I have already done SA shield in Jan 2022 using Nikko short term bond. At that time tbills was just paying 0.48%.He also didn't mention COY either, and I'm quite sure Dork32 is capable of posting in this forum.
I do. Maybe we evaluate the cost of bank branch queuing differently.
But it's not like that. It's not online shopping at Site A versus online shopping at Site L. The unit trust-based SA shielding method is the online shopping. You can do it from your sofa. (Well, most people can.) Buying a 6 month T-bill for SA shielding requires queuing at a bank branch. So the comparison is online shopping versus "brick and mortar" shopping. I find online shopping more convenient (less costly), so I assign some cost to the "brick and mortar" option. I also assign some cost to the risk that the SA interest rate will unpeg from its floor (rise above 4.0%) during the latter month(s) of the 6 month T-bill. Then I estimate what COY/EIR would be sufficiently attractive for me to favor T-bill-based shielding over bond unit trust-based shielding, and currently I have set those numbers to be 4.25%/4.33% based on how I feel about the net cost and risk differences. That also happens to be the equivalent of about half a month of SA interest at the floor rate (T-bill relative to unit trust).
How would you bid (COY) if you were bidding in the next 6 month T-bill auction for SA shielding purposes?
all these are one time cost. whether it is queing or taking one day leave and bus fare. i leave it to the individual whether they want to factor it in or not. this is because the amount shielded differs from person to person. i estimate that i will be shielding 300k. taking .3% on 300k for 6 mths is 450. taking 0.3% on 50k is much lower. it should up to the individual how many % is needed to recover this cost. the most important is to set the base number from which they can build fromHe also didn't mention COY either, and I'm quite sure Dork32 is capable of posting in this forum.
I do. Maybe we evaluate the cost of bank branch queuing differently.
But it's not like that. It's not online shopping at Site A versus online shopping at Site L. The unit trust-based SA shielding method is the online shopping. You can do it from your sofa. (Well, most people can.) Buying a 6 month T-bill for SA shielding requires queuing at a bank branch. So the comparison is online shopping versus "brick and mortar" shopping. I find online shopping more convenient (less costly), so I assign some cost to the "brick and mortar" option. I also assign some cost to the risk that the SA interest rate will unpeg from its floor (rise above 4.0%) during the latter month(s) of the 6 month T-bill. Then I estimate what COY/EIR would be sufficiently attractive for me to favor T-bill-based shielding over bond unit trust-based shielding, and currently I have set those numbers to be 4.25%/4.33% based on how I feel about the net cost and risk differences. That also happens to be the equivalent of about half a month of SA interest at the floor rate (T-bill relative to unit trust).
How would you bid (COY) if you were bidding in the next 6 month T-bill auction for SA shielding purposes?
you don't need permission to. dunno what's the purpose of saying this.Thank you Dork32 for finally giving me permission to set my T-bill "hurdle rate."
i just want to say this. before, we want the shielding period to be short coz the longer it is, the longer you lose your 4% interest at sa. but these days with tbills earning above 4%. there is really no hurry to get your money back to sa. in fact. it would be better leaving it in tbills.
i always say this. it is your money, no one can stop you.Thank you Dork32 for finally giving me permission to set my T-bill "hurdle rate."
But you didn't shoot anything down. You've acknowledged that there are differential costs and risks, you've acknowledged that the zero cost/zero risk hurdle rate is 4.00% EIR (which would be 3.92% COY), and you haven't offered any specific estimate for what the (higher) hurdle rate should be. You evidently won't even say what your current hurdle rate is, as is your right. Mine is currently 4.33% EIR/4.25% COY. Thanks very much; it's been a thrill.
I thought dork mentioned what is the base rate mathematically?
depends on your tax bracket
How would each tax bracket and age affect the decision?
if you are of low tax bracket or no tax bracket. the savings from tax you get might be less than the additional compounded interest u get with OA to SA transfer
Agreed. It also depends on:
For the time being, use OA for T-bill as the yield is higher than SA/RA.
Difficult to get the t bills allocation.
Why difficult?
the bank Q is crazy.
Yours is with UOB ?
