Monday, January 28, 2008

Tips to beat inflation from "My paper" 25 Jan 08 - Part 2/2

4) Recreation & Others
- Choose countries where rates are lower
- Choose free recreational spots such as East Coast Park
- Buy at discount shops or online forums for equipment

5) Housing
- Wait for property market cools
- Hold off major renovation works till demand drops

6) Clothing & footwear
- Go for second-hand items
- Stock up staples such as socks during sales

7) Education & Stationery
- Buy refills for pens
- Take a group tuition classes for cheaper rates
- Buy used textbooks from seniors

Saturday, January 26, 2008

Tips to beat inflation from "My paper" 25 Jan 08 - Part 1/2

1) Food
- Brought own container when buyout takeout to save on the surcharges of 20 cents for plastic containers.
- Supermarket gives discount on home brands
- Eat out at fancy restaurant less often

2) Transport & communication
-Take trains and buses and avoide taxis
- Walk short distance instead of paying 65 cents for the feeder bus service
- Get a mobile plan that suits your needs

3) Health care
-Ask your doctor for generic drugs such as paracetamol instead of brand name ones like Panadol
- Use your company healthcare benefits
- Call up clinics to ask about consultation fees before seeing the doctor

Saturday, January 19, 2008

Traded Endowment Policies (TEP)

Recently, Singapore government has raised the concerns that many Singaporeans will not have enough money for retirement.


The Singapore government is proposing a Compulsory Annuity Scheme for all Singaporeans. What's the problem?

The only problem is that currently, Annuity plans offer very low returns of less than 3%. Thus, putting money into Annuity plan for retirement income might not be a good idea if inflation rate is above 2%.


If returns on Annuity is 3% and inflation is at 3%, it means ZERO returns for your money parked in Annuity.


The Good News is a person can easily structure an Attractive Annuity Plan with double the returns of a typical Annuity plan by "laddering TEPs". What do we mean? A person can invest in say 5 TEPs with varying maturity period of say, 5 years, 6 years, 7 years, 8 years and 9 years to maturity.


Upon maturity of the 5 year TEP, you can withdraw the "gains" (double that of Annuity) to fund your lifestyle and rollover (re-invest) the principal amount into another TEP with say another 5 years to maturity. At end of year 6, you have another TEP maturing and again you can withdraw the gains to fund your lifestyle and again roll over (re-invest) the principal amount into another TEP with another 5 years to maturity.


By repeating this process, you will actually create a non-stop income stream year after year after 5 years from now and achieve the same benefit of an Annuity plan (non-stop income stream).


However, by investing into TEPs, you have an added advantage over investing into Annuity as the returns of TEPS can be double that of Annuity plans currently.

From: TEP Pte Limited