Saving and Investing My Money Archives

New Tranche of NTUC Gro Capital Ease at 1.96% p.a.

September 28, 2020 by Kyith 3 Comments

NTUC has decided to come up with another short-term low-risk savings tranche of the popular Gro Capital Ease.

The Gro Capital tranche is a short-term insurance plan that is ideal for you if you have the following specific needs:

Money meant for your child’s university or tertiary education in the next few years
Money means for renovation, wedding banquet

Because the money will be locked up for a short period, these kinds of insurance endowment plans are not ideal if you need the money asap. For example, you wish to take advantage of the market downturn and invest at a low price. This is also not ideal if your relative needed help in the next 2 weeks, you really want to help, but with this, you might not be able to liquidate the money fast enough.

So do think about your needs.

Short-term insurance endowment plans are also ideal if you do not know what to do with your money and would like to earn a higher rate.

The NTUC Gro Capital is a 3-year endowment plan that will deliver a guaranteed yield at maturity of 1.96% p.a.¹

All you need to do is commit a single premium (a one-time lump-sum payment), and at the end of the 3 years, you will receive a guaranteed maturity benefit of 106%²of the single premium.

Here are some things to take note about Gro Capital Ease:

Protection for death & total and permanent disability (TPD before age 70)

Should you die or become totally and permanently disabled within one year from the cover start date of the policy, Gro Capital Ease will pay out the net single premium. Otherwise, it will pay out 105% of the net single premium if you are in your second year of the policy term.

Application can be done online, starting from just $5,000

Enjoy a hassle-free application from the comforts of your home when you apply online.

What’s more, the minimum single premium for Gro Capital Ease starts from just $5,000 per online transaction which can be paid via eNets, PayNow QR or Supplementary Retirement Scheme (SRS) funds.

However, if you like, you can still consult a financial advisor representative to assist with your application, which can be paid via cash or SRS funds. The minimum single premium for this option starts from $20,000.

Guaranteed Acceptance

But that’s not all! With no medical underwriting required, you can be assured of guaranteed acceptance.

If you are interested, do hurry and sign up here as Gro Capital Ease is only available on a first-come, first-served basis for a limited period.

Notes:

The guaranteed yield at maturity of 1.96% p.a. will be paid out at the end of the 3-year policy term, provided that the insured survives at the end of the policy term, with no policy alterations or claims made during the entire policy term.
The guaranteed maturity benefit of 106% (rounded to the nearest 2 decimal places) of the single premium is based on the guaranteed yield at maturity of 1.96 p.a.

This article is only for information. It reflects my opinion and not that of NTUC Income Insurance Co-operative Limited (“Income”). It is not financial advice and has no regard for any person’s investment and financial needs. Please seek advice from a qualified advisor for a suitable product. The past performance of a product is not indicative of its future performance. Income is not responsible to any person for this article including any unauthorized use of information. This is not an offer, recommendation, or solicitation to buy or sell any products.

Precise terms, conditions, and exclusions of products are in the policy contracts.

Protected up to specified limits by SDIC (applicable for Income products that fall under the Policy Owners’ Protection Scheme).

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Information is correct as at 28 Sep 2020

Singapore Savings Bonds SSB October 2020 Issue Yields 0.90% for 10 Year and 0.26% for 1 Year

September 3, 2020 by Kyith 3 Comments

Here is a safe way to save your money that you have no idea when you will need to use it, or your emergency fund.

The 10-yr and 1-yr Singapore Savings Bonds Rate since the first issue in Oct 2015

The August 2020’s SSB bonds yield an interest rate of 0.90%/yr for the next 10 years. You can apply through ATM or Internet Banking via the three banks (UOB,OCBC, DBS)

However, if you only hold the SSB bonds for 1 year, with 2 semi-annual payments, your interest rate is 0.26%/yr.

$10,000 will grow to $10,914 in 10 years.

This bond is backed by the Singapore Government and its available to Singaporeans.

A single person can own not more than SG$200,000 worth of Singapore Savings Bonds. You can also use your Supplementary Retirement Scheme (SRS) account to purchase.

You can find out more information about the SSB here.

Note that every month, there will be a new issue you can subscribe to via ATM. The 1 to 10-year yield you will get will differ from this month’s ladder as shown above.

Last month’s bond yields 0.93%/yr for 10 years and 0.27%/yr for 1 year.

Here is the current historical SSB 10 Year Yield Curve with the 1 Year Yield Curve since Oct 2015 when SSB was started (Click on the chart, move over the line to see the actual yield for that month):

The Application and Redemption Schedule

You will apply for the bonds through the month. At the end of the month, you will know how much of the bond you applied was successful.

Here is the schedule for application and redemption if you wish to sell:

You have 02 to about 25th of the month (technically the 4th day from the last working day of the month) to apply or decide to redeem the SSB that you wish to redeem.

Your bond will be in your CDP on the 1st of the next month. You will see your cash in your bank account linked to your CDP account on the 1st of next month.

How does the Singapore Savings Bonds Compare versus SGS Bonds versus Singapore Treasury Bills?

Singapore savings bonds is like a “unit trust” or a “fund” of SGS Bonds.

But what is the difference between you buying SGS Bonds and its sister the T-Bills directly?

Both the SGS Bonds and T-Bills are also issued by the Government and are AAA rated.

Here is an MAS detailed comparison of the three:

SGS Bonds versus Singapore T-bills versus Singapore Savings Bonds — Click to see bigger comparison table

What is this Singapore Savings Bonds? Read my past write-ups:

Past Issues of SSB and their Rates:

Do Like Me on Facebook. I share some tidbits that is not on the blog post there often. You can also choose to subscribe to my content via email below.

I break down my resources according to these topics:

Building Your Wealth Foundation – If you know and apply these simple financial concepts, your long term wealth should be pretty well managed. Find out what they are
Active Investing – For the active stock investors. My deeper thoughts from my stock investing experience
Learning about REITs – My Free “Course” on REIT Investing for Beginners and Seasoned Investors
Dividend Stock Tracker – Track all the common 4-10% yielding dividend stocks in SG
Free Stock Portfolio Tracking Google Sheets that many love
Retirement Planning, Financial Independence and Spending down money – My deep dive into how much you need to achieve these, and the different ways you can be financially free
Providend – Where I work doing research. Fee-Only Advisory. No Commissions. Financial Independence Advisers and Retirement Specialists. No charge for the first meeting to understand how it works

Looks like Stashaway Simple’s Yield is Really Virtual

August 27, 2020 by Kyith 3 Comments

This morning, some of my friends received a mailer from Stashaway.

In the email, Stashaway updated that they will lower the projected interest rate for its cash management portfolio Stashaway Simple, from 1.9% to 1.4%. This will take effect from September 1 onwards.

The reason given by the CIO is that “to stimulate the economy, global central banks keep lowering interest rates. Although this is great news for people looking to borrow money, the lower interest rates also make it more difficult to earn rates on cash.”

So they analyze and believe interest rates won’t go back up for the foreseeable future.

Stashaway Simple is made up of two LionGlobal money market unit trust:

LionGlobal SGD Money Market Fund
LionGlobal SGD Enhanced Liquidity Fund

Stashaway also said that these two funds have not been performing well a few months ago but StashAway had added a rebate to bridge the difference between the projected 1.9% rate and the actual rate.

My friend zzXiaoboizz has written his thoughts about this reduction. In his piece, he goes a bit deeper on why he was not surprised these two funds were not able to endure and give 1.9%.

Cash Solutions like Stashaway Simple are Not Immune to Market Interest Rate Forces

There is not a lot that I would add but maybe I will talk about the Enhanced Liquidity Fund later.

I told those folks around me to be realistic about your returns from short term safe instruments.

A lot of my friends find these pools of money to be refreshing. However, beneath a very nice sounding wrapper, the underlying are unit trusts that have existed for a long time.

These unit trusts, or money market funds, typically invest in fixed deposits or equivalents. Some funds, such as the LionGlobal SGD Enhanced Liquidity Fund push their holds to bonds/debt instruments that will mature within the next 12 months.

These bonds are more risky and because they are more risky, they may give a higher return to compensate for the risk.

If you find that the interest rate of all your fixed deposits are collapsing, then it is a matter of time that the returns of these money market funds move closer towards your fixed deposit returns.

The only way to get higher returns

Go further longer in duration to capture the term premium
Go further out the credit quality to capture the credit premium

Basically premium is a nice sounding word for risk.

The High-Interest Projection Have Served its Main Purpose

Here’s the thing: Everyone in the industry knows the way to attract money to your company is to offer attractive savings interest rates.

The majority of the people are not investors, they are savers and on the lookout for safe products with attractive rates. This is how Yu-Er-Bao grew in China. This is why when the government structure the digital license, they did it in such a way that the future digital banks cannot compete through the attractive interest rate way (correct me if I am wrong).

If you advertise you have a savings solution that is cash deposit like that give near 2%, you are going to attract a lot of money.

You just have to check out Endowus and Stashaway’s websites. The hottest, most visible areas of both their sites are reserved for their cash solutions. For the rest such as MoneyOwl, FSMOne it is buried deeper.

If they bring you in with the cash offer, then they can slowly massage you to invest with them.

The cash is more of a lead generation.

Stashaway came up with a very sophisticated system that is able to know when the economic regime is going to shift, compute the correlation of different asset classes, sectors, then dynamically shift the portfolio allocation.

What are the chances they don’t know a 1.9% return sometimes is unsustainable? If it is unsustainable, why not just… maybe give a lower return?

They just got another round of funding, so by right they should be in a more comfortable position to continue rebating the difference in performance.

I think they have gotten all of you in. That is done already and no need to keep sustaining this.

Some Notes on the LionGlobal SGD Enhanced Liquidity Fund

This fund is damn hot.

You can find it in FSM’s CashSweep, Both of Endowus Cash Solutions, Stashaway Simple.

If Stashaway said the performance have been poor then I think all the solutions will be impacted.

The fund is rather new (incepted in November 2018). The fund seeks to preserve capital, enhance income and provide a high level of liquidity by investing in a broadly diversified portfolio of high-quality debt instruments.

The portfolio can invest in various debt instruments, of different tenures but seeks to maintain a weighted average portfolio credit rating of A- and an average duration of around 12 months.

The fund currently has a management fee of 0.35% a year. The year to date return of the fund in 2020 is 1.06%.

Since inception, the fund has delivered a return of 1.6% per annum. This contrasts with the 1.8% return per annum of its benchmark, which is the 3-month MAS bill.

The fund’s holdings is not fixed deposits or equivalent securities. The holdings are higher credit rating bonds that are maturing soon.

Here are the fund’s top 10 holds:

The LionGlobal SGD Enhanced Liquidity Fund can enhance the return over the traditional savings deposit by:

Going further out the risk spectrum by holding corporate bonds of companies they deemed to have at least credit rating of A-. While you may find that a bond rated with rating of A- is high, there are bonds with higher credit rating of AA and AAA.
Flirting with bonds that are longer in maturity to capture the term premium

While we think that over the long term, the fund should yield positive returns, because the majority of their holdings are corporate bonds, in the short term, there is a likelihood that the value of your investment may be negative.

The Bloomberg chart above provides a snapshot of the total return for 5 of the top 10 holdings during the period where the bond market experienced greater volatility.

On a short-term basis, some of the bonds suffer losses (refer to the column labeled Total Return).

If we extend the timeline from the start of 2020 to the 4^th of Aug 2020, you will observe that majority of the bonds recovered in terms of total return.

The manager of LionGlobal SGD Enhanced Liquidity Fund needs to manage these short-term fluctuations well.

This does mean that there exists the possibility that the value of the fund can dip into the negative range.

The returns chart for the fund looks very smoothed and you do not see these price volatility. I think the reason is that the manager do not mark-to-market the value of the asset.

Conclusion

In the spectrum of risk versus returns, stuff like this would lean closer to the low-risk side. I am not going to be that idiot who dug up some data and then proceed to tell you not to put money into it.

But I do find that our brain tends to go into that lazy mode that this should be relatively safe. Just know that these are safe but not going to be the super safe sort.

In the grand scheme of things, if they fund can still get 1.4% a year, it is better than decent. However, based on zzXiaoboizz thinking, even this would prove to be a challenge.

If you ask me, I will tell you I dunno how the rates will go. The way to use these cash account is…. to use it for the real purpose: To have a certain pool of money for liquidity purpose.

Take advantage that these money market funds, through their economies of scale, can get better interest rates that you could not.

Expect the rates to fluctuate.

Don’t treat these cash account as your main wealth-building machine. View the cash portion in totality with your higher-risk investments. Manage your cash, bonds, equity allocation according to your duration and risk tolerance.

If you follow zzXiaoboizz que, maybe even for the most risk averse one, deploying 10-15% of your portfolio in equities, might yield a better return while keeping the volatility of your portfolio low.

Do Like Me on Facebook. I share some tidbits that is not on the blog post there often. You can also choose to subscribe to my content via email below.

I break down my resources according to these topics:

Building Your Wealth Foundation – If you know and apply these simple financial concepts, your long term wealth should be pretty well managed. Find out what they are
Active Investing – For the active stock investors. My deeper thoughts from my stock investing experience
Learning about REITs – My Free “Course” on REIT Investing for Beginners and Seasoned Investors
Dividend Stock Tracker – Track all the common 4-10% yielding dividend stocks in SG
Free Stock Portfolio Tracking Google Sheets that many love
Retirement Planning, Financial Independence and Spending down money – My deep dive into how much you need to achieve these, and the different ways you can be financially free
Providend – Where I work doing research. Fee-Only Advisory. No Commissions. Financial Independence Advisers and Retirement Specialists. No charge for the first meeting to understand how it works

Singapore Savings Bonds SSB August 2020 Issue Yields 0.93% for 10 Year and 0.27% for 1 Year

July 6, 2020 by Kyith Leave a Comment

Here is a safe way to save your money that you have no idea when you will need to use it, or your emergency fund.

The August 2020’s SSB bonds yield an interest rate of 0.93%/yr for the next 10 years. You can apply through ATM or Internet Banking via the three banks (UOB,OCBC, DBS)

However, if you only hold the SSB bonds for 1 year, with 2 semi-annual payments, your interest rate is 0.27%/yr.

$10,000 will grow to $10,946 in 10 years.

This bond is backed by the Singapore Government and its available to Singaporeans.

A single person can own not more than SG$200,000 worth of Singapore Savings Bonds. You can also use your Supplementary Retirement Scheme (SRS) account to purchase.

You can find out more information about the SSB here.

Note that every month, there will be a new issue you can subscribe to via ATM. The 1 to 10-year yield you will get will differ from this month’s ladder as shown above.

Last month’s bond yields 0.80%/yr for 10 years and 0.30%/yr for 1 year.

Here is the current historical SSB 10 Year Yield Curve with the 1 Year Yield Curve since Oct 2015 when SSB was started (Click on the chart, move over the line to see the actual yield for that month):

The Application and Redemption Schedule

You will apply for the bonds through the month. At the end of the month, you will know how much of the bond you applied was successful.

Here is the schedule for application and redemption if you wish to sell:

You have 02 to about 25th of the month (technically the 4th day from the last working day of the month) to apply or decide to redeem the SSB that you wish to redeem.

Your bond will be in your CDP on the 1st of the next month. You will see your cash in your bank account linked to your CDP account on the 1st of next month.

How does the Singapore Savings Bonds Compare versus SGS Bonds versus Singapore Treasury Bills?

Singapore savings bonds is like a “unit trust” or a “fund” of SGS Bonds.

But what is the difference between you buying SGS Bonds and its sister the T-Bills directly?

Both the SGS Bonds and T-Bills are also issued by the Government and are AAA rated.

Here is an MAS detailed comparison of the three:

What is this Singapore Savings Bonds? Read my past write-ups:

Past Issues of SSB and their Rates:

Do Like Me on Facebook. I share some tidbits that is not on the blog post there often. You can also choose to subscribe to my content via email below.

I break down my resources according to these topics:

Building Your Wealth Foundation – If you know and apply these simple financial concepts, your long term wealth should be pretty well managed. Find out what they are
Active Investing – For the active stock investors. My deeper thoughts from my stock investing experience
Learning about REITs – My Free “Course” on REIT Investing for Beginners and Seasoned Investors
Dividend Stock Tracker – Track all the common 4-10% yielding dividend stocks in SG
Free Stock Portfolio Tracking Google Sheets that many love
Retirement Planning, Financial Independence and Spending down money – My deep dive into how much you need to achieve these, and the different ways you can be financially free
Providend – Where I work doing research. Fee-Only Advisory. No Commissions. Financial Independence Advisers and Retirement Specialists. No charge for the first meeting to understand how it works

The Application and Redemption Schedule

How does the Singapore Savings Bonds Compare versus SGS Bonds versus Singapore Treasury Bills?

Cash Solutions like Stashaway Simple are Not Immune to Market Interest Rate Forces

The High-Interest Projection Have Served its Main Purpose

Some Notes on the LionGlobal SGD Enhanced Liquidity Fund

Conclusion

The Application and Redemption Schedule

How does the Singapore Savings Bonds Compare versus SGS Bonds versus Singapore Treasury Bills?

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