In a nutshell the changes are:

• HDB allow buyers to take a 2nd concessionary loan from HDB even if they downsize to a smaller flat or move to a flat of the same size. Previously, only upgraders qualified for a second concessionary loan. However the sales proceeds from the sale of a flat, seller can only keep the greater of $25,000 or half of the cash proceeds. The remaining cash and CPF balance has to be used to finance the purchase of the next flat if they take up a HDB concessionary loan.
• MOP increased to three years for all flats bought in the resale market. Currently, the MOP is 2.5 years for buyers who choose to take up an HDB concessionary loan and just 1 year for buyers who either take a commercial bank loan or do not take any loan.
• 3,800 more elderly lessees will now benefit from its lease buyback scheme which has been revised. The scheme allows the elderly to monetise their flats by selling the tail end of the flat’s lease back to HDB.
• HDB will withhold $10,000 of the subsidies for a household made up of 1 Singapore Citizen + 1 PR when they buy a HDB flat. Once the PR converts to citizenship, or when the couple has a Singapore citizen child, the Board will return the withheld subsidy.
  
• A quota cap for PR households of 8 per cent in each block and 5 per cent within each neighbourhood.
• It will be applied on top of the ethnic integration policy (EIP) but will not apply to Malaysian PRs.
• EIP for Indian/Others limit was raised from 10 per cent and 13 per cent at the neighbourhood and block levels to 12 per cent and 15 per cent respectively.

For tenancies beginning before 1 Feb, owners have a six-month grace period from that date to register.

Owners also have to inform HDB when they renew or terminate the subletting of rooms and when there are changes to tenants’ particulars.

There is no need to seek prior approval for the subletting of rooms.

HDB announced this yesterday in support of the efforts of the Ministry of Home Affairs to stamp out loan shark activities.

It hopes the move will help to address the problem of new flat occupiers being harassed by loan sharks while the borrowers are untraceable.

The additional information will enable MHA to trace such borrowers.

Flat owners can register their sub-letting of rooms online or at HDB branch offices.

A maximum penalty of $3,000 will be imposed for non-compliance.

Flat owners who repeatedly fail to comply with the new regulation may have their flat acquired by HDB.

Source: TNP 13th January 2010

CENTRAL Provident Fund members have been warned they face fines of up to $10,000 if they take part in a scam that has just come to light.

The CPF Board issued the stern warning after a report in The Straits Times yesterday exposing a practice adopted by unscrupulous financial advisers who plunder members’ CPF investment funds.

Some CPF members who are desperate for fast cash have agreed to take part in the scam, which involves the rapid buying and selling - or ‘churning’ - of investment products using CPF money.

The members dip into their retirement savings to buy and sell investment products under the CPF Investment Scheme - and in doing so they become eligible for cash rebates used as a carrot by errant financial advisers.

The advisers get to pocket healthy commissions.

CPF rules prohibit members from pocketing such cash rebates. All gains or rebates from CPF investments must be put back into members’ CPF accounts, to ensure they have enough for their golden years.

A CPF Board spokesman said: ‘CPF members found guilty of working with errant financial advisers to pocket cash rebates which amount to premature withdrawals of CPF monies may be fined up to $2,500. For second or subsequent convictions, the fine may be up to $10,000.’

The scam typically involves frequent buying and selling of unit trusts and investment-linked insurance policies for no good reason. In the process, the customer gets hit with charges while the financial adviser pockets extra commissions. Over an extended period of churning activity, the customer suffers as the savings in his CPF account - used for the transactions - inevitably dwindle, particularly in a falling or flat market.

Advisers typically entice CPF members to ‘churn’ by investing their retirement funds in return for monthly cash rebates. In most cases, CPF members are given blank forms to sign, authorising the advisers to transact these products on their behalf.

The cash rebates come from the sales charges tied to each transaction. The sales charge works out to 2 per cent to 3 per cent of the sum invested, of which the customer receives a cut. The balance is pocketed by the adviser, a person who may have introduced the member to the adviser, and the investment firm.

Singapore Insurance Institute council member, Mr Stanley Jeremiah, urged CPF members to be more careful about safeguarding their retirement funds.

‘People should be aware that by participating in churning they are cheating themselves because they are dissipating their retirement funds and committing a criminal offence,’ he said.

Mr Jeremiah said that even if a CPF member wants to take a chance, he would be making a big mistake because if he is caught, the penalties would be bigger than most of the cash rebates. With continued churning, the fines can be very substantial.

This article was first published in The Straits Times.

Source: AsiaOne Business

DBS, Fundsupermart among those which now charge just 1%

A PRICE war seems to have broken out in the unit trust industry in Singapore, with at least three fund distributors now slashing their sales charges to just 1 per cent.

DBS Bank started the ball rolling in early October when it cut its sales charge on all unit trusts to 1 per cent - a move the bank says has already resulted in a two-fold increase in unit trust sales.

Last Tuesday, online fund distributor Fundsupermart.com reduced its sales charge for its 11 best performing funds over a period of three years to 1 per cent.

And The Straits Times has learnt that even though it has not advertised this, Standard Chartered Bank (Stanchart) is also offering a 1 per cent sales charge to selected customers quietly.

Unit trusts are typically sold by banks, insurers, stockbrokers and other independent financial advisers.

These distributors levy an upfront sales charge, which is deducted straightaway from the principal amount an investor puts into a unit trust.

Read the full story in Saturday’s edition of The Straits Times @ Dec 19, 2009

By Sylvia Paik

• Read contract: what’s covered, what’s not, is there any minimum bill need to be charged before claim is valid, and some finer details.
• Most importantly, declare as much as you can any health issues when applying for insurance. Insurance payout may be voided if there are discrepancies. Then all of those premiums you’ve been paying will go down the drain.

Manulife Q1 Claims statistics

Download here.

In order to recover his $40,000, DWS China Equity Fund has to yield 67% to bring up his $60,000 balance to $100,000.

If Ali adds $50,000 to his investment, his new balance will $110,000. His total invested amount is now $150,000. Still $40,000 short, but mathematics later reveal that DWS China Equity Fund has only need to yield 37% to gain his $40,000!

Would it be easier to yield 67% or 37%? The answer is obvious. What if instead of adding $50,000, he adds $100,000 to his current balance instead?

The DWS China Equity fund would only need to yield 25%! Ali would get back his $40,000 much faster than before!

“However, we have recently seen a change in sentiment and increasing investor risk appetite, and this has benefited most equity funds and even higher-risk fixed income funds.”

There’s certainly a hint of optimism among the investors out there. Being a forward looking individual like myself, the storm will eventually subside as they always do. Unless you’re talking about the end of the world that is..

The Insider understands that Equity and Bonds generally in opposite directions to each other, like a magnet’s South pole and a North pole. The big difference is that the Equity fund is a bigger “magnet” then the Bond fund.

So we see how the Equities, a.k.a. the Stocks, have a BIG influence in how the Bond funds would react.

I took a couple of Bond Funds to compare against a popular Equity Fund, the DWS China Equity Fund in the past 6 months. Do you see the “magnetism” between them?

bonds movement against the equity fund

I don’t think anyone would like to be invested on a fund that is dropping, but channelling 20% of your investment into an Equity Fd for a small start could be rewarding in the long run.

SARS in 2003

Here’s the short of it:

• There might be short term volatility
• Unlikely to be a major impact on the share market
• SARS didn’t really eventuate, economic impact was modest although it caused some volatity in the market

What should you do now?

MohdKhair.com feels that it may not be a good idea to get aggressive on your investment now, but being 100% in conservative funds may cause you to lose out on strong gains when global market eventually recovers. It usually comes quicker than we can react.

An Insider understands that stocks movement is the first indicator of  the direction of economy. In the process, it also dictates the fall of  the property market as we are experiencing right now.

Stocks trend first indicator of the economy (source).

Unit trust investors have seen an average spike of 30% return back then when the world recovers from the Asian Financial crisis. Though no-one truly knows when will be the start of the recovery until it is too late, we have seen a sustained growth over 6-8 months after the Asian Financial Crisis was over.

Question is, will you be one of them who will catch the wave?