Tuesday, November 29, 2016

Getting Insurance Advice Without An Insurance Agent with Selfcheck

Have you heard that technological advancement will disrupt the financial advisory industry? We can now buy property without a property agent through an app. How about getting a Selfcheck on your insurance needs online? Now it is possible with a new digital “adviser” on DIYInsurance.

Insurance is a tricky maze where most people are confused on what they actually need. Who can we trust to give us the most unemotional advise without any sales talk or hard selling? Feeling pressured to buy any insurance is not the way to go. We have the right to really think about what we need without any hard selling.

With a digital "adviser", all the hard selling, and the pressure to buy are all gone. We can now assess our own insurance needs at the comfort of our homes, making decisions with a clear mind without any distractions.

How Selfcheck works?

I've tried out this selfcheck and I would say I'm quite impressed at how easy it is to use and the quality of the recommendations which are given. I don't even need to spend 1 hour of my time to listen to sales talk. All it takes is just 5-10 mins to key in my personal data and then the system calculates my insurance needs and recommends the best insurance plan comparing various companies in the market. If you did not know, DIYInsurance is also an insurance comparison web portal.

My Selfcheck results

I tried to key in my details and got some results which I'm quite happy about. Here's how simple it is to do a selfcheck and the results which I got:

First, they will ask for some personal details such as your name, date of birth and annual income

After which, there will be some questions on assessing our financial needs and health.

Thirdly, will be some basic questions on our employment status and expectations

And lastly, the results are generated out

For my protection needs, the digital adviser recommended 4 main insurance:
  1. Death
  2. Critical Illness
  3. Disability Income
  4. Healthcare
If you realise, all the recommendations are for insurance needs only. There are no savings plans, endowment or investment link policies involved. This is in line with what I believe that insurance should just be for insurance coverage and not be complicated with savings or investment. I don't have to pay high fees to save and invest when I can do it myself at very low fees. 

Honest advise and trusted service

Talking about fees, in case you did not know, DIYInsurance staff are not commission based which is very different from normal insurance advisers out there. They are all salaried base which means they do not get extra money from recommending any insurance plans you do not need. 

However, the quality of service still maintains the same. There is a dedicated adviser assigned to each person and in the event of a claim, they can approach their adviser to process it. They also have a Client Service Management team to help on any needs which you may have. 

Save on your insurance?

Because of the selfcheck digital adviser platform, processes become more efficient which allows DIYInsurance to pass on greater cost savings to their clients. They are increasing the rebate of agent’s commissions from 30% to 50% back to you. This is a straight 50% cost savings on the commissions which is paid to the company. As mentioned before, DIYInsurance staff are salaried so the commissions are actually paid to the company like a referral fee which all other insurance companies pay to their agent too.

As what I understand from them, the commission rebates are not just for 1 year, they are for as long as the insurer pays them (usually 3-6 years along). This is really a good initiative from them to pass cost savings to their clients.

DIYInsurance is MAS licensed since 2003 and is a trusted place to be insured. I've personally interacted with their staff before and know that they really want to serve people well. Try out the new selfcheck digital adviser and see for yourself the new era of financial advisory.

This article was written in collaboration with DIYInsurance. All views expressed in the article are the independent opinions of sgyounginvestment.blogspot.sg

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Thursday, November 24, 2016

A New Era With A New US President - How Will The Future Change?

As we all have heard, Donald Trump's winning the US presidential election was quite a shock to most people. It was a shock because people are afraid he will do drastic changes to policies affecting trade around the world which causes instability.

Just last week, President Obama backs off Pacific trade deal vote effort, which is known to us as the Trans-Pacific Partnership or TPP. This is an important trade deal and if it does not come true, it could be a big set back. In October this year, PM Lee warns of harm to US' standing if TPP isn't ratified. The TPP, co-founded by Singapore, aims to create a giant free-trade zone and give the 12 countries access to 800 million consumers, representing one-third of global trade. It is a key thrust of the US' foreign policy in Asia aimed at balancing China's rising influence in the Asia-Pacific. There have been lots of talks during the APEC summit in Peru where details are still being sorted out for the trade pact.

There are many questions to how the world will change. In particular for us in Singapore, how will it affect us? Singapore is a small country and we have depended on trade to survive for the longest time now. If trade is affected, some jobs in Singapore may be lost. We may find ourselves unemployable as jobs we are familiar with begin to disappear.

LinkedIn published a report on the most in-demand skills in 2017 globally. It was quite interesting to see what kind of jobs are in demand now and you'll be surprised a lot are in fairly new areas.

Here are the hottest, most in-demand skills around the globe according to LinkedIn:

1. Cloud and Distributed Computing

2. Statistical Analysis and Data Mining

3. Web Architecture and Development Framework

4. Middleware and Integration Software

5. User Interface Design

6. Network and Information Security

7. Mobile Development

8. Data Presentation

9. SEO/SEM Marketing

10. Storage Systems and Management

From what I see, the jobs that are in demand have changed quite a lot from the past. Most of the skills are not even taught in our traditional schools which we graduated from. I understand why cloud computing and statistical analysis are at the top. These 2 skills are very important for the future technologies which will be the forefront of what is to come globally.

Even in Singapore, we are embarking on many technology changes to increase productivity and also the smart nation project. The recent forming of the Government Technology Agency of Singapore (GovTech) also shows how serious the government is in future technologies.

More data analysts will be needed as we will have more data in the future in our super connected world. Data is a resource which can be used to generate new business and profits and economic growth for the country. Cloud computing will change how we do business as hardware becomes virtualised in the cloud.

The labour movement in Singapore, NTUC, leveraging on its extended network of partners, also announced that they will set up a new unit next year to identify work opportunities of the future to help better match workers to up-and-coming jobs. The first five sectors they will start pilot projects in by 2019 are financial services, infocomm technology and media, precision engineering, healthcare and education. This seems to send a signal that these sectors will see increased demand in Singapore for the many years to come and that workers should continue to upskill to remain relevant and future ready. 

Singapore's non oil domestic exports sinks 12 percent in October as reported just last week. This is not good news for the Singapore's economy as US is more likely to shrink trade further. I've never been through a bad recession in my life since I started working. The closest was the European sovereign debt crisis which was averted because help was rendered out to the few troubled nations. I've heard of people being retrenched and even hear from my colleagues that my company freeze annual increments and decrease bonus payouts when times were bad back then.

Are you ready for the new era? Are your skills ready for the future? In this dynamic economic climate, it bodes well to ask yourself if you are adequately prepared for technological disruptions that might take away your job.

This article was written in collaboration with the National Trade Union Congress. All views expressed in the article are the independent opinions of sgyounginvestment.blogspot.sg

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Tuesday, November 1, 2016

Tips For Refinancing Our Home Loans

Home loans... this is a major part for a property owner in Singapore. If you had bought a private property, you can only take a bank loan whereas for a HDB property, we can choose between a bank loan or a loan from HDB. 

Bank loans are structured in a way where if we do not refinance regularly, we will lose out on a lot of cost savings and end up paying more for our housing loan instalment. Many banks do not reveal that to you. It is like credit cards where they give you waiver of annual fees for first few years and start charging you later if you do not realise it. Some are smart enough to call in and cancel the card or request the fees to be waived. Others will end up paying the extra fees unknowingly.

How does bank loan work? 

For every loan package, there is a spread applied to the interest rate. If it is a sibor package, it will be something like "sibor + 0.8%". I've talked to many people before and some don't realise the rate that they are paying now is just temporary. Most of the time, after a few years (likely 2-3 years), the spread will increase. Instead of  0.8%, the spread increases to 1.2%. Some can even increase as much as 1% which is a significant amount on our loan installment. It will be a shock when we realise we have to pay a few hundred or thousands more per month later. 

Here are some tips on refinancing and when we should do it:

You should refinance as early as 6 months before lock in expires

Refinancing should not be done only when we see an increase in our loan instalment after the spread increases. We should refinance and get a better package even before our lock in expires. Yes this can be done and it can be done as early as 6 months before. 

The reason to refinance before lock in expires is simple. The minimum notice period for refinancing is 3 months which means if we only refinance after our lock in period expires, where the loan instalment will be higher, we will be stuck with the high interest rates for at least 3 months. 3 months can be a few thousand dollars paid in extra by then. 

The different variable rates to choose from

For loan packages, there are both fixed and variable rates. For variable rates, there are different options to choose from again. This is the confusing part for many people and sometimes I have to explain for quite awhile before people can understand the options available. 

For variable rates, there are mainly 3 types:
  1. Bank's board rate
  2. Sibor/SOR rate
  3. Fixed deposit mortgage rate
As mentioned earlier, for home loans, there is a spread. For variable rates, it will be pegged to either one of the above variable factors. Thus, it can be either "board rate + 0.8%" or "sibor + 0.8%" or "fixed deposit mortgage rate + 0.8%". 

For bank's board rate, this is the most NOT transparent among the 3 types. The bank can change the rate as and when they want and then tell you your loan instalment will be higher the next month. There is no way we can check or see the rate for this. 

For sibor/sor rates, it is transparent and all banks follow the same rate. However, the rate can change quite a lot base on historical figures. It was as high as 8% in 1987, 7%+ in 1998 and almost 4% in 2007. Every financial crisis causes the sibor to fluctuate quite badly. 

For the fixed deposit mortgage rate, this is a relatively new type as compared to the bank's board rate or sibor/sor rate. This is also a transparent rate as it is pegged to the fixed deposit rate and we can see the rate published on the website of that particular bank. Many people are sometimes confused that this is a fixed rate. It is not a fixed rate. This rate is also less volatile as compared to the sibor based on historical figures. In any case, increasing the fixed deposit rate does not benefit the bank as it is also a cost to them.

Fixed rates only for short period of time

If your loan is on fixed rates, do not believe that your rate is fixed forever. There is no such thing as a long term fixed rate which means if you want fixed rates for longer term, you should refinance regularly. Most fixed rates are for 2-3 years with some extending to 5 years but that's about it so far from what I have seen among all the banks in Singapore. 

Once your fixed rate ends, it will revert to a variable rate so it is better to refinance to get fixed rates again. 

Should I switch from HDB loan to bank loan?

So far, we have discussed mostly on bank loans. If you're on HDB loan, the interest is 2.6% whereas if we switch to bank loans currently, it can be as low as 1%. However, switching to bank loans will have a huge consequence. The main issue is we would not be able to switch back to HDB loan once we go over to bank loans. 

HDB loans, although it is higher at 2.6%, but it is liken to a long term fixed rate as the rate has not changed for a long time. If we want more stability, we should stay on HDB loan.

However, if our loan is left about 5-10 years, we can consider switching to bank loan to take advantage of lower interest rates and not worry too much since the loan is going to end soon. 

What are the fees for refinancing?

Refinancing is not free. There are fees involved which we should take note of. However, if our loan amount is high, the banks will always give cash rebates or subsidies to cover most of the fees. 

The fees for refinancing are as follow:
  1. Valuation fees
  2. Legal fees
  3. Mortgage stamp duty 
In most cases, cash rebates and subsidies can cover most of the cost which means we only need to pay less than a few hundred. Do note that all fees can be paid by CPF so no cash is needed as long as we have enough in our CPF Ordinary account. 

Where to get the best loan package for refinancing?

If you would like to find out more about refinancing and get the best rate for your home loan, fill in this form below and I'll get back to you on the best rate:
I will also be giving out vouchers as below for every confirmed case:

Loan amount $200K-$300K: 

$20 CapitaLand or NTUC Vouchers

Loan Amount $300K-$500K: 
$40 CapitaLand or NTUC Vouchers

Loan Amount $500K-$800K: 
$60 CapitaLand or NTUC Vouchers

Loan Amount above $800K: 
$80 CapitaLand or NTUC Vouchers

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