Logic Quiz 4-2 (Vol 4)

There are four houses with different colours in a row. Each occupant plays a different instrument and keeps a different pet.

 1. The grey house is left of the red house.
 2. The salesman lives left of the teacher.
 3. The manager keeps maltese.
 4. The bass player lives in the red house.
 5. The brown house is the first house.
 6. The drum player keeps maltese.
 7. The flute player lives in the third house.
 8. The schnauzer owner lives in the yellow house.
 9. The teacher keeps pekingese.
10. The lawyer plays guitar.

Question: Who keeps pomeranian?

Give your answer here. The correct answer will be displayed when you submit your entry.

Benchmark
1 to 5 mins: very good
5 to 10 min: good
10 to 15 mins: fair
more than 15 mins: need more practice! 

More of the quiz
It appears every Sunday in The New Paper.
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After submitting your answer, you will be given the link to a webpage that teaches the method to solve this puzzle. 

It is easy to be cheated (2) - Capital Protected Products

During the past ten years, many financial institutions introduced structured products, such as the capital guaranteed or capital protected products. They are designed to attract investors who do now wish to take investment risk, and wanted a better return than paid on fixed deposits. 

These structured products are usually issued for a term of 5 years. The capital is protected or guaranteed. The investors were told that the capital is protected and they can earn a higher rate of return.  

To provide the capital protection, about 80% of the money is invested in a low risk bond to produce the capital return on the maturity date. Of the remaining 20%, about 10% is taken away as expenses, distribution cost and profit for the issuer. The remaining 10% is used to buy an option that has a small chance of earning a high return, but a larger chance of returning nothing. 

Most investors of these products got back only their capital after five years, with little or no gain. 

If the investors had bought the low risk bond, they would have received a return of 20%  for the 5 year period. The financial institutions did not want to sell the low risk bonds as they earned a small fee compared to the structured products (which paid a higher commission). 

To be fair, some distributors were not aware that the products were bad products. They were only concerned about earning the high commissions for distributing the products. They failed in their duty in giving the proper financial advise to their customers. 

During the period that these products were sold, the retail customers must have invested several billions of dollars and lost several hundred millions in the return that they would have obtained by investing in low risk bonds. Unfortunately, the financial institutions were not held accountable for selling these bad products. 

Tan Kin Lian

 

Benchmark premium rates

Some readers ask if it is possible to get $100,000 of cover in a term insurance policy and if it depends on age? 

You can refer to the benchmark rates here. Some insurance companies should be able to offer premium rates that meet these benchmark. You can call their hotline. 

Different Types of Life Insurance Policies

Dear Mr. Tan,

If you find the time, can you explain the different types of life insurance policies, such as whole life, endowment, term, ILP. I am quite confused about them.

REPLY

You can read this explanation. Please tell your friends to read it as well.

Try this test.

Preparing your case in FIDREC

Dear Mr. Tan,

I have just received a rejection letter from the bank that sold the minibond to me. I am devastated. What can I do now? Shall I go to FIDREC? What about the class action?

REPLY

Over the past five months, many investors have recieved a rejection letter or a low offer that they cannot accept.  The best course of action is through FIDREC. I have updated this guide on how to use FIDREC. I have found a lawyer who is willing to provide legal assistance to help the investor in the FIDREC process for a flat fee of $500. 

Various groups of investors have approached several lawyers to organise a class action. I understand that most of these efforts have stalled. The class actions required at least 500 participants to contribute $2,000 or more. They were not able to get an sufficient number of participants. 

Masdar - City of the Future

Watch this video.

It is easy to be cheated (1) - Introduction

I shall be writing a few articles about how easy it is for someone to be cheated in the world of investments. I shall be quoting from several recent experiences in Singapore, but I will not be mentioning specific products or organisations. You have to make a guess.

There will be lessons that can be learnt so that you are not caught in these scams. You have to worry about reputable organisations, as many of them are now engaged in these type of practices in their pursuit of profit.

It is easy for a consumer to be cheating from the following  types of products:

a) structured and banking products

b) insurance products

c) shares

d) trading in foreign currenty 

e) land banking and other non-listed products

f)  exotic products sold by private bankers

Nearly all investments are similar to gambling. The investor in speculating (i.e. gambling) on the price movement of the product. The speculator makes a profit when the price goes up and makes a loss when it goes down. The investor also has to make a choice in selecting the right product to invest it. 

It is easy for a small investor to be cheated in this environment by the other party who has better information or the ability to create the product to their advantage.

Even the cautious investor, who does not wish to take any speculative risk, can be conned into investing in products (such as the credit linked notes) that can wipe out the entire savings, without providing a commensurate rate of return. Some are offered products that have already turned bad, but are packaged in a misleading manner at an over-inflated price. They are being cheated!

Do come to my blog daily to read about these stories and take the lessons to avoid being cheated of your hard earned money.

Tan Kin Lian