View Single Post
Old 15-09-2018, 02:51 PM   #2269
yongsaver
Member
 
Join Date: Jun 2015
Posts: 308
Good that you consider everything.

Interest rate is expected to trend up for the next few years with expected 1 rate hike this yr and 2-3 next yr. This will affect bond prices and when rates goes up, chances of it getting called will also decrease as their cost of borrowing will be higher if the company/Govt called it and borrow from market.

So just need to plan for alternative cash holding, if not you might be hit with drop in bond price when you need cash (eg property investment, emergency etc)
agree. one should not dump everything into just one instrument, it should form part of the overall portfolio. my portfolio used to be overweighted in cash till couple of weeks ago when i kicked myself for overly kiasi...

last time
40% - real estate
60% - cash

my plan:
40% - real estate
20% cash
40% - Bonds
less than 1% in stocks..kiasi...

the interesting thing about SG IR is that it tracks the USD/SGD exchange rate...so there are ups and downs eventhough the general expectation of ir is up. i suspect that is partly the reason why the net effect on retail FD rates is very slow and we in this thread kpkb why retail FD rates move up so slow....worse, some even move down when u thought its going up...e.g. ICBC last month offering 1.85% FD rate for 1 year, this month went down to 1.65%. so IR movement is not so straightforward..and a perpetual bond with low coupon rate may still have a chance to be called.
yongsaver is offline   Reply With Quote