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  • 25-Aug-10 12:43 | anonymous member
     

    I don't know if I'm imagining things or not, but I seem to see a lot more ads for bond funds recently in Singapore. This is no surprise because in search of safer and less volatile returns, retail investors globally have invested heavily in bond funds, often thinking they are as safe as investing in individual bonds: with the added advantages of diversification (interest rate and default risks) and lower investment costs.

    They are not

    When you invest in a bond, you know the interest rate and the duration (maturity date) of the bond. When interest rates go up, the value of a bond goes down. But you will keep getting the promised interest and know that all you have to do is hold the bond until it matures to get your principal back. Bit like a fixed deposit.

    You will only lose your principal if you decide to sell it before it matures.

    Because a bond fund owns many different bonds, as a unit holder in the fund, you don't have a defined interest rate or a maturity date. You have an average interest rate and average duration for all the bonds in the fund.

    This may seem an esoteric difference, but believe me, when interest rates rise you will regret not understanding the difference earlier. You could lose serious money because for any percentage point change in interest rates, the value of the fund will change by the amount of the duration. This sounds complicated but the following illustration will make clear the inconvenient truth.

    If the fund holds bonds with an average duration of 10 years, and interest rates go up by one percentage point, the value of your fund will drop by 10 percent.

    I think many otherwise financially literate investors do not realise this fact. Even worse, I suspect most financial advisers are unaware of this.


  • 22-Aug-10 08:44 | anonymous
    We sincerely apologize to the few members who turned up at the wrong venue due to insufficient communication on top of the emails sent. For these members, please attend the next talk free of charge (assuming you have already paid for this talk).

    For the rest of the participants, we hope you have enjoyed the talk. As always, your feedback is welcome. Please use the contact form so that we can improve in our next talk.

    Until next time!
  • 21-Aug-10 09:58 | anonymous
    I received this in my email today.
    You have being awarded the sum of £1,500,000.00 Pounds by Liverwood Award , held in August 2010. Send Name.., address.. Country.. for claim.
    I'm sure you would have received plenty of such emails. Please exercise your smart consumer judgement. Most of the time, I think if something is too good to be true, it most likely is. What do you think?
  • 20-Aug-10 15:40 | anonymous
    Thanks to some generous volunteers, we received some strong candidates for some of these positions. We now need just a few more to be part of the team to take FiSCA to the next level. If this is you, just fill in the form here.

    If you want to be part of any of the teams, you can also indicate your preference by choosing the area you wish to volunteer in.

    We look forward to hear from you!
  • 18-Aug-10 05:24 | anonymous member

    It is often said shopping is Singaporeans' favourite pastime. It appears that way, with advertising everywhere .

    Advertisers spend millions of dollars trying to persuade us that a certain product or service can make us successful, prevent boredom, attract sexual partners, and so on. As the best designed ads try to manipulate our spending habits, it is not surprising that emotional spending can become a problem.

    You are buying emotionally. when you buy something you don't need and, in some cases, don't even really want, as a result of feeling stressed, bored, under-appreciated, incompetent, unhappy, or any number of other emotions.

    We often make decisions based on approximate rules of thumb, not strict logic, relying on mental emotional filters to understand and respond to events. These filters, in turn use anecdotes and stereotypes, not logic.

    Once you are conscious of your shopping habits, you'll develop greater control over your finances and you'll be able to enjoy what you are doing without the worry, dread or guilt of having spent too much.

    And according to Deirdre Barratt, a leading American psychologist teaching at Harvard Medical School, it only takes two weeks to change a habit. For two weeks, she says, consciously change your habit. Giving changing your eating habits as an example, she recommends reminding yourself to have a salad instead of a cheeseburger every time you go to the cafeteria for two weeks. After two weeks,if you don't think about it, you will choose the salad over the cheeseburger. 

    Below are some suggestions on how you can be more conscious of your spending, and thereby cutting back on emotional spending.

    Impulse Buys

    One way to cut down on emotional spending is to avoid making impulse purchases. This means more than buying sweets at the supermarket checkout counter. When you find yourself wanting to buy something you didn't already want before you got there, don't buy it.

    Tell yourself that you make a decision about whether to buy the item tomorrow. Bet you, you often forget about the item as soon as you leave the store.

    Avoid Temptation

    Limit the situations that tempt you to spend. One way is to only go shopping when you need something. You can further avoid temptation, by drawing up a list, so that you don't need to go shopping (on-line or off-line) that often.

    If you find yourself spending more when a particular person is with you, try to schedule free or inexpensive activities with that person, like going for a walk or meeting at a local coffee shop.

    Avoid whenever practical reading, listening or watching ads. The more “offers” you read, listen to or watch, the more you will tempted. Of course it isn't always possible, you can't leave your car when an ad comes on the radio. But when watching television or listening to the radio at home, you could go make a cup of coffee, go to the toilet, etc when the ad comes on.

    Get help

    Tell family and close friends that you're trying to spend less, and that you want them to give you a hard time when they see you making an unnecessary purchase.

    Remind yourself constantly

    Make a list of your financial priorities and put it in a place where you'll see it often, like the refrigerator door or the bathroom mirror . Make a second copy for your wallet or purse, If Put small sticky notes on your credit cards to remind yourself of what you're saving up for. If all this sounds too in your face, I got this tip from an American website.

    Do something different

    If you use shopping as a form of entertainment or as a distraction, try to identify what you're feeling when you want to buy something and choose a more constructive behaviour that will help you deal with that emotion.

    For example, if you've had a bad day at work, call a friend and moan instead of shopping. If you're feeling stressed, take a walk. If you must have to buy something, make it inexpensive. But these small items add up! So beware.

    Remember, be aware of your actions.



  • 17-Aug-10 11:57 | anonymous
    I recently cancelled a subscription to a "free" service provided by a telecommunication company. The free service is automatically given to me when I took out the mobile plan, but I do not use the service nor did I apply for the service in the first place.

    They sent me an SMS to automatically subscribe me to the free service. After 3 months, the free service will be charged to my bill at $X per month. I cancelled the free service immediately as I don't want to have to remind myself 3 months down the road to cancel for something I did not apply for.

    The cancellation went smoothly, until I got another SMS stating that they have subscribed me again. It seems that the system will keep doing this until I call up to speak to someone to personally cancel it.

    Inertia forces us to take the "don't bother" attitude. Be a smart consumer. Only spend things that you need. Something that appears free is not always free. Avoid spending money mindlessly.
  • 12-Aug-10 10:12 | anonymous
    FiSCA is now calling for leaders that will champion a specific area of our cause. We need 6 specific leaders to take FiSCA to the next level. If you have the passion for consumer issues and would like to lead our cause, please fill in the form here.

    We look forward to hear from you!
  • 04-Aug-10 09:30 | anonymous member
    We all know saving money is a good thing because we know money saved from one activity could be spent on another activity, form a reserve against unexpected situations, or be invested for future needs. Most people always say they are interested in saving money, but they don't “walk the talk”.

    One way to start saving is to realise that we often spend money mindlessly. There are plenty of scientific evidence that we are often not conscious of why we do things.

    We often make decisions based on approximate rules of thumb, not strict logic. We rely on mental filters or emotional filters to understand and respond to events. These filters, in turn use anecdotes and stereotypes, not logic.

    Once you are conscious of how you spend your money, you will develop greater control over your finances and you'll be able to enjoy what you are doing without the worry, dread or guilt of having spent too much.

    According to a leading American psychologist teaching at Harvard Medical School, it only takes two weeks to change a habit. For two weeks, she says, consciously change your habit. Using diet as an example, she cites reminding yourself to have a salad instead of a cheeseburger every time you go to the cafeteria for two weeks. After two weeks, if you don't think about it, you will choose the salad mindlessly.

    With all these in mind, here are some ways that we can avoid spending money mindlessly.

    1.  Review your mobile phone plans

    Check your phone bills to see if may be paying more than you need to. If you are using fewer minutes than your monthly plan allows, switch to a lower-rate plan. If you are using more minutes than your monthly allotment, then upgrade to a higher plan. Check whether you are paying for added features that you seldom use use and see if you get rid of them.

    Take time to compare and determine which plan provides the most value based on your needs. Be prepared to switch telcos, now that there is mobile number portability.

    2.  Avoid unnecessary bank and credit card fees

    Check the fees that you are paying for bank services and credit cards. Look around to see if there are are alternative providers that will charge less or offer “free” deals. But remember to make sure that you know what strings are attached to any offer.

    3.  Avoid penalty payments

    If late payment entails penalty payments, make sure you pay bills on time. Use the GIRO if necessary. With interest rates so low, paying late does not make sense.

    4.  Take a look at your magazine subscriptions

    Consider getting an annual subscription even if if you don't want to read a magazine regularly. Buying a few issues a year could be enough to cover the entire annual subscription. It all depends on the frequency you buy issues, and the annual magazine subscription price.

    5. Go easy at the convenience stores

    Many people don't think about the big mark-up they pay for convenience store items. Avoid shopping regularly at convenience stores. Use a convenience store for that odd can of soft drink, bar of chocolate or ice cream.

    If you find that you need a daily fix of Coke, ice cream or chocolate, buy these in bulk at a supermarket. Of course, this advice will not work if you need your fix during office hours, and your office has limited suitable storage space. In that case, you may need to continue spending at the store, or change your habits. It's up to you but at least you are making a conscious decision.

    The important thing...

    The important thing is be aware of what you are doing. Don't do anything mindlessly. Even saving money can become a mindless, silly activity. In mindlessly saving, you miss out on why you save: to make life more pleasant and enjoyable.









  • 02-Aug-10 17:09 | anonymous
    FiSCA is proud to bring you 2 talks this month!

    First up, we have a financial topic on Invest for the long term. This talk is going to be held on 21 August 2010 and will cover:
    • Principles of long term investing, compounding and dollar cost averaging
    • Earn a better yield by investing in equities
    • Reduce risk by investing for the long term in a low cost, diversified fund
    • How to access information from the SGX website
    • How to get information about ETFs, REITS and  blue chip shares (with high dividend yield)
    • How to open an account with a stockbroker (using a remisier or an online account)
    • Expenses of investing
    Click here for more details of the talk.

    Next is our Financial Planning talk which is back on 28 August 2010. Click here for more details of this talk!

    Everyone is welcome. Hope to see you there!
  • 29-Jul-10 08:50 | anonymous
    This is a personal story from Michele. Her experience with the bank urge us to follow up with things that are important to you. Do not let it lie by the way side. Here is her story. If you want to contribute your own story, please get in touch with us.

    Background:

    My mom had a $150k property loan with the bank, for which I was the guarantor.  This loan was fully redeemed on 3 December 2009. I was aware of the extremely onerous conditions listed on the guarantee document and had been advised from the outset to ensure i was given a full discharge when the loan was repaid. I wrote in to the bank on 31 March 2010 requesting for a discharge of the loan guarantee. In my mind, there were no reasons for the bank to hold back this discharge as i have no banking relationship with them (no loan, no credit card and no bank account).

    I followed up with phone calls to the credit processing department and was informed that it was being handled by some other department. Things dragged on until mid july, where I just couldn't accept the lack of response from them.

    This is what i did:

    On 14 July 2010, I re-faxed my request for discharge of guarantee to the bank (including all supporting documents relating to their confirmation that the loan was redeemed).  At the same time i have also lodged a feedback at the MAS website (it was an online form).  In my feedback to MAS, I provided them with the same documents i had provided the bank.  Also In my feedback to MAS I raised the following points:
    1. When a process or when compliance breakdown within a bank, should there be a standard process to discharge guarantors once a loan had been repaid?  The reason I raised this was because the bank representatives kept telling me that this was not a standard process.
    2. Should there be greater regulatory oversight in this area to protect consumers? There must be countless other consumers who have personal guarantees e.g. study loans, who may still be carrying the liability till today
    Of course, having raised my first feedback to MAS on 14 July 2010, i got an IMMEDIATE response from the bank on 16 July 2010. The "discharge" letter came swiftly by courier to my home but it was most unsatisfactory.  I quote the contents below:
    "we hereby confirm that you are released from your liability under the Guarantee dated 19/9/2003 subject to the condition that such release will be void and of no effect if any payment or security which we have received with respect to the ammount guaranteed is avoided or reduced by any reason whatsoever, and we shall be entitiled to rely on the said guarantee as if this release had not been given."
    So... yet another feedback was sent to MAS on 19 July 2010. This time I provided a copy of the above "discharge" letter and also urged MAS to look further into these 3 issues on consumer protection:
    1. Why is there a lack of a standard process to discharge guarantees on fully repaid loans?
    2. Why is there a lack of a clean discharge since i have no credit issues or banking relationship with the bank?
    3. Why is there a lack of protection to the consumer?
    At this stage i was fully prepared to engage a legal counsel, report to CASE, report to FIDREC, the MP and the newspapers etc.

    Well, the bank's response was swift and i got my letter of discharge plus a profuse apology by the evening of 19 july 2010!  This time the discharge letter was clean and clear... i just hope the people signing the letter have sufficient authority to do so. The bank letter was also copied to MAS.  So i guess that close my case.

    I think the bigger issue here is the prevalence of personal loan guarantees in Singapore and the reluctance of banks to discharge such guarantees even after the loan has been fully repaid.  How many consumers out there would actually pursue or follow up for a proper discharge?  Many people simply assume that it is discharged, but the fact is that the guarantee document is worded in an evergreen manner and is never discharged until the bank does so in writing.
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