HEADLINES [click on headline to view story]:

Family Money

Personal Directions

The Doctor's Consultation by Dr. Iain Corness

Agony Column

Camera Class by Snapshot

Dr Byte's Computer Conundrums

Family Money: Endowment Policies - Part 1

What’s The Basic Idea Behind Endowment Policies?

By Leslie Wright,
Managing director of Westminster Portfolio Services (Thailand) Ltd.

Most UK residents or ex-residents are familiar with the concept of the endowment policy. Basically longer-term savings plans, endowment policies are sold in conjunction with an interest-only mortgage, as a low-risk route to growth that will pay off the capital element of the loan at the end of its term (usually 25 years). They are also available for more general savings purposes – school fees, for example – in the shape of fixed-term savings plans, typically running for 10 years.

The policy itself is a savings vehicle or wrapper. The monthly premium covers an element of life insurance, which will pay out the target maturity value if you die before the end of the term. The rest of the premium is generally channelled into your choice of a range of underlying investments, which may be structured as unit-linked or with-profits funds.

Unit-linked funds provide direct exposure to the stock market, and their value is directly related to those of the assets they hold. Needless to say, the disastrous performance of the stock market over the past three years has ensured that policy holders investing in these funds have suffered badly. One survey, which looked at the performance of an annual premium of ฃ500 invested by a 30-year old male, showed that over a 10-year period to 1 March 2000 (and a total investment of ฃ5,000 during that time) the average maturity value from a unit-linked endowment was ฃ8,454. Over the 10 years to 1 March 2003, that average had fallen by more than 40%, to (ฃ4, 817).

However, until the early 1990s, when life companies started to broaden the choice available by introducing unit-linked offerings, the basis of most endowment policies was with-profits investment, promoted as a far less risky way of gaining some exposure to the equity markets.

With-Profits
Problems

With-profits funds work by investing in a mix of assets, including bonds, gilts and property, as well as equities. The ups and downs of the market are ‘smoothed’ by holding back some of the profits in those years when the market performs strongly, and using them to bolster payouts in less prosperous years.

With-profits, like unitised funds, have been hit by stock market volatility, but the mix of assets they hold and the smoothing effect means that the impact has been less pronounced. That same survey shows that the average performance of a low-cost with-profits endowment over 10 years to 2003 was ฃ6,544.

Some returns are paid out each year, and those cannot be taken away: the rest is paid out on maturity, as a terminal bonus. But annual bonuses have fallen throughout the 1990s, in the face of falling inflation and interest rates, with particularly severe cuts of up to 55% reduction from one life company over the past year. Terminal bonuses, which used to account for 60-70% of the total policy value, have recently dwindled to almost nothing, with drastic effects on final payouts.

And as another recent survey shows, falls in with-profits endowment maturity values are gathering pace. On 1 April 2003, a 29-year old non-smoking male, paying ฃ20 a month over 25 years, would have received a final payout averaging 19% less than if it had matured on the same date in 2002. That 2002 value was down 9% on the equivalent for 2001, which in turn was only 6% down on 2000. A similar trend is evident for 10-year polices.

Worse still, with-profits funds have the right to apply a ‘market value adjustment’ (MVA) in the event of a severe fall in the market, or a rush to cash-in policies. The MVA amounts to a penalty for policy holders who cash in their holdings, on the grounds that they will deplete the fund for those remaining. The same survey found that of 26 life companies who responded, 14 had applied MVAs since August last year, imposing penalties of up to 30% entirely at the discretion of the company.

The Consumers’ Association publication “Which?” magazine emphasises the problem of transparency in its damning February 2002 report on with-profits funds. It points out that insurance companies don’t have to disclose crucial information such as underlying charges, actual investment performance, or why payments made to policyholders may differ from real investment returns. “There is no clear link between the amount of annual bonus you receive and the fund’s actual return. Policyholders, therefore, have no way to judge how well their insurance company is managing the fund, or work out whether they’re getting a good deal,” says the report.

Clearly, the scale of cuts and restrictions imposed on with-profits endowments recently suggests that all is not well with many insurance companies - yet the complexities of with-profits funds, and the opacity surrounding them, means that consumers are not provided with comprehensive explanations. Given the supposed benefits of the smoothing process as a way of protecting against hard times, it is difficult for angry, out-of-pocket investors who thought they were entering into a low-risk contract to understand why the insurance firms got themselves into this position.

What Went Wrong?

In the early 1980s when endowment policies were at the height of their popularity, inflation was booming, interest rates were high and tax relief was available on the premiums paid. Prospects were sufficiently strong for annual growth of 8~12% to be assumed and achieved, and for investors to take out their policies in the expectation that they would not only achieve their target sum but be able to pocket a handy surplus as well.

But tax relief was abolished years ago, investment growth has been hit by steadily declining interest and inflation rates, and the forecasts made so optimistically through the 1980s and early 1990s are no longer viable. Growth rates of 4~6% are now quoted by insurance companies as an optimistic guide for the future for endowment investors - leaving many who took out their policies in the late 1980s or early 1990s with a large shortfall to make up.

Despite these long-term economic changes, fierce competition through the 1990s drove the life companies to continue to pay out bonuses too generous for the state of their financial reserves. As a consequence, they now find themselves in difficulty - trying to shore up their finances by switching out of equities and into fixed-interest holdings.

(To be continued next week)

Personal Directions: Where there’s a will there’s a way

By Christina Dodd,
founder and managing director of Asia Training Associates

Remember when you were young and growing up your mother or father would always come up with some saying to spur you on or to teach you what was right and what was wrong, or the difference between bad and good? One of my mother’s favorites was, “There’s no such word as can’t in the dictionary!” I can still hear her voice to this day saying this at times to me during my childhood and later on in life. I am sure that it helped me a great deal in the way I think and I behave today, indeed in helping me know who I am.

Words can be extremely powerful. They have an almost magical quality to them and a limitless depth to their strength and capability to inspire and motivate. But I wonder if we really grasp this as we use words in our everyday lives. Do we fully realize the consequences of the words we speak and the way in which we say them?

Another phrase my mother would say to me is, “Where there’s a will, there’s a way”. She was a great positive thinker, my mum, now that I look back and see her and understand that she really had to think this way and behave in this way to bring us up in those days. Words such as these most likely helped her to simply “get on with it” and to do the things she had to do to feed us and clothe us, get us through school and into adult life when we could finally take care of ourselves.

Let’s take a look at this phrase, where there’s a will there’s a way. When you first say it, do you completely understand it, or are you just uttering words because you have been asked to? Do you totally come into tune with their meaning? Those of us who have perhaps had to fight for what we have or fight for what we want to be or do in life, will immediately recognize the depth of these words and their immense value.

I know from my own experiences that this statement has so much truth in it that it is definitely overpowering. I can recall numerous incidents in my life where I have made it and gotten through all kinds of circumstances and incredible obstacles purely because of my “will”, and because my “will” was determined and focused, I was able to draw on the resources and capabilities within myself to achieve what I wanted to achieve. From small tasks to much larger ones, if you have a will to complete them, you will complete them. You will find a way!

Sometimes I wonder whether children growing up today have the opportunity to hear such words as these spoken in the home by their mothers and fathers. In certain places and societies no doubt they do. But I fear the majority of children in this world would have no such positive warmth and communication come their way. Education, in these terms, is far more essential to life than any other. I find the attitudes and behavior of children and the youth of today in desperate need of attention. This is at all levels of schooling right from the very start.

The ultimate responsibility lies with parents and families as to how their children are “educated”. But it also lies with the education system as well. I believe that it is the duty of educators to provide an additional dimension to learning and that it should take the form of a “positive learning approach” to life. In every aspect of kindergarten, primary school, high school, college and university there should be more emphasis on personal development and human achievement – the possibilities within each individual to succeed. To my mind we could do little harm in providing such opportunity based on the serious lack of it that exists in a lot of families today.

You know, and I know the power that positive thinking and positive speech can have. Why do we have to only realize this as adults? If we can learn so many details of history and understand the complexities of physics at school, why can’t we learn about the benefit and value of positive behavior and thinking as well? Wouldn’t it be a great leap forward and an add-on to the other forms of education we receive, helping us to enter adult life and the corporate world in a much more prepared way?

The reason why this whole subject is so important is that it is so easy to feel defeated. Our nature is such that we think negative before we think positive and because of this, it is that bit harder to fight back. When people retort that your idea, for example, which you think is good, is ridiculous and has no possibility of getting off the ground, you are more inclined to give up than to continue and fight for it. Most people give up upon hearing a negative response or discouragement. Both the giver and receiver of “words” need to understand their power and potential.

Let me just point out at this stage that I am not advocating that “positive thinking” makes life easy, not at all. But it will get help you through life and all its struggles by overcoming adversity, and if applied in the right way, help you achieve a meaningful, happy and rewarding life. Nothing is ever easy – it is all totally up to us – and that is why you have to take on the world everyday with a positive outlook. The consequences of “positive words” are important to life and this needs to be conveyed (at their level and not lectured) to the young people of today as a matter of necessity and of urgency.

If you’d like more details on our programs for your professional or personal needs, please contact me at Christina .dodd@asiat rainingas sociates.com and until next time – have a great week!

The Doctor's Consultation: ‘Chemo’ and breast cancer survival and other women’s issues

by Dr. Iain Corness

I came across an article the other day referring to breast cancer survival rates and compared two similar kinds of cytotoxic drugs. The end result of the study was that Drug A was more effective than Drug B, but had significantly more side effects as well. Reading further, it was reported that Drug B extended life by 13 point something months, while Drug A had the sufferer living 15 point something months, however the downside to these two extra months included mouth ulcers, infections and low blood counts. However, the researchers came to the conclusion that Drug A was best.

I ask you, best for who? In my book, it wasn’t the patient! Yes, it’s my old hobby horse - the Quality of Life. What is the point of saying you can have Drug A, to give you two extra months of misery. One thing is for sure, I will put my last baht on the fact that none of the research team took either drug! At least the famous medico John Hunter gave himself syphilis to try to find the cure. You won’t find that kind of dedication today, even though some people would call it foolishness.

We must never forget that in all our research we are not dealing here with breast cancers - we are dealing with women that have breast cancer! We, the medical profession, must treat the whole person, not the disease.

Now I mentioned breast cancer for a couple of reasons. One is the fact that screening tests can be done, and I would suggest that all you ladies over the age of 40 (or over the age of 30 if your mother or a maternal aunt died of breast cancer) should consider annual mammograms in addition to your monthly Breast Self Examination.

The second reason I mentioned breast cancer is that it is not, as many western women think, the greatest killer of women. For many 10 year groups of women, heart disease is the greatest killer. Yes, heart disease, the greatest killer of men is now firmly entrenched in women’s medicine.

I’m sorry to say this, but along with your quest for equality and work opportunities, you also picked up male disease patterns as well. Heart disease in particular. One of the reasons is of course the western diet high in animal fats, well documented as a precursor of heart disease. Cholesterol deposits in the coronary arteries, coronary artery bypass grafts (known in the medical trade as CABG’s, or ‘cabbages’) are all now women’s diseases too.

So what can you do about this? The simple answer is to take a leaf out of the Eastern ladies’ handbooks on living. An Asian diet, which is high in vegetable content and low in animal fats is a good start. More of a ‘jai yen yen’ approach to life’s problems also helps. Use the ‘family’ network to get problems solved, and in fact the family approach to living, with each member helping when necessary, is another good example from the Asian book of life.

In the meantime, you should get your cholesterol measured each year too, not just “him downstairs”. Correct it as needed. Get your blood pressure checked and correct it as needed. Make sure your weight is within healthy limits too. And finally, all things in moderation applies to the women folk as well.

Agony Column

Camera Class: What makes a‘good’ photograph?s

by Harry Flashman

The other day I had the opportunity to go through some assorted photographs from the Jesters Children’s Fair shot by two photographers. One was an amateur, but very keen photographer, while the other was a professional having been hired for the day. Both were intent on bringing the event to life on film. And before you try and guess the outcome, both were successful, but in different ways.

The principal difference came in the amount of film used by the two photographers. This was an all-day event, so obviously there would be quite a few rolls taken, but the number of rolls shot was interesting. Most people would imagine that the pro would take more film, but this was not the case here. There are a couple of reasons for this, leaving aside whether the pro had Scottish or Jewish heritage! The pro had done this fair in previous years, so knew what he was going to shoot, before he even got there. The amateur, on the other hand, was not forearmed to the same extent. The pro also knew his equipment in its totality, so technical details were never going to be a hindrance to photo taking. The amateur was not as au fait with his gear, so there was always that element of uncertainty, hence the need to shoot more images, just to be sure.

Being a children’s fair, most of the images shot were of children, sometimes the interaction between children or children and adults, but the subject matter was similar. However, there were some differences in the way the subjects were shot. The pro used a long lens and featured kid’s faces, rather than the entire child. Shooting with the aperture wide open, he achieved a very short depth of field, relegating the always cluttered fair background into hazy swirls that did not detract at all from the subject.

The amateur, on the other hand, also managed to come home with some good kid’s pix, but tended to have the complete child in the frame, and since he did not have the length of lens used by the pro, could not get the backgrounds out of focus as much as the pro.

Another feature difference was the position from which the shots were taken, with the pro getting down on one knee to get level with the child almost every shot, whereas the amateur did not do this as often, making the child look small as the camera looked down on the subject.

So what do you have to do to get a ‘good’ photo from a fair? The first rule is to shoot more film. It makes no difference whether you are only getting one good image in twelve - if you only take four photographs you are not going to get the image you wanted. Even the pros only expect one in four or one in six, so don’t worry!

The second rule is to use a long lens (at least 135 mm, but around 200-250 is better). With longer lenses you have to shoot at a faster shutter speed (1/250th would be the norm here) and this will mean the aperture has to be opened right up, and I would suggest that f5.6 or larger aperture be aimed for, even if this means shooting at 1/500th or 1/1000. The long lens also allows you to be far enough away from the subjects that they are not aware of you taking their photograph, always great for super candid facial expressions.

The third rule is to get down to the level of your subject. Little people are closer to the ground than we are, so get down with them. (However, with stilt walkers, still get down low and shoot upwards with a wide lens to magnify their height! See, there are no ‘rules’ that can’t be broken.)

The fourth rule is just to know your equipment. Practice with it, know what it can do and its limitations, and shoot within those parameters. Happy snapping!

Dr Byte's Computer Conundrums

I get many emails and telephone requests for help with viruses, and increasingly, related to Spam or Junk email. So this issue is going to be devoted to a look at Spam and what is around now to help take on this new enemy. I have to admit that for a long time I have been using the Grin and Bear-It method of using my delete button, but at last I had a little time to research and test a couple of really interesting applications and best of all, they are free (at the time of typing).

Did you know that France banned spam? Did you even notice this?

Neither did anyone else. For one thing, the French have no teeth in their ban and for another who pays attention to French laws anyhow? Yahoo, after all, still has Nazi stuff on their auction site, whatever sensitive French judges feel about it.

And while there is no Nazi problem around here, there is a spam problem. You can expect to see, if you haven’t already been at the cutting edge of the notices, a new generation of anti-spam tools is on the way. They will advertise as simple, transparent, built-in, all the buzzwords that people love if they are seeking a magic bullet against a spreading epidemic.

Already the anti-virus crowd is, let’s be honest here, folks, spamming us to buy their anti-spamming programs. McAfee, Norton and the others are showing us how easy it is to spam, and trying to sell us their easy solutions to stop them.

If I sound bitter about it, you haven’t heard anything yet.

Their stuff isn’t worth the money!

Free software will do as well as the big boys without the overhead of software bloat or the noise pollution of the self-aggrandising advertisements. There. Is that bitter enough now?

Now, here are some transparent, easy, free tools that can help you catch and stomp spam. They work as well as the stuff from the big boys, and employ the new, silver-bullet techniques.

Spamihilator is as easy as software gets. The hardest thing about this software is actually getting it. The home page is in German and you have to muddle through the menus to download. Then, you finally get a program that’s entirely in English. That’s the price of software from the open source movement, where teams of really kind and entirely altruistic folks work on helpful computer projects that can serve us all.

Spamihilator sits between your email program and you, filtering out the garbage automagically and handing you the pearls - real email, separated from spam. I consider it a work in progress (actually, by definition, all open source is work in progress). The only problem with Spamihilator is that it uses its own judgment on what is spam and what isn’t, and doesn’t take your personal input.

The software works with all email programs, Outlook, Eudora, Phoenix, Netscape, whatever. It looks at POP3 email as you download it from your Internet provider. (If you use webmail such as Hotmail, you’ll have to trust the site to filter for you.) The good new is that Spamihilator did not remove a single, real email from my inbox. That is the toughest part of spam-catching. Throwing away spam is fairly easy, but if even one, legitimate email is trashed, it could be injurious to you. Spamihilator got about 80% of my spam during a week of testing. That’s a very good record because I get several hundred a week now, on several email accounts.

It is helpful, but it has to get much better in coming months before I give it 4 stars. I hope it gains the ability to learn from you what is spam. That is, you must have the power to point to spam and instruct the program, “That’s spam, don’t give it to me again.’’

SpamPal does that and gets my 5 stars

This program is about the same size as Spamihilator (less than 400KB to download) and works just about the same. You let it look at your incoming mail, and it separates the chaff from the wheat and stores the chaff somewhere where the sun doesn’t often shine. You can go to the selected folder and look at the chaff when you want, and when you have time.

This is a key feature of SpamPal, which seeks to learn from the omniscient one, you. Only you know for sure what is spam and what isn’t. Items like mass-mailed newsletters, for example, are frequently filtered as spam, and you may have to talk sternly to SpamPal to allow them through.

You do it this way

If you see a spam that isn’t spam in the SpamPal chaff folder, simply point to it and tell SpamPal to “whitelist’’ it. Whitelisting is the opposite of blacklisting. If you tell SpamPal that a weekly newsletter on furniture marketing isn’t spam, then SpamPal will, from that moment on, allow that newsletter through to you.

And SpamPal has blacklisting. If a spam mailout tries to masquerade as useful information from an honest Internet site, point to it and put it on the blacklist. From then on, mail from that source will be rated as spam.

The program works on a different basis from Spamihilator, and before I get email about it, sure, you can run both programs if you want; it might not be a bad idea.

Spamihilator actually ranks and filters email but SpamPal brutally tracks it with a black-and-white rule: If it comes from a site blacklisted by a volunteer group known as DNSBL, it will be shunted off as spam, else it will be allowed.

By the way, DNSBL blacklists specific Internet sites used by spammers, or which refuse to close down backdoors exploited by spammers.

Last of all there is Spam CSI. This is complex, obsessive piece of software which I thought should only appeal to a few geeks and how wrong I was. The program has turned into a bestseller, but only gets my 3.5 Star award. It’s yet another pun if you didn’t realise it. “CSI’’ has become a popular term because of a successful TV show, referring to “crime scene investigator,’’ or police forensic specialists.

In that sense, Spam CSI is a well named, multi-faceted and multi-talented program that reports to the scene of the spam, investigates the e-violation, tries to track the criminal responsible for interrupting your day and, ultimately, make him pay. (I say “him’’ in an entirely sexist, accusatory manner but without fear of contradiction. “She’’ doesn’t spam, now, does she?)

I confess that I deal with spam the old-fashioned way. I grit my teeth and hit “Delete’’ when I see the subject line in my mailbox (usually) or when I realise it’s spam when the spammer has tricked me into opening it (occasionally). So when I tried Spam CSI, I was surprised with the well thought-out program. However, there are some shortcomings which will either distract you and annoy as they did me, or you may either not worry about the little glitches. I honestly didn’t think that many people would use it but I got it wrong. A lot of people are using Spam CSI.

In the process, they are learning a lot about spam. That’s a good thing. Knowing your enemy is a prime requisite for wars since Sun Tzu laid down the rules defining the Art of War.

The author of Spam CSI has built a remarkable mail filtering system, and the idea is that you run all your email through the program. Like the other two programs, it handles mail destined for just about any email software.

Spam CSI rates each message you receive and is reasonably good at weeding out the spam from the real stuff. Then it lets you launch a forensic investigation of each spam, in the hope you can track it to its source. Your real email goes through to the reply software as usual. You don’t have to go that far, but Spam CSI, at least theoretically, gives you great e-power, even the power to shut down a spamming operation, if not an actual spamming person.

Basically you get your mail from a regular Internet provider, and not off the web like Hotmail. Spam CSI will read incoming mail in virtually any email program - Outlook, Eudora, Pegasus and so on. It parses and lists each message, and assigns a ranking of 1-1,000 where “1'’ is spam, definitely, and “999'’ is good, old, wanted email.

I ran several hundred incoming messages (I get a lot of spam) through Spam CSI and while I love the concept and the thinking behind Spam CSI, I was irritated with having to wait till the program finished before I could verify the auto selections. I also made the bad mistake of choosing Auto Delete Denied Mail, and it did just that before I could check if something should be in the denied list. Blam and it was gone. The filter is as excellent as the time you put in to teach it what to filter.

Of course, you can simply delete blacklisted messages if you like and forget about them, but that’s no fun and with Spam CSI you have a built-in tool that can try to trace the real origin of the spam (Hint: it’s never the part of the message that says “from:’’) and find out who is responsible. The program makes it possible for the average computer user to find out where spam is coming from, and email the owner of the web site or domain involved. Most spam originates from perfectly decent and innocent Internet sites, because spammers use and abuse the sites to originate their indecent proposals (see my previous column about spam).

So when the webmaster or administration officer at, say, KSC Internet in Thailand or Moscow.com in America or Amerikanskiy.ru in Moscow gets an email from your own good self, pointing out that you are being abused by nasty email, they will shut down that spammer faster than you can reach for a beer at the bar. And that would be a good deed for the week.

I still think this is a heavy program for most people. Certainly, at seven megabytes to download, it is a big program. But if you want to learn more about the enemy, by all means get this remarkable and well documented spam hunter.

Spamihilator has a home page on the main open source web site. Remember it’s in German and there’s no future in hunting for the English documentary. Just go to download, through http://spamihilator.source forge.net

You can download Spampal from www.spampal.org. uk or their mirror site at www. spampal.us

Spam CSI is available at www.promailix.com

My thanks to Bangkok Post, ZDNet and The Australian for the above content. If you have any questions or tips that you would like to share with me, contact Dr Byte at Chiang Mai Mail.