Direct practices lose 35 percent of enrollees, raise fees 23 percent

Each year, the OIC reports to the Legislature on the status of direct health care practices in Washington. A direct health care practice is an arrangement where a health care provider charges a patient a set monthly fee for primary health care services. The provider doesn’t bill the patient’s insurance for the services and only provides certain medical services in the office.

The December 2014 report contains data from July 1, 2012 through June 30, 2014, which is two fiscal years’ worth of information.

Some highlights from the report:

• As of June 30, 2014 there were approximately 8,658 direct-practice patients in Washington at 29 practices around the state. Patient participation decreased by 35 percent from fiscal year 2013. Four new practices opened in Seattle, Camas and Centralia. Three practices closed in Spokane and Lakewood.
• Monthly fees at direct practices ranged from $25 to more than $200. The most expensive was $910 per month. The average monthly fee weighted by the number of patients was $150.78, a 23 percent increase from fiscal year 2013.
• The OIC received no consumer complaints regarding direct patient practices in fiscal year 2014.

The Affordable Care Act now requires health insurance plans to cover 10 essential health benefits, which include preventive services and chronic disease management. It also puts a cap on deductibles that consumers pay each year and direct practice fees do not count toward that yearly maximum. In addition, Washington expanded its Apple Health (Medicaid) program and the state’s individual health insurance market grew 30 percent in fiscal year 2014 to more than 327,000 people.

View the full report to the Legislature.

World's Simplest Market Alert Tool - Interview With Daniel Chia, Professional Investment Manager and Co-Founder of Call-Levels

Recently on Monday, I met up personally with 2 of the co-founders, Daniel and Cynthia, of a new app called call-levels. In this post, I'll be featuring Daniel Chia, who has a vast amount of experience in the financial industry. Learn from a professional investment manager on what he has to say about making money from the markets. Learn how a newly launched free-to-use app can help us in our investment and trading decisions.

Credit: https://www.call-levels.com/

About Daniel Chia

Daniel Chia has always been fascinated by numbers. A Cambridge graduate who earned his Masters in Mathematics and Statistics from Harvard University, Daniel spent nearly a decade at Sovereign Wealth Funds and Hedge Funds.  He was a key part of the Quantitative Trading Team at GIC, and was a Portfolio Manager at Asia’s largest systematic macro hedge fund, where he built and traded systematic models predicting and exploiting market sentiment and bias. The experience Daniel has gained through his academic and professional career has helped him identify and build a tool to overcome the largest obstacle standing in the way of good investment decisions.


1. Tell us more about yourself and how you got started in your career in the financial industry?

I’m Daniel Chia, a professional investment manager for the last 10 years with a life long interest in portfolio management. I’ve always been interested in finance, first from a mathematical perspective (I’m a math major), but I’ve gained more experience, from a behavioural perspective, i.e. how sentiment and greed/fear can affect your approach to the markets.


2. What are your views on trading vs investing? Many young people want to earn quick money from trading. Do you have any advice for them in terms of growing their wealth?

To me there is no difference between quick money and slow money. The most important thing in the end is ensuring that your strategy can take risk smartly and make money.

I think that the difference between trading and investing is:

a) holding time of assets and
b) liquidity of assets.

The risks are different. I’ve seen many traders burn out as they are 24/7 in the markets and also long term investors panic when the market turns and liquidity dries up to the point that they are looking for a return of their capital, not a return on capital. As you grow your wealth, it helps to know what risks you are most comfortable with.

Traders quickly learn that the markets have no rules, and the only rules that can be controlled are those that the traders impose on themselves. This can be overwhelming for new beginners as they cope with the psychological impact of taking risk and potentially losing money. The priority of any trader is to survive. This means being able to adapt to the markets, and eliminating as many rookie bad habits as possible. Each error eliminated is money saved, and each dollar saved can be put into taking risk. What is the one bad habit that most beginner traders make?

They Can’t Stop Watching Prices!

This is counter-intuitive: every trader will tell you that “Each Trade is Important”. When I started trading, I too took this adage literally and tried to watch prices all the time. Literally, all the time, in front of a Bloomberg, staring the numbers flash green and red. I was looking at charts, calculating profit and loss all time. I realised in due time that this was a bad habit, and possibly the worst habit I could have. It made me unable to turn off, built anxiety, and worst of all, caused me to doubt my own investment strategy. It sapped energy from when I really needed to be active, during major market moves which occur only during 5% of the time I spent watching markets. This problem becomes more dangerous with the introduction of mobile trading apps, meaning that traders are now able to watch prices wherever they are. Many traders are now unable to switch off from prices, and the pressure to adjust on the fly means they deviate from their strategies and trade more frequently.



3. What are your own personal investments or trading strategy? Are you more short term or long term?

When I started trading I was reactive, finding market strategies that reacted to tactical events and changes in outlook and sentiment.

As I gained experience I found it more sustainable to be predictive, building longer term themes and strategies in the markets and finding times when overreaction occurs for good entry and exits. I’ve been able to build quantitative models that can do some of the work for me, which really helps.

Now I’m trying to be more proactive, the best trades in the market are those that I personally can influence and improve, and I am trying my best by setting up and leading a start-up - Call Levels.

4. How would the new app, Call-levels,  help us in our own personal trading and investments?

Call Levels is the simplest tool you can have that fulfils the most basic need of the market. To be able to set price alerts easily and receive them reliably is something everyone needs.

To survive in the markets you have to make sure your tools are simple and work well. And we aim to be the most reliable tool in the market. We have had fund managers tell us that alerts in Call Levels were comparable to their $3,000+ a month Bloombergs - we’re constantly trying to improve the product to make it even better!

Call Levels is extremely simple, you cannot price watch, because there are no flashing prices, but you can set prices so that you can be aware of the market, but only when it moves. Price watching, especially when there is nothing happening in the markets, is bad, it tires you, makes you anxious, and takes your attention away from the 10% of the time when the market really moves and you need to be there.


5. Where can they get the app now?

It is out available on iTunes for iOS users. bit.ly/call-levels. Any feedback will really help at this early stage!


6. The app will be available for Android users as well as the introduction of equities and indices feature soon. When will it be released?

We are targeting Jan 2015 for Android with Equities and Indices.


7. Lastly, since you’ve been in the financial industry for many years, do you have any advice for young people who would want to join the financial industry as their career?

Be honest, humble and keep trying to learn and find out more. And keep in mind that wealth is more than money, do remember your health, friends and family. To help that do try Call Levels, we watch the markets so you don’t have to!


To find out more about the Call-Levels App, do visit their website at: https://www.call-levels.com/

They are looking for feedbacks on the App itself and also any suggestions on additional features which you think is useful to be included in the App. Comment below to leave your suggestions or send me an email at sgyounginvestment@gmail.com.

I think the app is something that is very useful and easy to use for us who trade or invest in the markets. I'm personally looking forward to the equities feature which will be released in Jan 2015. We were also talking about the possibility to include additional features such as alerts based on P/E, P/B ratio or any others. Feel free to give your suggestions. Share it with your friends and family. Download and try out the free app today!

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Changes to the CPF - CPF Focus Group Discussion

Few months ago during the national day rally speech by the Prime Minister, it was announced that there may be possible changes to the CPF scheme to allow for more flexibility. A CPF advisory panel was appointed by the Ministry of Manpower in September 2014 to study possible enhancements to some key aspects of the CPF system, to make it more flexible to meet the needs of more Singaporeans and provide additional options in retirement.

I was at the first CPF focus group discussion last Saturday. I got to meet and interact with a few other people and know what were the concerns they had with regards to the CPF system. CPF was not a topic of interest to me until somewhere this year when I started to hear a lot of negative things about it. I had no idea what is the Minimum Sum or what it means. What I only know was that a portion of my salary is deducted every month into the CPF.

Because of the negativity spreading around, I decided to look deeper into what was going on. Writing a financial blog at that time also spur me to produce an article on the CPF system which I wrote here: All about CPF minimum sum and CPF life. My conclusion is, CPF is a social safety net that is for our basic retirement needs. Without it, our society may be in chaos with people having no money for even the basic necessities such as food during retirement.

But, as with every system, there will always be more improvements to be made. Many feedbacks were given and I personally heard from readers who emailed me as well as friends, family and colleagues who discussed about the CPF. As a young person living in Singapore, I see some of my older colleagues regret that they did not plan for retirement earlier in their lives. They had to continue working even when they don't like it. They do not have a choice to do what they like in life rather than just working in something they don't like.

During the focus group discussion, we formed into groups of 6. My group had only 5 person with 2 of the advisory panel members sitting in to listen. We could interact and discuss relatively well with the small group.

The 3 questions that we discussed were:

1. “How much of your retirement expenses should be covered by payouts from your CPF savings? And how much will you need to cover your basic expenses?”
2. “How much should be allowed to be withdrawn at a lump sum at 65, bearing in mind that withdrawing this amount will lead to lower CPF payouts?”
3. “If there was a CPF LIFE plan that had lower payouts at the start, but increased every year to help with increases in the cost of living, would you opt for it?”

I shall not elaborate further on what the general answers were during the discussion as you can probably read from news report by the media. They did quite a good job capturing what was being discussed during the focus group discussion.

For myself, here are my personal views to the 3 questions:

1. “How much of your retirement expenses should be covered by payouts from your CPF savings? And how much will you need to cover your basic expenses?”

I would like CPF to cover all of my basic necessities such as food, utilities bills, transport etc. In today's dollar value, a figure of $1000/mth would be quite comfortable. This is just for basic expenses


2. “How much should be allowed to be withdrawn at a lump sum at 65, bearing in mind that withdrawing this amount will lead to lower CPF payouts?”

Withdrawing a lump sum at age 65 is not needed if we have adequate money for retirement. I would choose not to withdraw any lump sum unless I really have no savings left. The money in the CPF still earns a 4% risk free interest in the retirement account. Moreover, having $155,000 inside the CPF at age 55 would give us an estimated $1200/mth for the rest of our lives starting from age 65. At 4% interest rates, the $155,000 in your RA account would grow to an estimate of $229,437 when you reach age 65 (assuming there are no further contributions). If we calculate, this would mean a 6.27% annual draw down rate (($14,400 divided by $229,437)*100%). This is not a bad draw down rate at all considering you get payouts for the rest of your life under the CPF life scheme.


3. “If there was a CPF LIFE plan that had lower payouts at the start, but increased every year to help with increases in the cost of living, would you opt for it?”

This question is tricky. I think starting to draw down at age 65 is already late and if we still get lower payouts at the start, then the amount becomes very little. With a fixed payout, there would be a worry of not having enough in later parts of our lives but I guess who still cares about increase cost of living when they are in their 70s?


I don't really like the idea of only drawing down our CPF at age 65. Since there're considerations to make the CPF more flexible, perhaps there could be an option to draw down earlier but of course with lesser payouts. An example would be to draw down maybe $900-$1000/mth at age 60 instead of $1200/mth at age 65. This is just my suggestion.

I did ask around and I always hear that draw down age at 65 is too late. Perhaps age 60 would be a good age to starting drawing down their CPF. A concern was that those who are above 60 risk losing their jobs more than anyone else.

There will be more focus group discussions organised for the next few months. If you are interested to participate for the subsequent focus group discussions, please refer to this website for more information: www.cpfpanel.sg. You can sign up for the discussions through the website directly. Information on the next available sessions are also listed on the website itself.

You can also send in your views and feedback on the CPF by emailing to cpf_panel@mom.gov.sg

I did talk to some of the advisory panel members and they were sincere in listening to feedbacks so they can make better informed decisions. We can all do our small little part to give our ideas and suggestions.

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Planning ahead [Guest Post]

This is a short guest post by Young. He has written a few other posts for my blog previously.  

Recently, there was an article in the papers regarding how young Singaporeans were frivolously spending on designer handbags. Read the article here.

It appears that many netizens were quick to condemn and I can definitely understand why given their estimated monthly pay mentioned in the article. (SGYI: The salary was just a mid four figure salary)

Who’s right? Who’s wrong? Is there even a right or wrong in the first place? I think not. There is no right or wrong. Some of the individuals quoted in the article state that they don’t feel pain spending the money and neither do they save up to fund these purchases.

Should we criticize these people? I think everyone has their own opinions but at the end of the day; the bottom line is that so long as one is able to justify his or her actions, it is entirely prerogative to do what they wish to.

Of course, one can never go wrong with saving what they can and I definitely stand by that going forward. Maybe youths aren't interested in learning to invest; but the act of saving itself, is definitely commendable at least to me.

I hope you enjoyed reading my brief post and have a great weekend!

In Summary, I feel that at the end of the day, one should know better what is best for oneself. Do not be overly tempted by decadent, opulent or frivolous lifestyles. Money out will always be easier than money in.

My thoughts: 

Many young people now grow up in more well to do families. Recently I have a friend who got a brand new BMW from his father. He knows his family is rich so he also spends most of his own money and don't find the need to plan ahead or save up for his future. Many of us may envy people who are born in rich families or envy people who get to live luxuriously but life gets boring without challenges. 

We don't have to envy the lives of others. The value of money is lost when we spend recklessly. One day we'll wake up and realise how ridiculous are the items we bought when we finally realise the need to plan ahead. 

What should I know about travel insurance?

If you are getting ready to travel for the holidays, here are some things to consider about travel insurance before you purchase it.

Many travel companies—airlines, cruise lines, resorts—offer travel insurance that will refund most or all of the cost of the trip in certain circumstances. Policies typically cover things like trip cancelations due to illness, civil unrest, job loss, or the transportation carrier going out of business. They’ll also pay for fees incurred by missed connections and delays; baggage damage or loss; medical expenses incurred by an injury or illness while traveling; emergency evacuation; car rental damage; and accidental death.

Before you decide whether to purchase travel insurance, you should consider:

• What your medical insurance covers when you travel.
• What your homeowner or renter insurance covers in the event of lost or stolen belongings.
• What your life insurance policy covers in the event of accidental death while traveling.
• The cancelation policy is for the travel insurance.
• Read the policy's fine print. Some don't cover certain activities such as hang-gliding, bungee jumping or other activities. Some also exclude certain pre-existing conditions from the medical coverage they offer.
• You should also make sure the travel insurance company is licensed to sell insurance in Washington.

Read more about travel insurance on our website.

Questions? You can contact our consumer advocates online or at 1-800-562-6900.

Planning For Retirement Isn't About Sacrificing All of Your Current Lifestyle

The word retirement in itself sounds old. It seems like only old people talk about retirement. You may ask "Why do I have to plan for retirement when I'm so young?". Some may say "Retirement planning means sacrificing my lifestyle now. I have to save money and spend lesser to save for retirement". Sacrificing their current lifestyle is probably not what young people would think of. Come on, its at this young age that we should enjoy life to the fullest isn't it? If we're old, we won't be able to enjoy that much already.

Credit: pixabay.com

What if I told you today that retirement planning is not about sacrificing all of your current lifestyle? You don't have to hide at home and eat bread everyday just to save money for your old age. To me, that doesn't make sense at all. What I want is whilst planning for retirement, I can still dine out at restaurants, travel overseas to explore the world, probably own a car (maybe not one in Singapore) and even live in a moderate luxurious house. How do we do that?

You see, many people thought that they need to live a very cheap life so that I can have more money in the future. But to be honest, even though I plan for retirement, I still own smart phones like many other people out there (but I don't change phones that frequently now). I still eat at restaurants. I still travel overseas. I also wear branded clothes (not a lot though). I have a shirt from Levi's, jeans from TopMan, shoes from Pedro and a bag from Zinc. I'm definitely not living a cheap life. Although we should not spend too excessively, we don't have to sacrificing everything either. If you've read my previous article, you would remembered I mentioned that frugal and cheap is different.

I still could travel to Taiwan for an overseas trip:

I dine in at restaurants like every other person:

Dim Sum anyone?

Korean BBQ Yum Yum

Japanese Ramen. Love the thick soup base 

Japanese Deserts. Green tea Ice cream

Deserts again

I even had a VIP experience at the Singapore F1 this year (It was free!!):

Sky Terrace. So relax...

Some weird looking food. Its actually chilli sauce inside the small syringe. Very smart idea.

As you can see, the life I live, although not too luxurious, is not too cheap either. Well, I didn't started out like this. I was saving excessively at the start. It was needed to get me on a head start. As time goes by, things got better and I could be less tight with money. But, I still eat at hawker centres and coffee shops everyday for normal meals. It doesn't make sense to eat at restaurants for every meals every single day. For young people, its ok to go clubbing and have drink to chill out but if you're doing it too frequently, then I can't help you if you got no money left at the end of the month. If you've read my financial goals page, you would know I've set myself a target to save 100k by the age of 28 which is less than 2 years from now. I am confident that I can still meet that target even while living a moderate life. What is the key to planning retirement while still enjoying life?


Here are 4 points to retirement planning without sacrificing too much of your current lifestyle:


1) Increase your Income

You've probably heard a lot of people tell you that you need to decrease your expenses to save more money for retirement. While saving money is important, we don't want to save every cent and be a miser or live a cheapskate life either. If we have all the money in the world but no friends or family to share it with, then there's no point in it.

We need to socialise. To socialise we need to spend money. A young person's greatest asset is he or she can increase income easily. Go for courses, upgrade your skills, get a degree, excel in your work and you can easily get a higher income.

You could even earn some side income by starting a part time business. Are you good in web designing? You could earn some money by promoting your skills and doing freelance web designing for other people out there. Are you good in drawing and art? You could earn some money drawing and selling your art pieces. Are you good in music? You could teach some music lessons for some side income. The ways to create more income is endless.


2) Create passive income


While active income is important, we don't want to work and work until we have no time to spend it or no time for our friends and family members. Creating streams of passive income through stocks investing and through creating products and intellectual property is a good way.

The key is to create money for your luxuries and enjoyments. These are your wants instead of your needs in life. Your savings goals cannot be changed. If you've set yourself a target to save 100K in 5 years, you know you need to save 20K a year. That 20K is non negotiable. Now if you want to have some luxuries, learn to create the money you need. Create passive income and let the passive income pay for your luxuries.

If you have 100k, invest it in a well diversified portfolio of income and growth stocks with an average dividend yield of 5% and you can get $5000 in dividends every year. This $5000 probably will be able to let you live a better life without affecting your financial plan.

For the whole of this year till now, my passive income came up close to $3000. This is not a very huge sum of money but it allows me to be less tight with money and I could use it to give my friends and family a treat. I could even go on an overseas trip and still come back in a good financial shape because of this extra passive income. That's the essence of having passive income.


3) Start early and you don't have to save too much

Retirement planning should never start when you're near retirement age. The reason is simple. The later you start, the more money you have to save and the more sacrifice to your lifestyle you have to make. I learnt this through my colleagues when I started working 4 years ago. Many of them are in their 40s and even 50s. Most of the time they will regret on not starting to plan early. Time lost can never be earned back. I know it sounds depressing for people who are older now but if you're really at an older age but still want to plan for retirement, then you have to catch up at a much faster rate. Its still possible to plan but its just harder.

Using numbers, we will be able to see and understand better why starting early is better. If you start saving $1000 monthly at the age of 24, you'll have $384,000 by the time you're 55. But if you only start saving $1000 monthly at the age of 35, you'll only have $240,000 by the time you're 55. Well, you may say $384K and $240K is still not enough for retirement in Singapore. You're definitely right. Which brings me to my last point below.


4) Invest as early as possible

All of us know we must invest early to see our money grow at a compounding rate. Even though all of us learnt the effects of compounding since secondary school days, most of us actually do not realise its significance impact on our money. Let's use the example of saving $1000 monthly again. If you save $1000 per month at age 24 and invest it at an investment return of 4%, this money would have grown to about $750,000 by the time you're 55. This is double of the $384,000 hardcore savings if you did not invest at all.

Investing seems complicated to a lot of people. When I tell my friends about the importance of investing, most of them know that but are clueless on how to actually do it. For those who are not into picking your own stocks for investing, you would be better off just investing in index funds instead of buying other funds or unit trusts with high management fees and charges.

I wrote an article on index funds investing here:  Investing Basics - Low Cost Index Fund investing (Passive Investing)

Now, even POSB and OCBC offers index fund investing. Read the above link to know more about it.

The even more interesting part is $1000 per month savings invested at a 4% rate of return will grow to more than $1 Million before you reach age 65. 4% rate of return is not too difficult to achieve. I hope this will be enough for our retirement by that time.

Below shows how a person's wealth will grow if he saves $1000 per month and invest at a 4% rate of return:

Age	Income	Expenses	Additional Yearly Savings	Total Savings	Investment returns
24	$36,000.00	$24,000.00		$12,000.00	4%
25	$36,000.00	$24,000.00	$12,000.00	$24,480.00	4%
26	$36,000.00	$24,000.00	$12,000.00	$37,459.20	4%
27	$36,000.00	$24,000.00	$12,000.00	$50,957.57	4%
28	$36,000.00	$24,000.00	$12,000.00	$64,995.87	4%
29	$36,000.00	$24,000.00	$12,000.00	$79,595.71	4%
30	$36,000.00	$24,000.00	$12,000.00	$94,779.53	4%
31	$36,000.00	$24,000.00	$12,000.00	$110,570.72	4%
32	$36,000.00	$24,000.00	$12,000.00	$126,993.54	4%
33	$36,000.00	$24,000.00	$12,000.00	$144,073.29	4%
34	$36,000.00	$24,000.00	$12,000.00	$161,836.22	4%
35	$36,000.00	$24,000.00	$12,000.00	$180,309.67	4%
36	$36,000.00	$24,000.00	$12,000.00	$199,522.05	4%
37	$36,000.00	$24,000.00	$12,000.00	$219,502.93	4%
38	$36,000.00	$24,000.00	$12,000.00	$240,283.05	4%
39	$36,000.00	$24,000.00	$12,000.00	$261,894.37	4%
40	$36,000.00	$24,000.00	$12,000.00	$284,370.15	4%
41	$36,000.00	$24,000.00	$12,000.00	$307,744.95	4%
42	$36,000.00	$24,000.00	$12,000.00	$332,054.75	4%
43	$36,000.00	$24,000.00	$12,000.00	$357,336.94	4%
44	$36,000.00	$24,000.00	$12,000.00	$383,630.42	4%
45	$36,000.00	$24,000.00	$12,000.00	$410,975.64	4%
46	$36,000.00	$24,000.00	$12,000.00	$439,414.66	4%
47	$36,000.00	$24,000.00	$12,000.00	$468,991.25	4%
48	$36,000.00	$24,000.00	$12,000.00	$499,750.90	4%
49	$36,000.00	$24,000.00	$12,000.00	$531,740.94	4%
50	$36,000.00	$24,000.00	$12,000.00	$565,010.57	4%
51	$36,000.00	$24,000.00	$12,000.00	$599,611.00	4%
52	$36,000.00	$24,000.00	$12,000.00	$635,595.44	4%
53	$36,000.00	$24,000.00	$12,000.00	$673,019.25	4%
54	$36,000.00	$24,000.00	$12,000.00	$711,940.02	4%
55	$36,000.00	$24,000.00	$12,000.00	$752,417.62	4%
56	$36,000.00	$24,000.00	$12,000.00	$794,514.33	4%
57	$36,000.00	$24,000.00	$12,000.00	$838,294.90	4%
58	$36,000.00	$24,000.00	$12,000.00	$883,826.70	4%
59	$36,000.00	$24,000.00	$12,000.00	$931,179.77	4%
60	$36,000.00	$24,000.00	$12,000.00	$980,426.96	4%
61	$36,000.00	$24,000.00	$12,000.00	$1,031,644.04	4%
62	$36,000.00	$24,000.00	$12,000.00	$1,084,909.80	4%
63	$36,000.00	$24,000.00	$12,000.00	$1,140,306.19	4%
64	$36,000.00	$24,000.00	$12,000.00	$1,197,918.44	4%
65	$36,000.00	$24,000.00	$12,000.00	$1,257,835.17	4%

Retirement planning isn't as scary as what we think. Some people assume that they need to live a extremely cheap life and forgo their lifestyle if they start retirement planning. That is absolutely not true at all unless you are living a lifestyle of luxurious houses and cars that is far above your means. The first step you need to take is to determine the amount of money that you want to save. Be ambitious. Go ahead to plan for a savings of 1 Million. Then work downwards to determine how much you need to save each year to achieve that amount.

If you find that your current salary is impossible for you to reach 1 Million, then you need to start the 4 steps which are: "Increase Your Income", "Create Passive Income", "Start Early" and "Invest Early".

No matter how old you are now, start planning right away. Even though the older you get the harder it is, starting late is better than never. For young people, starting early makes the process less painful. Put aside the notion that you need to sacrifice and live like a cheapskate just for retirement. It doesn't work this way. If you plan later, you might have to become a cheapskate but not if you plan early.

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Related Posts:
1. How an Average Family Can Retire Within 10 years of Working?
2. CPF as an asset that generates income
3. Going from working middle class to rich with a simple tweak

Some homeowner policies offer percentage deductibles

When you are considering homeowner insurance, it’s good to be aware of what type of deductible you have. Some insurance companies charge deductibles that are a percentage of the home’s value, rather than a flat dollar amount. For example, if your deductible is 0.5 percent and your home’s value is $500,000, your deductible would be $2,500.

Some people would prefer to pay a higher deductible and get a lower monthly premium. It’s important to do the math and find out what that half-percent will cost you. Keep in mind, your home’s value is likely to increase over time, which means your deductible will, too.

Read more about homeowner insurance on our website. Questions? You can contact our consumer advocates online or at 1-800-562-6900.

Been in an auto accident? Beware of this scam

KING 5 news reported yesterday that some accident victims are being scammed into getting unnecessary chiropractic treatment to drum up payments from insurance companies. Consumers who experience this -- or any other type of insurance scam -- should report it to our consumer advocates at 1-800-562-6900 or online.

According to KING 5, the scammers use Washington State Patrol’s collision reports to find people who've been in auto accidents. One family reported they were led to believe the insurance company wanted them to be seen and gave them a time limit for the visit.

"They said the claim was going to close immediately. They said we need to come in if we want to have any future claims," the victim told KING 5. 

If you are involved in an accident, the auto insurance company will not require you to see a doctor. It is up to you to seek medical treatment at your discretion. However, if you claim you have medical problems related to an accident, the insurance company may request verification from a medical professional. Consumers should always contact their insurance company’s claim representative or their insurance agent or broker when they have questions about a claim.  

In addition to misleading consumers, tricking consumers into getting unnecessary treatment can drive up insurance rates. Insurance companies base their rates in part on the claims they paid in previous years and unnecessary claims get factored into future rate increases.

Read more about insurance fraud and scams.

How Not To Be a Cheapskate In Your Journey To Financial Freedom

In my journey to financial freedom for the past one year since I started this blog, many other people have joined in to start their own journey too. Some are younger than me, some are the same age as me while some are older than me. What is common is that we're all on the same path to financial freedom.

I have posted more than 230 articles on this blog on a wide range of topics from personal finance to investments to success stories and even life lessons. In this journey, often we'll ask ourselves how to balance between saving money and spending money. Swinging to either extremities may not be healthy for our lives in the long run. Imagine because young people want to save money and they have to abandon their social lives of hanging out with friends at shopping centres? Or worse still when you go dating, you get labelled as a cheapskate. I'm sure we do not want this kind of life.

Living a cheapskate life is never good. However, thinking that frugality is synonymous with cheapskate is also wrong. They are 2 completely different lifestyle. When we're older and free from the dating world or the need to belong to a certain younger generation of society, then being cheap works perfectly fine for you. But the problem is for young people. Being young means having the desire to be part of a society, to feel belong to a group of people and having some social status. I've been young and am still young by society standards. Telling young people to be separated from society and become some unusual weirdo is never good.

Credit: https://www.flickr.com/photos/51764518@N02/9759057675/

Nowadays, you mostly don't see a group of young students hanging out at hawker centres or coffee shops. Where are most of them? They are either in nicely decorated Cafes, fast food joints like MacDonald or at the cinema watching movies. This is the lifestyle and if you're a young person right now, you probably have to or is doing that to be part of your group. Also, you mostly see young students with trendy and nice clothes during the weekends. Now the question is, will they still be able to save money with this kind of lifestyle?

I was chatting with a friend on this cheapskate issue which revolves around the furniture that we buy. There was an issue that a certain brand of furniture was thought to be valued for money just because it is cheap. However, the problem is most people who buy that brand of furniture realises that it is not durable and falls apart easily. What attracted consumers to buy is the design and what appears to be good quality material but underneath it hides the cheapskate materials that easily dents. But however, buying cheapskate stuffs does not save you money at all. The plan is to make you buy again and again. This is consumerism which I've discussed on in a previous article here.

Buying good quality stuffs saves cost in the long run. It saves the environment too by minimising wastage. A cheapskate person buys stuffs which is cheap and thought to be value for money. A frugal person buys stuffs which is of good quality and yet spends less to own it. This is the distinct difference between cheapskate and frugality.

So How Not to be a Cheapskate and still be able to achieve financial freedom? Here are some ways:

1) Know that being Frugal is not equal to being Cheap. Frugal doesn't mean you own all the crappy stuffs.

Being labelled as a cheapskate is never a good thing. Thinking that frugality is equal to cheapskate will destroy your life. Frugality is a trait while cheapskate is a social disorder. If you save money by taking advantage of others such as not paying for bills, waiting for someone to treat you for a meal, then its cheapskate.

Here's a funny video to illustrate what it means to be cheapskate:

*Warning: Don't do what the video shows if not you'll become a cheapskate

The video is funny. I had a few good laughs on some of their ideas. A frugal person does not take advantage of others. Only a cheapskate does. Frugality is not about owning all the cheap and crappy stuffs. For example, a frugal person can own a branded $100+ pair of shoe and know that it can last for many years vs buying a cheap $20 shoe which can only last for 1 year.  

2) Live like a Spartan when nobody's around

We need to socialise to make friends and build network. These are the times we hang out at Cafes and have meals at restaurants. When you're out dating, it's appropriate to pick up the bill and give a treat to your girlfriend. Even when you're out with friends, paying for the drinks goes a long way for the friendship that you have. It doesn't hurt to pay that little money which strengthens relationships. 

However, when you're alone and nobody's around, you can start living your simple life again. Buying simple groceries and cooking at home is great. Relaxing with an interesting book instead of an iPad seems like a good idea. Nobody will see you as a cheapskate when you're alone. 

3) Get more for less

Believe it or not, it is impossible not to spend any money. You got to spend money for that formal shirt, pants or skirts for your first job interview to look presentable. You got to spend on socialising to build up your network especially during the early days of your life. For young people, you got to date to get a girlfriend. That cost money too. Some of us might want to go on an overseas trip at least once a year to take a break from work. Yes, that is important too to let you recharge from working the whole year.

Since we have to spend money, we might as well spend it smartly. There are discounts all over the city. With the internet, it is even easier to compare products and get the latest discounts. I can buy that same piece of shirt that usually cost $80 for $30. I can get the same plane ticket that usually cost $500 for $200. I can watch the same movie at the same cinema for $9 instead of $12. All these discounts happen all the time. We can get the same product but at a lesser price.

Let me give you a specific example. For plane tickets, it gets easier to travel with budget airlines such as Jet Star, Scoot and Air Asia. But do you know these budget airlines still offer discounts even though their tickets are already cheap? Discounts happen almost every week with special discounts once a month or every few months. Sign up for their newsletter and if you just wait for a few more days before you book your tickets, you might get that $200 plane ticket instead of the $500 ticket.

Let your financial journey not be a cheapskate but a meaningful one.

Enjoyed my articles? 
You can Subscribe to SG Young Investment by Email 
or follow me on my Facebook page and get notified about new posts.

Related Posts:
1. Going from working middle class to rich with a simple tweak
2. How do you spend your money?

Can OIC recommend insurance agents to consumers?

Consumers call our hotline daily to ask us questions about insurance. Sometimes, consumers ask us to refer them to insurance sales agents who might be able to sell them the type of coverage they are looking for.

While we do regulate the insurance industry, we do not refer consumers to specific agents or brokers. However, we encourage consumers to check the licensing status of agents, brokers or companies on our website. Consumers can also call our hotline and ask one of our consumer advocates to look up that information on their behalf.

Read more about your insurance on our website.

Questions? Contact our consumer advocates online or by calling 1-800-562-6900.

The search for a better quality of life

All humans desire a better quality of life. When we are poor, our basic instinct was just to find food for survival. When we have enough food, we would like something more such as a nice house or perhaps a car. Then we go on to buy nice clothes and accessories and shoes. The list goes on and on. Soon, we find ourselves caught up in consumerism. We buy more items but use less of each item. The more we buy, the less we use.

Now, think about the past when you were still a student with little to no money. You probably just had one pair of shoes and it was precious to you. When you do get a new pair of shoe after wearing it for many years, it feels great. That was the time you were living in frugality. As a student with limited cash, you try to get the best deals when you dine out. You try to only buy during a discount.


Consumerism vs Frugality

It'll not be easy to explain the difference between consumerism and frugality to someone who has been living a consumerism lifestyle since young. Some how, people who are living in consumerism will find that frugal people are sacrificing too much and not living a good quality of life. They would say "Why save money when I can spend money to buy happiness?" To them, saving money is sacrificing their quality of life. However, today, I found out that living a frugal life may not be a sacrifice. It could in fact lead to a better quality of life. Let me explain using a simple analogy.

People living in consumerism like to buy lots of stuff. They think that since one shirt is good, another one will make it better. They have a wardrobe full of clothes and maybe even more than 2 wardrobes of clothes. They have a shoe cabinet with more than 10 pair of shoes. They may also have many different bags and accessories. But, if you ask them if they do wear all those clothes, those shoes or even carry those bags, very often you'll hear that they had only wore it once or twice or never wore it before. Many of them still only use those few that they like better and dump the rest at one side.


Quality, not Quantity

This is the same with food. Having a plate of spaghetti is good but doesn't mean having another plate will be better. When you're hungry, more food will be good. When food is scarce, more is good. But when you're full and more food comes to your table, you feel disgusted. A scarcity mindset will result in consumerism. Buying more of the same stuffs does not make your life better. In fact, it's the direct opposite. So how do we go searching for a better quality of life? Here's the answer: Quality is the key, not quantity. Let's go back to the example on food. It doesn't make sense to keep buying more quantity of food when you're full. If we don't buy more food, we can focus our energy and resources to buy better quality food.

Now, when we translate this idea to the clothes, the shoes and all those stuff, we should also buy lesser but better quality ones instead of just more quantity of it. So, who buys lesser quantity and better quality stuffs? The answer is the truly frugal people. Frugality is defined as the prudence in avoiding waste. Frugal people do not like to waste resources. This means when they buy something, they make sure they really use it and not dump it at one side when they get home. Maximizing the use of resources is their forte. If they buy food, they make sure they finish and not waste any of it.

Sometimes, a similiar can of drink cost $1 here but $3 elsewhere. Yes, it does happen. For me, if I know I can get a $1 drink somewhere near, I will find it difficult to buy a $3 can of drink. Even though $3 is nothing and I can definitely afford it, but I know this $3 can be used to buy a decent meal instead of just a can of drink. It'll be foolish to pay more for less (sometimes I still do it if there's no choice). I can get better quality out of the $3.

Having a better quality of life for frugal people is easy. Instead of wasting the effort and money to buy more of a similar stuff, the effort is put into finding a better quality of it. In this way, our quality of life increases. We get better for less. We can find better deals but still get the same quality goods. We can get value out of a frugal lifestyle. This is the search for a better quality of life. Rich people are frugal and they lead a better quality of life.

Enjoyed my articles? 
You can Subscribe to SG Young Investment by Email 
or follow me on my Facebook page and get notified about new posts.

Related Posts:
1. Going from working middle class to rich with a simple tweak
2. Practising Frugality to Achieve Happiness in a High Cost of Living Environment
3. Your Perspective of Luxury and an Experience

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CSR is OK...but what about Individual Social Responsibility ?

Ever since the launch of 'Swacha Bharat Abhiyan' by the Hon.Prime Minister of India, Shri Narendra Modiji, there is an increased response from the Corporate world to contribute at least 2% of their annual Net Profit to this project.

This contribution by corporates reminds me of an NGO which raised money through a monthly contribution of just ONE RUPEE PER MONTH called RUPEE-A-MONTH (RAM) through its members. It becomes our Individual Social Responsibility (ISR) to contribute at least 2% of our Annual income to a Social cause which is close to our heart. In addition to this, it would always be better if we contribute our time, knowledge and skills to create an ecosystem around us to create equitable distribution of wealth and opportunities.