BBCWatcher
Arch-Supremacy Member
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I’m going to answer that:
1. You’re not getting a better interest rate that way, or at least not materially better.
2. Your U.S. dollars are stranded. Eventually (soon?) you’ll want to spend them, and any/all the banks in Singapore will charge you fees to liberate your U.S. dollars. Schwab hands you the world’s best debit/ATM card to spend your U.S. dollars (if you’re not living in Malaysia or Thailand; otherwise Schwab is still lower cost when it comes time to spend).
3. A much more limited choice of maturities. U.S. Treasuries offer tenors ranging from 4 weeks to 30 years.
4. No availability of U.S. dollar inflation-linked yields. (U.S. Treasuries offer that, in TIPS.)
5. You don’t have early access to funds if you want them, at least not without a guaranteed penalty. U.S. Treasuries have an active secondary market, so you can unwind part or all of your ladder any time you wish, and roughly half the time at a profit rather than a penalty.
6. Less safety. A bank in Singapore could have problems, plus you’re exposed to U.S. dollar risks (a smaller risk). You only add risk by placing U.S. dollars in an alien place (a bank in Singapore), never reduce it.
Why NOT U.S. Treasuries? I’m genuinely puzzled why you seem resistant to that idea. You’ve got a 6 figure sum of U.S. dollars, and you said you want capital preservation. If the interest rates are good — and they are — then U.S. Treasuries are THE answer to that question. You get the absolute highest level of U.S. dollar safety, decent yields, and low costs. And, with funds at Schwab (or Interactive Brokers for that matter), you’ve then got a few other interesting and appropriate choices if you want to assume slightly more risk for some or all of your funds to try to get some higher yields. For example, a low cost U.S. municipal bond fund might be interesting if the yields are attractive enough. Or a low cost U.S. investment grade corporate bond fund, which is still OK for non-U.S. persons in terms of tax treatment (as I understand it). Or U.S. Certificate of Deposits, which I think Schwab can place for you, as I recall. U.S. CDs are U.S. federal government insured up to US$250,000 per bank, so the deposit insurance is great.
