of Money for Your Purse

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H ello

Thank you for subscribing to BigFatPurse.com

I am very happy that many readers have found the website

informative. This ebook is created for you, my loyal readers.

It has been a great learning journey with you around. I have

compiled 15 scoops (or articles) that I think would provide

a very good foundation to manage your finances. It willcome in 3 parts.

Part 1 aims to change your mindset towards money.

Everything in life is a projection of your beliefs and

thoughts. Hence, this is the first thing to change if you are

not having success with money.

Part 2 aims to impart the personal finance mantras to you.

Questions like how to save, plan for insurance and housing

loans will be answered.

Part 3 is about growing your money. Why it is not wise to

buy unit trusts? Why STI ETF is the best instrument togrow your money with the best balance of risk and rewards?

I hope these 15 scoops can really help you in your finances.

Feel free to send this ebook to your family, relatives and

friends. But do not attempt to edit and/or claim it as your

work and sell for profits.

Warmest regards,

Alvin


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3 15 Scoops of Money for your Purse

D isclaimer

This is to protect myself. The financial concepts and ideaspreached in this ebook are created from my perspective. It

may not be relevant to your situation and if unsure, please

consult your licensed financial advisor. The parties

quoted/mentioned in this ebook, BigFatPurse.com, and me

(Alvin), will not be held liable for any inaccurate

information or financial losses incurred.

Nonetheless, I have prepared this ebook to the best of my

ability.

1st Edition - 2010

Contact: [email protected]


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415 Scoops of Money for your Purse

T he 15 scoops

Part 1 Stories to change the way you think aboutmoney

Scoop 1 - What do you really want in life

Scoop 2 - Today is the day you live happily ever

after

Scoop3 - Lessons from the movie: UP

Scoop 4 - How much money do you need (want)?

Scoop 5 - Money, wealth and you

Part 2 Save and protect what you have

Scoop 6 - Rule of thumb for your personal finance

Scoop 7 - How to save money

Scoop 8 - The importance of having 2 bank

accounts

Scoop 9 - Insurance should protect your worst case

scenarios

Scoop 10 - Insure yourself against Partial Disability

Scoop 11 - 6 Reasons why you should not repay

your housing loan early


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Part 3 The smartest and easiest way to grow your

money (and includes the lousy but popular way)

Scoop 12 - Why investing in mutual funds and unit

trusts may not be a good idea

Scoop 13 - Why investing in mutual funds and unit

trusts may not be a good idea Part 2

Scoop 14 - Straits Times Index Exchange Traded

Fund (STI ETF)

Scoop 15 - My STI ETF survived the subprime

crisis


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Scoop 1 - W hat do you really want in life?

Do you really know what you want in life?I believe beingrich is one of the most popular goals. But is being rich really

an end point? Or is it a means to an end? An anonymous

Mexican parable enlightens us (version from The 4 hour

workweek):

An American businessman took a vacation to a small coastal

Mexican village on doctors orders. Unable to sleep after an

urgent call from the office the first morning, he walked out

to the pier to clear his head. A small boat with just one

fisherman had docked, and inside the boat were several large

yellowfin tuna. The American complimented the Mexicanon the quality of his fish.

How long did it take you to catch them? the American

asked.

Only a little while, the Mexican replied in surprisingly

good English.

Why didnt you stay out longer and catch more fish? the

American then asked.

I have enough to support my family and give a few to

friends, the Mexican said as he unloaded them into a

basket.


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But what do you do with the rest of your time?

The Mexican looked up and smiled. I sleep late, fish a little,play with my children, take siesta with my wife, and stroll

into the village each evening, where I sip wine and play

guitar with my amigos. I have a full and busy life, senor.

The American laughed and stood tall. Sir, I am a Harvard

M.B.A. and could help you. You should spend more time

fishing, and with the proceeds, buy a bigger boat. In no

time, you could buy several boats with the increased haul.

Eventually, you would have a fleet of fishing boats.

He continued, Instead of selling your catch to a

middleman, you would sell directly to the processor,

eventually opening your own cannery. You would control

the product, processing and distribution. You would need to

leave this small coastal fishing village, and move to Mexico

City, then Los Angeles and eventually New York City,

where you will run your expanding enterprise with proper

management.

The Mexican fisherman asked, But, senor, how long will

this all take?

To which the American replied, 15-20 years. 25 tops.

But what then, senor?


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The American laughed and said,Thats the best part.

When the time is right, you would announce an IPO and

sell your company stock to the public and become very rich,

you would make millions.

Millions, senor? Then what?

Then you would retire and move to a small coastal fishing

village, where you would sleep late, fish a little, play with

your kids, take siesta with your wife, stroll to the village in

the evenings where you could sip wine and play your guitar

with your amigos

If one day you really earn your millions, what do you want

to do? The answer would most probably be what you really

want in your life.


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Scoop 2 - T oday is the day you live happily ever

after

I must confess I am one of those who cannot live in the

present. I always believe the future will be better and

how good it will to be in that position. Having the things I

will like to have and doing the things I will want to do. It

was till I read The M onk Who Sold H is Ferrari that I hadan awakening Happiness is not meant to be reserved for

the future. It is now, today that you savor every single

moment. Happiness is a journey, not a destination.

Ironically, it is by having the sense of happiness and

gratitude now that will allow you to reach your goals in life

in the future.

Here is an extract of the story Peter and the M agic Thread,

taken from The M onk Who Sold H is Ferrari, to illustrate

what it means to live at the moment:

Peter was a very lively little boy. Everyone loved him: his

family, his teachers and his friends. But he did have one

weakness.

Peter could never live in the moment.

He had not learned to enjoy the process of life. When he

was in school, he dreamed of being outside playing. When

he was outside playing he dreamed of his summer vacation.


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Peter constantly daydreamed, never taking the time to savor

the special moments that filled his days. One morning,

Peter was out walking in a forest near his home. Feeling

tired, he decided to rest on a patch of grass and eventually

dozed off. After only a few minutes of deep sleep, he heard

someone calling his name.

Peter! Peter! came the shrill voice from above.

As he slowly opened his eyes, he was startled to see a striking

woman standing above him. She must have been over a

hundred years old and her snow-white hair dangled well

below her shoulders like a matted blanket of wool. In this

womans wrinkled hand was a magical little ball with a holein the center and out of

the hole dangled a long, golden thread.

Peter, she said, this is the thread of your life. If you pull the

thread just a bit, an hour will pass in seconds. If you pull a

little harder, whole days will pass in minutes. And if you

pull with all your might, months even years will pass

by in days.

Peter grew very excited at this discovery. Id like to have it if

I may? he asked. The elderly woman quickly reached down

and gave the ball with the magic thread to the young boy.


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The next day, Peter was sitting in the classroom feeling

restless and bored. Suddenly, he remembered his new toy.

As he pulled a little bit of the golden thread, he quickly

found himself at home, playing in his garden. Realizing the

power of the magic thread, Peter soon grew tired of being a

schoolboy and longed to

be a teenager, with all the excitement that phase of life

would bring. So again he pulled out the ball and pulled hardon the golden thread.

Suddenly he was a teenager with a very pretty young

girlfriend named Elise. But Peter still wasnt content. He

had never learned to enjoy the moment and to explore the

simple wonders of every stage of his life. Instead, hedreamed of being an adult. So again he pulled on the thread

and many years whizzed by in an instant. Now he found

that he had been transformed into a middle-aged adult.

Elise was now his wife and Peter was

surrounded with a houseful of kids. But Peter also noticedsomething else. His once jet black hair had started to turn

grey. And his once youthful mother whom he loved so

dearly had grown old and frail.

Yet Peter still could not live in the moment. He had never

learned to live in the now. So, once again, he pulled on themagic thread and waited for the changes to appear. Peter

now found that he was a ninety-year-old man. His thick


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dark hair had turned white as snow and his beautiful young

wife Elise had also grown old and had passed away a few

years earlier. His wonderful children had grown up and left

home to lead lives of their own.

For the first time in his entire life, Peter realized that he had

not taken the time to embrace the wonders of living. He

had never gone fishing with his kids or taken a moonlight

stroll with Elise. He had never planted a garden or read

those wonderful books his mother had loved to read.

Instead, he had hurried through life, never resting to see all

that was good along the way.

Peter became very sad at this discovery. He decided to goout to the forest where he used to walk as a boy to clear his

head and warm his spirit. As he entered the forest, he

noticed that the little saplings of his childhood had grown

into mighty oaks. The forest itself had matured into a

paradise of nature. He lay down on a small patch of grass

and fell into a deep slumber. After only a minute, he heard

someone calling out to him.

Peter! Peter! cried the voice. He looked up in astonishment

to see that it was none other than the old woman who had

given him the ball with the magic golden thread many yearsearlier.

How have you enjoyed my special gift? she asked.


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Peter was direct in his reply. At first it was fun but now I

hate it. My whole life has passed before my eyes without

giving me the chance to enjoy it. Sure, there would have

been sad times as well as great times but I

havent had the chance to experience either. I feel empty

inside. I have missed the gift of living.

You are very ungrateful, said the old woman. Still, I will

give you one last wish.

Peter thought for an instant and then answered hastily. Id

like to go back to being a schoolboy and live my life over

again. He then returned to his deep sleep. Again he heard

someone calling his name and opened his eyes.

Who could it be this time? he wondered.

When he opened his eyes, he was absolutely delighted to see

his mother standing over his bedside. She looked young,

healthy and radiant. Peter realized that the strange womanof the forest had indeed granted his wish and he had

returned to his former life.

Hurry up Peter. You sleep too much. Your dreams will

make you late for school if you dont get up right this

minute, his mother admonished. Needless to say, Peter

dashed out of bed on this morning and began to live the

way he had hoped.


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Peter went on to live a full life, one rich with many delights,

joys and triumphs, but it all started when he stopped

sacrificing the present for the future and began to live in the

moment.


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Scoop 3 - Lessons from the movie: U P

I caught the show during a flight. Even though it is ananimation movie, I was able to relate to reality of life and I

would like to share my thoughts on them.

Leaving life goals and dreams to lower priorities

The movie is about a boy, Carl Fredrickson, who has a

common idol with childhood sweetheart, Ellie. The idol is

Charlie Muntz and he is an adventurer/explorer who went

away to Paradise Falls. Ellie has a life dream of having a

house on Paradise Falls which she made Carl to promise to

fulfil the dream. They got married and life gets pretty muchlike ordinary folks life revolves around work. Carl manned

a balloon stall while Ellie worked as a zookeeper. They made

it a point to save money so that they can fulfil the dream to

go to Paradise Falls. However, they had to use their savings

time and time again for unforseen events in life. This carried

on until one day, Ellie was ill and eventually passed away.

She left without having fulfilled her dream.

Do you have dreams that you want to do but kept

postponing them?

During my recent travel, I saw majority of the travellers are

elderlies. I was wondering is it true that you will only have

time and money to travel and see the world when you are


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old and have retired. But will an elderly be able to enjoy as

much as when he/she is more energetic during his/her youth?

There are bound to be places where elderlies will have

difficulties to go to, like diving, hiking or mountain scaling.

To put it crudely, it is like leaving sex for old age. As adults,

we centered our life around work and we put off everything

else to the back of our minds. Do we work to live? That is

the reason why achieving financial freedom is important tome. I do not want to exchange my life for money. I want to

live my life.

Forced to get out of comfort zone

After Ellie passed away, Carl was devastated. He hadnothing to live for except for the unfulfilled promise he

made with Ellie. However, he did not went ahead to work

on the promise. Instead, he was just staying home and

mulling with sadness. I t just takes too much courage and

effort to embark on the journey to Paradise Falls. It was

only when he was forced to move to old folks home that he

decided to escape.

Most of us are always in our comfort zone. The fact is we

need to get out of our comfort zone in order to grow as a

person or to achieve things in life. But it is easy to say, mostof us will not be able to get out of comfort zone just by

ourselves. Like Carl, he took the first step to leave for

Paradise Falls only when he was forced by external pressure.


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Thus, find someone who will hold you responsible for your

goals. He/she should be able to check on you and give

constant reminder to make sure you make progress towards

your goals.

Burning the bridge behind you

Once Carl went to Paradise Falls, there was no looking back.

He encountered many misfortunes and even his idol,

Charlie Muntz, was not who Carl thought he was. Despite

all these problems, he pressed on to fight his way out. He

survived and managed to place the house on Paradise Falls

(coincidentally) and fulfilling Ellies dream.

Maybe this is what burning the bridge behind you is all

about. When you know at the back of your mind that

retreating to your comfort zone is no longer an option, you

can only move on with the best of your abilities. Destroying

your retreat option may be a good option if you have

problem persevering towards your goals.

Staying happy always

Despite not able to travel to Paradise Falls, Ellie was not

disappointed. She had a happy life with Carl and she sticked

their pictures of happy moments in her adventure book,

that was reserved for Paradise Falls. It sounds a little

confusing now you may be thinking if she is happy with


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her life, she will not be able to leave the comfort zone and

go for her dream. To an extent, it is true. But this is because

she was dying and she knew it is no longer possible to realise

her dream ever. Knowing that, she probably had lowered

her expectations in life, and while looking back in time, she

was contented and thankful with what she had experienced.

The point is to look for things to be happy about. Do not

always look for imperfection and be unhappy about it.

There are bound to be things to be happy around you, just

that you did not realise and tend to pay more attention on

negative issues. Positiveness is necessary to propel you

towards your goal. Even if you fail to reach the stars, you

enjoyed happiness. Stay happy always.


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Scoop 4 - H ow much money do you need

(want)?

Have you ever asked yourself how much money do you

need? Everyday we are working for money, constantly

worrying about it and always hoping we can have more.

Most of us will think that we will be happy by having more

money. Is that so? How much do you need?

If you say we need money to survive, then you would not

need that much. Maslows hierachy of needs (see figure

below) specified that humans need to fulfil the basic

physiological needs like food, water, clothing and shelter in

order to think about something else. I would say most

Singaporeans would be able to afford these basic necessities.

The question is how expensive you want to eat, wear and

stay. Hawker or restaurant? Functional clothes or branded?

3 room HDB flat or Condominium? If you already have the

latter for most of the questions, you have more than fulfilledyour physiological needs. In fact, you are choosing a

particular lifestyle.


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What if you have achieved your desired lifestyle? Do you

forsee yourself being fulfilled and happy? Or when you havea condominium, you would want a landed property? If the

attention is on upgrading your lifestyle, you will never be

able to achieve fulfillment in life. I find this common to

many people around me, including myself, which my

perspective has begun to change. Life is much more than

what money can bring. If we keep thinking that money can

make us happy, we will be chasing shadows and be

disappointed at the end of the day. You should chase

money only when your basic needs cannot be fulfilled.

Because you need money to exchange for food, water,

clothes and shelter. I would assume you have fulfilled level 1since you are still alive and reading this post online. In this


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case, if you are chasing money, you are not talking about

needs, but wants. You want a desired lifestyle.

Let us revisit the Maslows hierarchy again. If you asked me,

only the first two levels (physiological and safety) require

money. Humans seek certainty and want things to be under

control. Once our basic needs are fulfilled, we look at

protecting what we have. We do indeed need more money

to be safe and secure. But how many of us do proper

financial planning, such that we get free from the money

trap? The more you earn, the more money you need to

protect your lifestyle. Most of us always complain Singapore

is so competitive and life is getting harder. This is

because our security (or current lifestyle) is threatened.Without a sound mindset and proper financial planning, we

will never be able to escape from this level.

To fulfill the level of love/belonging, most of us believe that

improving our lifestyle will improve the relationship

with our partners and family. The same

thinking applies to the levels of esteem and self-actualization.

By having a better lifestyle, we assume we will be well

respected and successful. Instead of protecting our

current lifestyle with proper financial planning, we keep

spending to improve our lifestyle. With a better lifestyle, wenow have to protect it by having more money. We get

trapped in the second level (safety). We find that we can


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never be satisfied. We always feel we do not have enough

money.

Money is not the problem. Mindset is the problem. We

need to understand and accept that having a better lifestyle

does not equate to having a better life. If we seek a better

lifestyle, when will it end? There will always be a better

lifestyle to chase after. I am not suggesting you should not

have a dream lifestyle. In fact you should. But know when

to stop. Work on your relationships. Work on your passion

in life. Warren Buffett is always a good example. Despite his

wealth, he still stays in the same house that he first bought.

Drinks coke and eat McDonalds. But he has reached the

level of self-actualization. Recently, 40 US billionairespledged half their wealth to charity. Have you ever

wondered why the rich earn more money only to give them

away? Because they have long detached themselves from

money. They no longer chase money. They no longer desire

a certain lifestyle. They want to achieve other things in lifethat cannot be achieved by money.

My point is, fulfillment in life is not about lifestyle or things

that money can buy. We have given too much credit to it.


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Scoop 5 - M oney, W ealth and You

I have heard from different sources about value creationbrings about wealth. You get richer only if you increase the

value that you give to others. Zig Ziglar said, you will get

what you want if you help enough people get what they

want. Initially, I am not sure about this principle even

when teacher Dennis mentioned about providing value andnot to aim for financial freedom as a goal. If I give

something to others, wouldnt it make me worse off? As I

continue to learn and inquire about money, that I start

to understand this principle. W hen you provide a service

or product that is needed by the society, you solve

problems and people who need the service or product

will pay you for it. T hey become better off consuming

the service or product, and you become wealthier. I t is a

win-win relationship. T he more value you can create,

the more money you can make. Hence, it is contrary to

what most people believe, in order to have more, you needto take more. Instead, in order to have more, you need to

give more.

Thanks to La Papillion for recommending Killing Sacred

Cows which gave me a better understanding of this

principle. I cannot explain better than the author, Garrett

Gunderson, so I shall quote his passages:


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Focusing on accumulating money is like wanting to harvest

the fruits of a tree while ignoring the roots. As we accept the

accumulation theory, most of us become frustrated with the

lack of fruit on our tree or lack of money in our bank

accounts. And what do we do to solve this problem? We

focus on the fruit only, rather than tracing the fruit to the

branches, then to the roots. The real solution is to nourish

the roots; then the fruit will naturally follow. This is theprinciple-based, rather than strategy-driven approach. Value

and dollars follow value creation. Dollars are the effect;

value creation is the cause.

The way for you to get what you want is to give others

what they want; to make yourself valuable to others. Whenyou create value for others, and they find it more beneficial

to live life with you than without you, you create a true

sense of security based on personal production, rather than

on external, uncontrollable factors.

Wise stewards of money have power because of their

applied knowledge and human life value; they dont derive

their power from money.

If we didnt have currency, the only way to exchange would

be the barter system. If I have wheat and you have pigs, andI want pigs and you want wheat, we can exchange wheat for

pigs, and we both walk away from the transaction wealthier

than before. I gave up something I valued less for something


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that I valued more, and so did you. But what do we do

when you dont want wheat, but I still want pigs? In that

case, you and I have no basis for exchange, because you

dont value what I have to give you in exchange.

Now put currency into the equation. If we agree upon

symbols of value (ones that other people in our society also

agree upon), I can give you currency instead of wheat in

exchange for pigs, and you can use the currency to exchange

with another person for something that you actually value.

So what does the currency represent? The value that each of

us individually want. People choose what denominations of

currency are worth to them, because they choose what theywant to buy with the currency. The value is in the minds of

people, not the currency. Money does only what we tell it to

do, and the things we tell it to do are based on the things

that we value and want.

Nobody wants currency; they want the things that can be

bought with currency. Or they want the prestige and

image that they think comes with having money.

If you want to prosper, you must stop thinking about

money and instead start thinking of ways that you can

create maximum value for as many people as possible.


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Scoop 6 - Rule of T humb for your Personal

Finance

There are a few popular rule of thumb when it comes to

managing money. I would say they do ensure you will be

financially sound if you follow them.

D o not chalk up debt more than 35% of your income

Banks use 35% as your borrowing limit when approving

your loan applications. This means that your monthly

repayment towards any form of debt should be below 35%

of your gross salary. The debts can be car installment,

housing loans, outstanding credit card bills, etc. This rule isto protect you from taking too much debts. Breaking this

rule will likely undermine your ability to save and you may

find yourself paying debts for the rest of your life.

Save at least 10% of your income

As the parable from The Richest Man In Babylon says,

For each ten coins I put in, to spend but nine. Always save

at least 10% of your income. This is actually the very first

step one should take to be well financially. The correct way

to save is to pay yourself first. Always put aside 10% of yourpay in another bank account (apart from the account that

your salary credits into) immediately when you receive it.

The account with the purpose to save should have minimal


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facilities, ie. without cheques, debit cards linking to it. This

is to make it difficult for you to withdraw the money.

D o not commit more than 10% of your income into

insurance

Do not under-insure but do not over-insure too! Many

people treat whole life insurance as a form of savings. It is

wrong! To me, insurance is a cost, it is not investment. One

should not try to kill two birds with one stone. There isnt

anything is this world that sounds so good you can have

comprehensive protection while the same pool of money

grows rapidly. Remember, buy what you need to protect as

protection is a cost. I t must be a needs driven requirement.Do not buy insurance to save (and invest). You will get

much better returns investing in STI ETF, which is simple

to understand. If you need a disciplined way to save, open a

Save as you earn account, where it will deduct monthly

contribution directly from your bank account. I am not a

believer that you can excel in both protection and

investment in one insurance policy.


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Scoop 7 - H ow to save money?

Do you find it hard to save money and that even if you havetried, the figure in your bank account always remains

stagnant? Saving money is the foundation of personal

financial planning. Even if you are a capable high salaried

personnel, you can end up poor with extravagant spending.

Thus, I hope the following tips can help you to save money.

Value money. As simple as it is, you need to value money

so that you will think thrice before parting with it. Protect it

at all cost and do not let others take away your hard earned

money easily. Once you have the correct mindset that

money is valuable, you are ready to start saving.

Pay yourself first Rich Dads popular phrase. Most

people tend to do otherwise; they would spend first and

thereafter, save the remaining. Chances are, there is nothing

left. Thus, set a target to save each time you get your

paycheck. The Richest Man in Babylon advises you to

save no less than 10% of your salary. You can open another

bank account specially for savings where you channel that

10% every month religiously. Do not touch the money in

this account unless it is an emergency. If you think that you

do not have the discipline, you can sign up for regularsavings plan with your local banks who would automatically


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channel your money to another account. In Singapore, here

are some of the options:

- MySavings account (POSB)

- FlexiDeposit (UOB)

- Monthly Savings Account (OCBC)

Live below your means. This is a classic answer to how to

be rich. Buy things that you can afford, especially the big

ticket items. You may adore the convertible sports coupe or

the penthouse in the prime location, but seriously ask

yourself whether you can afford it comfortably without a big

loan. Do not end up in huge debts that you are not able to

pay, not to even mention you will not have the capacity tosave.

Set a budget. After you set aside 10% of your paycheck for

savings, plan a budget of the remainder for regular

expenditure like your bills, transport, food and most

importantly, leave some for your entertainment and

recreation. Everyone needs to enjoy but set a budget and

make sure you keep to the amount. In this way, you will be

able to control your expenses. Remember: I f you fail to plan,

you plan to fail. Track your expenditure monthly to make

sure your budget is realistic and if it is, whether you kept toit. It would be easier to track if you make transactions with

your bank card or credit card as the bank will send you the

transaction records each month. However, be careful with


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credit cards, do not spend more than your planned budget

or above your means. One advantage of credit cards is that

you can save some money through the discounts at

merchant outlets.

When you are able to do the above, I am sure you will feel

more secure and definitely a less stressed person is a

happier person.


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Scoop 8 - T he importance of having 2 bank

accounts?

I dont know about you. But I do have 2 bank accounts.

One is known as an operating account where my salary

gets paid into as well as all my expenditures are taken from.

Here is the list of transactions are made with this account:

Income:

- Salary

Expenditure:

- Bills payment- Loan installment

- Insurance premium

- Cash withdrawal

- Share payment

- Petrol costs- Donations

The other account is truly a savings account where I divert

a portion of my salary to this account almost immediately

when my salary is paid. I keep the ATM card out of reach so

that I do not touch the money inside this account. I do not

have checks or other withdrawing facilities tied to this

account. No bill payment or insurance premium are made


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from it. It is important to make the account as inaccessible

as possible so that your money is safe. I will only use the

money for emergency situations.

This is what you should do:

Set up a new savings account with minimumbanking facilities

Divert a portion of your salary into this account themoment you get paid

Leave the ATM card at home or leave it with yourspouse (without him/her knowing your password of

course!)

Once you have saved sufficient emergency fund,continue to put money into this account

Invest when you have thousands of dollars morethan your emergency fund level

Repeatedly save and invest

Understanding the purpose alone is insufficient, you need to

take action. Open an account today and tell us that you

have done so.

For those who have an additional account already, save now

and tell us you have done so.

I will give you a pat on your back. Trust me, you will feel

good about yourself.


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Scoop 9 - Insurance should protect against your

worst case scenarios

I believe everyone should buy insurance to cover his/her

worst case scenarios and not just buy because it is likely to

happen. In fact, your worst case scenarios are likely to be

low probability events and hence, unlikely to occur. But

because they are unlikely to occur, most people areunprepared for them (just when you think you are healthy).

This causes the impact of such low probability events to

have big detrimental effects. Analogous to betting where

odds are involved, the payout for the outcome is the highest

when the probability of happening is the lowest. If you are

not insured against your worst, then you have the pay the

most price in the end.

D efining the worst case scenarios

Worst case scenarios can be very subjective and differs from

person to person, but there should be some similarities.

Defining your worst case scenarios is equivalent to defining

your needs, instead of your financial planner defining the

needs for you.

For illustration purposes, here are my worst case scenarios:

Scenario 1 I contracted major illness/disability such that I

am not able to work and have to depend on family.


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Scenario 2 I died and my dependents financial future

becomes uncertain.

Scenario 3 As a single child, my parents contracted major

illness/disability such that their medical costs become a toll

on my finances.

Protection against the worst

After defining my worst case scenarios, I should find out

what insurance policies are available for protection against

such cases:

Scenario 1 A whole life or a term life policy with critical

illness and total permanent disability clauses would be able

to compensate for major illness and total permanent

disability. It is impossible to cover all illnesses but like what

we went through initially, we should cover the worst cases.

Illnesses that are low in probability usually incur high

medical costs compare kidney failure to flu. The problemwith insurance products is that there is no one policy that

can cover all your protection needs. Hence, there are holes

in every policy that you need to augment with other policies.

The disadvantages of a whole/term life policy in relations to

critical illness and total permanent disability:

- critical illness cover is pretty useless if you do not opt for

early payout. This is because critical illness payout is paid in


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the final stages of your illnesses such that your probability of

recovery or even survival is low. This means that from the

first detection of the illness, the insurance does not pay you,

but only pays when you are about to die. And in fact, your

dependents can receive death payments after you die. So

having a critical illness coverage only helps in receiving the

payout a little earlier before your death.

The solution is to get the best shield plan available. The

shield plan will be able to cover a substantial amount of

hospital treatment and warding when you are contracted

with the illness. With the shield plan, you will not be

financially strained with prolong treatment. If you can only

afford to get one policy, then it should be the shield plan.

- total permanent disability (T PD ) only pays when you

lose a pair of limbs and is irrecoverable. What you can do is

to buy an accident plan, where it has different payout

percentage of the sum assured for disability of different parts

of your body. In this case, you can claim if you lose a leg or

an eye and need not be a pair. However, an accident plan is

only claimable if your injury or disability is sustained during

an accident. Alternatively, you can buy a partial disability

income policy, such that in the event you cannot work, be it

due to accident or illness, you can be compensated monthly.Even if you are wheel chaired but can recover, you can still

claim.


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Scenario 2 Likewise, a whole/term life policy would cover

for my worst case scenario 2. The money is to help the

dependents after a stream of income is lost in the family.

You do not need this if you have no dependents.

Scenario 3 - Shield plan becomes very important to my

parents to cover hospital bills. In addition, Eldershield can

be bought in case they lost their ability to carry out daily

functions and require private nurse to look after them.

As you can see, the approach is to insure yourself against

worst case scenarios that will have the biggest impact on

your life. There is no point in looking at the gains when

buying an insurance policy. For example, if you are lookingat something that is high probability in nature, like falling

sick with common flu, sore throat, fever, etc, that can be

cured by a general practitioner, and you are insured for this

rather than getting an accident plan. You may claim 100

times for years to come, but one day, you get into a car

accident and lost your leg and you do not get a single cent.

Visitng the general practitioner is a high probability event,

but you can afford the costs. Getting hit by car is low

probability event, but the costs of treatment may be costly. I

understand the example is a little far fetch but I just want to

bring across the point clearly. You should insured againstthe worst and not buy insurance based on returns or rewards.


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Scoop 10 - I nsure yourself against Partial

D isability

Currently, only Aviva and Great Eastern offer partial

disability income. The difference is that Aviva offers a

standalone policy while Great Eastern offers as a rider to a

whole life policy. Read on to find out why it is important

and why you need it.

W hat is partial disability income?

An excerpt from an article in Business T imesexplains it well:

A properly designed disability income programme ensuresa monthly income payout if you cannot perform your

primary occupation because of an injury, accident or any

illness which need not be one of the 30 major illnesses

named by the insurer.

Your earning ability is your most valuable asset as you arethe goose who lays the golden eggs. Most insurance policies

only pay when the golden goose drops dead or is critically ill,

but this is not enough. What we need to do is to insure the

gooses ability to lay the golden eggs. For example, no

insurance plan pays a teacher if she loses her voice and hasto quit teaching. Loss of voice does not meet the definition

of TPD, but is sufficient to trigger disability income payouts.


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Similarly, no insurance plan pays a pilot if he is grounded

for his diabetic condition.

Most people insure their car and home, not realising their

lifetime income potential could be many times the value of

their home. If you have enough assets to replace your

income, income may not matter anymore. Until then,

disability income cover provides an important safety net

against financial disaster. It should be a part of all prudent

financial planning strategies.

W hat I did?

I got a whole life policy with the disability income rider.

The sum assured is calculated such that when the partial

disability rider ends at age 55, the life policy can be

terminated and the money returned is enough to cover the

entire premium paid. This means that I get free coverage till

55!

W hat you need to take note:

It is important to note that the disability income is pegged

at 75% of your current salary. Even if your salary increases

in the future, the disability income will still remain the same

at the time you purchased the policy.disability income.

What you can do is to add on another income protection

plan to top up the increase in your income. This is especially


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important if you took on more obligations or liabilities

when you income increases as income protection essentially

provides for ones fixed recurring expenses.

Secondly, the payout is only made after 2 to 6 months

(depending on your occupation class) from the moment one

stops working. So one has to survive on emergency savings

in the bank during the interim period.

There are 3 factors to consider when taking on an income

protection plan.

1) Term of coverage (till age 55, 60 or 65)

2) Monthly payout (Max of 75% of salary)

3) Pre-Benefit period (60,90 or 180) days.

It is important to check with your employer how long a

period you will continued to be paid if you are disabled and

not able to carry on to perform your role in your

designation as that will be crucial to determine the pre-

benefit period.

One will not be able to received benefit payout from both

employees benefit and also an insurer to an amount morethan 75% of last drawn salary.

Conclusion


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There are instances where your life, critical illness and

accident policy do not cover. Partial disability income will

payout as long as you are not able to work due to physical

impairment, whether permanent or temporary. If the

physical impairment is not due to an accident, you cannot

claim the accident policy. If the disability is not permanent,

you cannot claim the life policy. If you do not suffer from

critical illness, you cannot claim the critical rider to your lifepolicy. But the cruel fact is that you cannot work because of

your physical impairment, and you have to stay at home for

maybe the next 2 years. Partial disability income will payout

to you during this tough period. If you do not have this

protection, you will not receive a single cent from all your

insurance policies.

If you like to find out how it will mend the hole in your

protection, you can approach Alfred Toh, who is the kind

guy who emphasized the importance of partial disability

income to me.


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Scoop 11 - 6 Reasons W hy You Should N O T

Repay Your H ousing Loan Early

Dennis Ng from www.HousingLoanSG.com, a leading

Mortgage Consultancy portal, has been helping and

advising many people with regards to housing loan. One of

his advice is not to repay your housing loan early, even if

you have the capability to do so. Why? You must bethinking it is so contrary to what was often preached be

debt free as soon as possible! Dennis does have very valid

points:

1) I t is the cheapest loan

Housing loan is the cheapest loan you can ever get from

banks. The interest is about 3-4% and you compare it to car

loan (7%), unsecured personal loan (14%) and credit card

loan (24%). You can see the contrasting difference! Dont

you think you should leverage on the cheapest loan available

to you?

2) Your networth remains the same

Repaying your housing loan early does not increase your net

worth. This is because you are just taking your cash fromyour bank and putting it into the house. Worse, you are

actually freezing your cash.


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3) Losing your life and money

Having mortgage insurance can help you in the event ofdeath or total disability, where your loan will be paid off by

the insurance. The cash or CPF monies can be left for your

beneficiaries. If you have repaid the loan using your cash

and CPF, you would have lost this advantage.

4) Opportunity Cost

With the cash in hand, you can invest and generate better

returns. Rather than being cash strapped, you have the

purchasing power to pick up real bargain stocks when the

market crashes. Again, it will not be possible if you have

your money locked in the house.

5) U se Interest O ffset Loan

With an interest offset loan, you can earn interest on your

cash to offset 100% of your housing loan interest you payon your loan. This equates to repaying your loan, but with

the liquidity of your cash where you can deploy when good

investment opportunity arises.

6) Buy Single Premium Endowment

If you do not know how to invest and would want to avoid

all risky products, you can buy a single premium


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endowment, maybe for 20 years at 3.5% annual return.

This would be able to offset your housing loan interest.

I have also posted questions to him and they are all

documented here:

1) I t is indeed a great i nsight you have provided. H owever, I

feel that most people do not have the luxury to choose to repay

their house early. They are often cash strapped and can only

meet monthly repayment schedule. The problem i s to even get to

the position of having the ability to repay housing loan early.

Do you agree?

I dont quite agree. There are quite a number of people who

are in a position to make lump sum repayment to Housing

Loan, some do it every year, using the Bonus they receive.

My main message is even if you have extra Cash/CPF to

make Prepayment to your Housing Loan, you should

refrain from doing so, because Housing Loan is possibly theONLY Good Debt available to almost everyone, and one

can speed up ones path to Financial Freedom by keeping

ones Home Loan.

I define Good Debt as a debt whereby it is possible for you

to get a higher return than the interest you pay on the loan.

Using this definition, the other common Good Debt is


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Business Loan, however, this is only applicable to people

who are in business.

5 years ago I had about S$250,000 in Cash. I owed about

S$200,000 in Housing Loan then. Im glad I chose to invest

S$200,000 of my cash instead of paying off my Housing

Loan. Over the last 5 years, because of the Major uptrend in

stocks and property, I managed to turn the S$200,000 into

about S$800,000 by leveraging on the Bull market in stocks

and later, property. (I also saved total of about S$200,000 in

the last 5 years, thus, I managed to reach my first million in

year 2008, in the midst of a Financial Crisis.

If I had used the S$200,000 to pay off my Housing Loan.Today, Ill be financially very far behind compared to my

current status.

I observe that most Singaporeans do not have much money

to retire because firstly, they over-commit, then they took

the next 20 to 30 years using their precious Cash/CPF to

pay off their Housing Loan. Thus, ending up Asset Rich

(fully-paid house) and Cash Poor when they reach age 60. ie.

buying a bigger house than they can comfortably afford.

Some also made the mistake of buying property near market

peak. Those who made the mistake of buying near the peak

in the previous property bull market in 1996 and saw prices

crashed by over 40% had to wait for close to 10 years for


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prices to recover to their purchase price. They did not

realize that the single Mistake they made (buying High) set

them back by 10 years of precious time.

Imagine another person who did not make the mistake

would be 10 years ahead of them, and because of the Power

of Compouding, once youre behind financially by 10 years,

you can never really catch up.

2) You mentioned about Interest Offset Loan. Would you be

able to elaborate further on how it works and how to go about

applying for it?

Basically, they allow you to put money into a Current

Account linked to the Housing Loan. The unique thing is

that the Current Account pays the same interest rate as what

they charge you on the Housing Loan. Ie. if bank charge

you 3% on your Housing Loan, they will pay you 3% on

any amount you deposit in the Current account as well.

Thus, if you owe S$1 million in Housing Loan and placed

S$1 million in the current account linked to the Housing

Loan, effectively youre paying 0%, (similar benefit to

paying off the Housing Loan). However, you have the

benefit of liquidity, should you need to use part or all of

the money in the current account, you are free to withdraw

anytime and youre only charged Housing Loan interest

rates.


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3) Lastly, buying a single premium endowment wouldnt it be

as good as locking your money somewhere else than in your

house? I believe there is penalty for redeeming the endowment

early. I feel it is not a good alternative to repaying housing loan

early, unless I am wrong.

Of course, a single endowment policy is not exactly a

fantastic investment alternative. I used it as an example in

case

people give the excuse that they do not know how to invest,

thus rather than risk losing their money investing, they

rather use their Cash/CPF to pay off their Housing Loan.

The good thing about Endowment policy is you can match

the time frame of the Asset (Endowment) with your

Liability (Housing Loan). The good news is that due to

power of compounding, over a long time of say 20 years,

even an annual compounded returns of 3.5% can work out

to quite a lot.

Eg. a S$300,000 earning 3.5% annual compounded interest

would grow to S$679,655 over 20 years. and S$842,038

over 30 years!

If people say they dont know how to pick stocks, another

alternative they can consider is to invest their money into

Exchange Traded Funds (ETF). ETF are basically funds


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that are traded like stocks in a stock exchange. Advantage is

you can track the performance of an index by a small

investment outlay eg. S$1,000, and the annual fees are

much lower than typical Unit Trusts. One example is STI

ETF.

Most people look at things too short term. Eg they only

compare the Housing Loan interest they pay over the next 3

years, vs the returns they get, 3.5% over 3 years. However,

they did not realize that over a longer period of time, say 30

years, things would look very differently.

What is our objective? Our objective should be to ensure

that when we reach aged 60, we are financially better off.Most people only look at short term, eg. can I make money

in 1 years time? And this is one main reason why many

people fall into scams, because most people are too

impatient and want to get Rich Quick.

Most Get Rich Quick schemes turn out to be Scams. The

sad fact is that it seems like people do not seem to be

smarter over time. Charles Ponzi conned people about 100

years ago, now people are still falling into similar Ponzi

scams, 100 years later.

Therefore, I strongly believe that if people can be taught to

increase their level of Financial Literacy and financially

knowledge, they will be able to retire comfortably. I myself


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only earn an average income of S$6,000 in the last 15 years,

or total of S$1.08 million. (For your information, my

starting pay in 1993 was only S$1,500). However, over the

same time period, I managed to save, invest and accumulate

S$1 million, excluding my house, by aged 39. Thus, I hope

that by sharing my knowledge and experience, I can inspire

more people that it is possible for an average middle class

Singaporean to retire by age 40.

This year I planned to launch seminars and workshops to

teach H ow to Save, Invest and Accumulate Your Fi rst M i llion

Dollars, because I firmly believe that if I give people a fish,

it can only fill them for one day, but if I teach them how to

fish, they will never go hungry again.

Dennis Ng is an active contributor to the media, especially

on My Paper and 95.8 FM Capital Radio. He is a qualified

CFP, Accountant and ex-banker. He co-founded

LEVERAGE HOLDINGS Pte Ltd, a leading loan

consulting firm in Singapore. For more information, visit

www.HousingLoanSG.com


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Scoop 12 - W hy investing in mutual funds or

unit trusts may not be a good idea?

Be careful when agents try to sell you mutual funds

(equivalent to unit trusts in Singapore). Since you do not

have the expertise and time to invest on your own, you may

feel it is better off to leave your money with the professional

fund managers who do it full time. It seems like an easy wayout, but there are important issues that you need to

understand before you think it is the best way for you to

invest.

1) M ost actively managed funds cannot beat the

benchmark or the index over the long run.

John Bogle, the founder of Vanguard funds and a strong

supporter of index funds, analysed the performance of US

mutual funds in the 36 year period from 1970-2006. At the

start of 1970 there were 355 equity funds. By 2006, only

three out of the original 355 funds beat the index

consistently over the 36 year period. Hence, your chance of

picking the 3 winners is 0.8% and how slim is that? You can

easily beat 352 funds by buying the index fund.

2) H igh fund management fees eats into your earnings.

This is one of the reasons why it is so difficult for funds to

beat the index because the annual management fees (2-3%)


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reduces your returns. Moreover, the fees are fixed no matter

how the fund performs even if the fund had a negative

return, the manager still gets paid. Overtime, compound

interest can aid you but on the other hand, your annual

fund management fees can compound against you as well.

3) Randomness of the market.

Burton Malkiel (author of the once controversial book, A

Random Walk Down Wall Street) and many other

efficient market believers feel that you cannot predict the

market and profit from it. Fund managers are therefore, no

different from monkeys throwing darts to select the stocks

to buy. They may have their own investment system andphilosophy, but they cannot disprove the luck factor in their

success or failure. The randomness was further addressed by

Nassim Taleb in his book, Fooled by Randomness. He

mentioned that randomness very much determines the

success or failure of managers. To answer how some

managers managed to be spot on in stocks, he drew the

analogy of coin throwing where everyone has a 50% chance

of the correct answer. For e.g., we begin with 100 managers,

after 1 throw, 50 managers (50%) were right. After second

throw, 25third, 12 fourth, 6. fifth 3. Thus, this is a

simplified example of how the top 3 funds can be spot onfor 5 years in a row. So how long more can they sustain


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their luck? It can be the moment you put your money in,

they start to choose the wrong side of the coin.

4) Restrictions for fund managers.

Fund managers have restrictions on what they can invest in

according to the promise and description of their respective

funds. Even if a golden opportunity comes knocking, they

may not be able to seize it due to these restrictions. Secondly,

if a particular sector or country is undergoing a downturn,

they may have to stay invested as stated in their fund

objectives. An additional problem also arised when the

popular fund gets too big they have too much money and

they cannot just sit on the cash. They are thus pressured tokeep the money invested even when there are no good

options. In the end, they may end up with second rated

investments. It just goes to say, the restrictions and pressures

are piled on top of the effect of randomness to make

managers more difficult to beat the market.

5) Sales charges.

Like management fees, sale charges (when you buy and sell)

eats your earnings away. It is true that there are few funds

that can beat the market each year (and it is often true that

this years top 5 funds will not be the next years top 5). You

may believe that you just need to identify these top funds

each year, you can earn big gains. As we know that there are


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hundreds of funds out there, your chances of finding the top

performing ones are slim. Coupled with the fact that you

buy sell frequently, you incur many sales charges, which

greatly reduces your returns even if you managed to pick

one or two correct ones.

In the future, if someone tries to sell you mutual funds,

maybe you can pose these challenges to them. I think if theycan defend their products convincingly, they deserve your

investment.


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Scoop 12 - W hy investing in mutual funds or

unit trusts may not be a good idea part 2

Followers of bigfatpurse will know that I am not a definitely

not a fan of mutual funds or unit trusts. I stated my reasons

in this earlier post: Why investing in mutual funds or unit

trusts may not be a good idea. It rekindled my thoughts

about mutual funds when I was reading Peter Lynchs OneUp on Wall Street, who as a fund manager, believes an

investment professional may not do as well as an ordinary

retail investor. In his book, he provided elaboration that was

not covered in my post and it was his view from the inside

that made it even more convincing.

Analysts may not be qualified afterall

Peter was hired at Fidelity (a fund management company)

as an intern while he was at Wharton University. He

sounded very critical against the investment professionals

like the research analysts (which I believe not all are bad)

Summer interns such as me, with no experience in

corporate finance or accounting, were put to work

researching companies and writing reports, the same as the

regular analysts. The whole intimidating business was

suddenly demystified even liberal arts majors could

analyze a stock.


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He even called professional investing an oxymoron but

redeemed himself speaking of a handful successful ones like

John Templeton, Warren Buffett and a few others.

Professionals are slow to recognize business success than

commoners

He argued that it takes a longer than desired time to identify

a business that has tremendous growth potential. He termed

it Street lag. Under the current system, a stock isnt truly

attractive until a number of large institutions have

recognized its suitability and an equal number of respected

Wall Street analysts have put it on the recommended list.

With so many people waiting for others to make the firstmove, its amazing that anything gets bought. He

substantiated with the example of The Limited, where many

analysts missed the stock in its early days. It was up

eighteenfold from 1979 to 1983, but only 6 analysts were

tracking it from 1981. It was only until 1985, the stock

came under the radar of the analysts and institutions chased

after it at $15, up from the initial 50 cents.

He reckoned that many commoners visiting any of the 400

The Limited stores back in 1981 would have realized its

thriving business earlier than the professionals.

T he need to keep his job


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Fund managers have big clients and bosses to answer to and

they have to justify for their fund performance and stock

selections to these people. With survival at stake, its the

rare professional who has the guts to traffic in an unknown

La Quinta. In fact, between the chance of making an

unusually large profit on an unknown company and the

assurance of losing only a small amount on an established

company, the normal mutual-fund manager, pension-fundmanager, or corporate-portfolio manager would jump at the

latter. Succes is one thing, but its more important not to

look bad if you fail. Theres an unwritten rule on Wall

Street: Youll never lose your job losing your clients money

in IBM."

If IBM goes bad and you bought it, the clients and the

bosses will ask: Whats wrong with the damn IBM lately?

But if La Quinta Motor Inns goes bad, theyll ask: Whats

wrong with you?"

In other words, fund managers find it easier to justify their

losing positions on big recognized companies than losing

positions on almost unknown companies. And it is often

that the greatest growth comes from the small companies.


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Scoop 14 - Straits T imes Index Exchange

Traded Fund (STI ETF)

If you are interested to invest in the Straits Times Index

(STI), it is available in SGX through the STI Exchange

Traded Fund (ETF). It started in 2002 and is managed by

State Street Global Advisors. STI is mainly a blue chip

(major companies) index of the top 30 companies listed inSGX. As compared to S& P 500, it is a much narrower

basket of stocks. Nonetheless, it is the most widely used

indicator for Singapore market.

The Funds investment objective is to replicate as closely as

possible, before expenses, the performance of the Straits

Times Index. As this will disallow the Fund Manager to buy

or sell based on his own judgement, it eliminates possible

human errors or emotions in investments. And because of

this mechanical investing style, the fund management fee is

low (0.3% per annum) as compared to a typical activelymanaged fund (~1.5% per annum). Another advantage of

ETF is that it can be easily traded (like stocks) via the

exchange and thus, facilitates short term trading.

Although the ETF is convenient to buy and sell, it is better

to buy and hold for the long term so as to have a longer

time horizon as an edge. I believe using the dollar cost

averaging (DCA) method (buying a fixed amount each


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month regardless of the ETF price) should be the initial and

primary method of investing. It may sound boring but it is

one of the safest and easiest, yet able to get reasonable

returns for a person who knows nothing about investing. It

eliminates the need for market timing and any form of

analysis of specific companies in the stock market. One note

to be taken seriously for DCA is that it takes great discipline

to contribute regularly in buying the counter, especiallywhen the market is not doing well. This is because the

method actually takes advantage when the counter price is

low (like a discount so you can buy more). If you are not

able to do it, then it will defeat its purpose and thus, think

thrice of the commitment level before you jump into it.

If you are interested in applying the DCA method for STI

ETF, PhillipCapital has a Shares Builder Plan (SBP) where

they accept a minimum of S$200/mth to purchase the ETF

for you. The cost of each transaction is S$6 + GST (for

investment www.poems.com.sg Financial Services Stocks& Shares Share Builders Plan. I am currently suscribing to

this plan, buying S$200 worth of STI ETF shares each

month and I decided to do it long term. (Update: I have

just increased it to S$400 in Apr 09!)

Here are some details about STI ETF:Counter Name STI ETF

Management fee 0.30% per annum (max 1%)


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1 Trading lot = 1000 shares

Currency SGD

Performance of STI ETF (taken from the funds annual

report on 30 Jun 07)


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Scoop 15 - M y ST I ET F Survived the Sub-

prime Crisis

I have mentioned that I have been putting aside $400 every

month into STI ETF, through POEMS Sharebuilder plan.

I started the investment about 2-3 years ago and only

contributed $200 per month. It was only about mid-2009

that I increased the contribution to $400.

We all know that due to the US Sub-prime crisis, the

market took a beating and plunged. My STI ETF sank too.

But I held on to the Sharebuilder plan, believing that dollar

cost averaging will work better for me in a down market.Dollar cost averaging (DCA) is to use a fixed sum of money

to buy a particular shares on a regular basis, instead of a

lump sum investment. The strategy works like how

Singaporeans go for shopping. When there is a sale,

Singaporeans will buy in bulk the items that are on discount.

Likewise, with $400 each month, I buy more when the

stock price falls, and buy less when the stock becomes more

expensive. Overtime, I get a big discount for the shares I

buy.

You may say that I could have profited more if I havebought near the low of STI but I must say I did not know

when the market will bottom and never will I in the future.


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What I must emphasized is that ordinary folks who do not

know how to time the market, can invest in this way and

gain very decent profits. Since it is so simple and relatively

safer than many other strategies or asset classes, it is highly

recommended for people who do not have the interest to

follow the market but like to profit from equities.

Lets talk about real life results: As of Dec 09 holdings, I

have 3077 shares of STI ETF and a DCA price of $2.5448

for each share. STI ETF closed at $2.99 today. This would

translate to a positive gain of $1369.63.

You may feel that the gain is small. But I want to stress that

I have a gain despite buying near the peak and went throughthe entire market crash in 2007-08. How many people have

their investment in the positive territory now?And I did not

time the market. It was robotic, the bank just GIRO my

contribution to the plan without me doing anything.

Anyone can do it! If this is the worst time, my STI ETF will

even perform better in better times.

If you are not convinced, do check out the annual reports

released by Streettracks. For your convenience, I took the

performance table from the latest 09 annual report:


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I feel that it is quite impressive if you compare to many

other managed funds or unit trusts. And the management

fee is only 0.3% per annum.

If you ask me if DBS STI ETF is better, I would say both

are the same. But I would prefer StreetTracks because it has

higher liquidity than DBS. Liquidity is important when you

want to sell your shares.

If you are interested, you can visit POEMS website and look

for the sharebuilder plan. Please note that I am not inviting

you to invest although I own the shares. I am just sharing

how this investment product is doing well for me. If you are

unsure, please consult your financial adviser before investing

in the ETF.


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15 Scoops of Money for Your Purse

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