info for beginners

[Epps_Sg]

1. The CDP fee for custodising SGS is currently waived. For now I believe there are zero fees or charges for directly buying and holding SGS. (Provided it is done with cash, not through CPFIS or SRS accounts.)

2. Indeed money market funds are not backed by deposit insurance or any capital guarantee. In practice the Phillips MMF is used as a temporary place to stash cash while people buy or sell unit trusts on their platform.

The failure of Lehman Brothers in 2008 caused one major US MMF that owned its debt to "break the buck" i.e. fall below its semi-guaranteed NAV of $1, and this resulted in a "bank run". Even though it only fell to something like 97 cents on the dollar it was enough to cause the whole thing to break down and have to be liquidated. Local MMFs do not have this unstable system of sticking to $1 value, but fundamentally they are still directly invested in debt - or more exotic stuff - that could turn sour, and they are completely exposed to bank runs.

Compare that to a plain and simple savings deposit backed by all the resources of a bank, and with the government standing behind it as lender of last resort and with deposit insurance. The smallish additional return in my view is not worth the hassle and risk.

I cant recall how much, but i have a small few dollars fees dedcuted from interest from my 30yr SG govt bonds bought with cash.

I am very curious of your choices

1) why would u suggest to put your money with Phillip securities money market fund that gives 0.6% only when you can open a bank saving accounts with CIMB that gives 0.8% per annual?

And iirc Phillip securities is not bank backed, it's money market fund is also not covered by depository insurance scheme too unlike CIMB bank or even Standchart saving account and iirc poems money market fund credit rating is C or something so again why would putting money into a lower interest return and less safer money market fund more attractive than putting money in a bank account that's backed by MAS? And is money market fund guaranted too? And if guaranted, by who? Poems or MAS?

2) I have also discussed the pro of using odd lot market over using this share builder plan from poems, please refer to the link I give earlier

CIMB starsaver has 0.8% and is more 'secure' than money market fund, so what i see as only reason to use money market funds is to get out of the 'bank savings only' practice. Take one small step, then take bigger steps into investments. Or else keep doing same old thing with bank savings, and it will be harder to get into investments.

At least thats the way i did it initially - i took up AUD 4yr structure deposit 'investments' from bank first in 2007 - being 'invested' and watching stocks and AUD rate plunge during the recession, and the subsequent recovery, made a big impression of some basic concepts of investment assets and forex on me - my capital was not highly risked back then actually, the deposit being termed capital 'gauranteed' - means 100% cash back even though the background investments suffered, so my returns for 4 years was initial 8% interest, 100% cash back, and small gain from AUD rates. If i had left money in fixed deposit back then, i would have 'experienced' nothing new about investments.

(P.S. just more info for others, capital 'protected' does not mean 100% cash back, from what i was told)

I not sure about odd lot market. I will take a look.

 

[Epps_Sg]

you take up a higher risk, lower return investment because you want to make the big step up to investment which is eventually your PP strategy and this move is gonna be an opportunity cost of 0.3% of interest return?

your logic and reasoning is really funny to be honest

worth it?

If i understand your question correctly, I find it worthwhile actually, for me. Opportunit cost is only 0.3%, potential gain if i managed to learn proper investments is annual 6~10% returns for years. That's many many many times returns. I have done my due diligence and think i can pull off passive investing and avoid potential -50% loss in investing. Similarly, from my past 'investing' and 'trading' experiences, i know that I should personally avoid dividend and value investing.

I am not one to avoid learning to cycle because I fear to fall off the bike and injure myself. I am prepared to get up on the bike and try again if i fall, other wise i will never learn to ride.

So instead of asking people to avoid investments totally, perhaps its more constructive to suggest those who are interested to learn investing how to invest more properly and how to avoid 'betting' approach to investing. One needs some indepth investing knowledge or experience to do so.

 

[Epps_Sg]

you talk like this PP strategy that you are using will not be the final strategy that you will be using for life and is actually still a learning and testing phase for you

well, so your cash portion is with poems mmf?

to add on, for saving accounts, your deposit is insured up to $50,000 in the event of a bank failure.

Actually PP is one of my final 'investing' strategy already. I may start another separate 'stock index ETF + 30yr govt bond' passive investing fund which will work also, just little more volatility and little less work. Historic long term returns of both are quite similar after dividends/interests, just the difference in volatility. I will do occasional review to monitor strategy performance and implementation, thats all, but my long term passive investing strategy is quite fixed now. As far as i am concerned, i already learn how to 'ride my bicycle' for my long term investing and capital preservation.

According to PP strategy, my cash portion suppossed to be with money market fund or 1-3 years short term govt bonds, but now its in bank savings because i cant bother to move it as short term interest elsewhere are all so low. 0.05% vs 0.8% interest is not much difference IMO. I have covered that difference in returns by skipping a restaurant meal

Just a little know fact, if one has more than 50k cash to park safely, and banks deposits cannot be insured for more than 50K. So if one has 200k where to park the money with 'full insurance'? I learn from PP strategy that such large cash can be converted to 1year govt treasury bills or short term govt bonds - all fully 'insured' by the govt because govt can raise 'tax' or 'print money' to pay back these bonds obligations if necessary (think of Japan?). If govt come to a point where they cannot pay back such bonds and bills, other financial institutions would likely be in much worst off shape already.

 

[Epps_Sg]

0.3% for a resturant dinner? have you considered not eating 10 resturant dinner + skip a holiday in a year to beat the 5% inflation???

so is your bank account cimb? or dbs?

i did not know that poems mmf can be converted into a sgs bonds when mmf goes bankrupt

bro, you are beginning not talking sense liao

my bank acct is dbs. you may feel differently, but 0.05% and 0.8% returns are paractically the same to me.

I am talking about mmf and sgs bond as separate issues.

just saying in general, for cash of more than 50k can be parked directly with treasury bills or short term bonds 'with no limits on insurance' instead of parking them in bank savings whcih has limited 50k insurance. MAS/govt is the insurer or treasury bills and sgs bonds.

 

[Epps_Sg]

so can i conclude that 8% and 0.8% is the same to you too given currently 8% is inflation and 0.8% is cimb saving rates? then wouldnt it better to put the money in cimb saving banks?

there are 4 assets in your PP theory
1) cash
2) bonds
3) stocks
4) golds

i am really getting confused by your PP theory already, so if i calculate that i needed to put $70,000 into cash allocation, but because i have more than $50,000 in cash, instead of following it strictly and putting it according to the allocation % to cash, i should put them and increase my bonds allocation because deposit insurance only cover not more than $50,000??

but again, if our local banks will have liquidity problem in the future to the extend that there will be bank failure, then probably our saving rate will be nearer to inflation rate already, your sti etf will cui to max.

but probably also when singapore govt cannot repay the debt obligation, the worst case scenario is they might just force you to take a haircut of the bonds rather than printing money or taxing more and further increase the inflation ba.

just my 5c

oklahh, for discussion purpose no offence.

Oh i see where you are confused about.

2) Bonds refers to 30 years 'long term bonds'. Stricly contain 'long term bonds only' for protection against deflation.

4) Cash component can be put in money market fund, 1-3 years short term bonds, or treasury bills (almost same thing). If have 70k cash, best to put all in 1-3 years short term bond/treasury bills - fully 'insured'. Second best put in mmf. Third best put 50k in bank savings account if one is super lazy to move it, then next 20k can be in 1-3 years short term bond which are 'insured'.

On a side note, you cannot really understand how PP works fully just from me - PP is a all-weather but very unconventional investing strategy and goes against many of people's basic instinct about investing. You got to read up PP in much more detail in order to fully understand and appreciate it. Then again you are welcome to ask me questions on PP.

On another note, a conventional 50/50 'STI ETF + govt bond' passive portfolio is much simpler to understand and implement.

 

[Sinkie]

Oh i see where you are confused about.

2) Bonds refers to 30 years 'long term bonds'. Stricly contain 'long term bonds only' for protection against deflation.

4) Cash component can be put in money market fund, 1-3 years short term bonds, or treasury bills (almost same thing). If have 70k cash, best to put all in 1-3 years short term bond/treasury bills - fully 'insured'. Second best put in mmf. Third best put 50k in bank savings account if one is super lazy to move it, then next 20k can be in 1-3 years short term bond which are 'insured'.

On a side note, you cannot really understand how PP works fully just from me - PP is a all-weather but very unconventional investing strategy and goes against many of people's basic instinct about investing. You got to read up PP in much more detail in order to fully understand and appreciate it. Then again you are welcome to ask me questions on PP.

On another note, a conventional 50/50 'STI ETF + govt bond' passive portfolio is much simpler to understand and implement.

ok, i guess this thread is abit off the track, so i have deleted some of our discussion

anyway good discussion, keep it up and keep us updated on your portfolio performance in 10 years time

lets keep this thread clean

 

[blackvice]

speaking of bond . Is that any bond in sg which is like TIPS ( Treasury inflation protected securities ) fund in US ?

 

[Some-one]

speaking of bond . Is that any bond in sg which is like TIPS ( Treasury inflation protected securities ) fund in US ?

No. There isn't.

 

[yihao93]

cimb bank, why would they offer a higher interest rate( Starsaver) then other banks like posb and dbs? is it because theres a huge drawback somewhere? ( I think can't be so good give you a higher rate then others right?)
Is is that you must deposit a certain amount monthly?

also, I can't find the interest rate for their FD in their website... weird..



I have other questions too but i believe that I can ask them directly yeah. ha.

-- 10 years... like so far X-X--

 

[lzydata]

cimb bank, why would they offer a higher interest rate( Starsaver) then other banks like posb and dbs? is it because theres a huge drawback somewhere? ( I think can't be so good give you a higher rate then others right?)
Is is that you must deposit a certain amount monthly?

also, I can't find the interest rate for their FD in their website... weird..

Look for "FD rates" in the column on the right.

You can either deposit a certain amount monthly or you can just put a bigger lump sum in there from the start, and they will account for it as if you put it in by instalments.

CIMB pays high interest because they want to attract deposits and acquire new customers. DBS/POSB pays low interest because they have enough deposits and customers. In fact, they have too much money.

 

[yihao93]

Look for "FD rates" in the column on the right.

You can either deposit a certain amount monthly or you can just put a bigger lump sum in there from the start, and they will account for it as if you put it in by instalments.

CIMB pays high interest because they want to attract deposits and acquire new customers. DBS/POSB pays low interest because they have enough deposits and customers. In fact, they have too much money.

ok. i think that at this point of time my money will be better off in cimb savings account instead of a FD account...

i believe i will open a cimb savings account then i will regularly put in cash from my NS pay for now.

how much would be an acceptable amount to actually make an meaningful investment of 6~8% returns p.a ? (passive investment)

what would be the returns for POEMS SBP?
Also in SBP does it matter what counter i buy?
What i understand from SBP is that by being in the plans i will be able to buy a portion of the share at a time ( portion related to amount invested) Am i right?

Also i read that buying odd lots is better compared to SBP?( i think sinkie said it)

 

[Sinkie]

ok. i think that at this point of time my money will be better off in cimb savings account instead of a FD account...

Think cimb will allow interbank giro transfer between POSB and CIMB with no transfer fees?

Yes lzydata is right. CIMB and Standchart are relatively new banks and therefore they offer higher interest rate than others to attract liquidity. Used to have a scb saving account when they have higher interest rate and transfer over to CIMB when CIMB comes into the banking scene. Previously CIMB saving rate was 0.9% when it first started.

There's no transfer fee involved when doing interbank transfer or even cross the border transfer to Malaysia

Infact I'm using CIMB banks for my salary and i have also arranged automated schedule interbank transfer once it's past the cut off date every month-end to my other banks account for expense and bill payment etc giro and credit card while keeping bulk of it as saving and rainy day

The difference between putting money in a bank and a mmf is I can easily access my money under emergency situation over weekend or public holiday by making my ways to orchard or Singapore land tower instead of waiting for a market to call my broker and another few days later for processing and cheque collection

Just my opinion

 

[yihao93]

can someone give me a guideline as to what to look out for in the prospectous of a company ?
In my opinion it is
1) risk factor
2)dividends policy
3) fees you need to pay
4)company's future plans

also, am i right to say that after reading the company's prospectous ,if i feel that what the company do will earn money, it would be a viable investment choice? what are the other factors to consider??

 

[Sinkie]

can someone give me a guideline as to what to look out for in the prospectous of a company ?
In my opinion it is
1) risk factor
2)dividends policy
3) fees you need to pay

You buying ipo ah?

 

[yihao93]

You buying ipo ah?

honestly speaking? i dunno wtf i am doing.
i just poking around SGX and then i go to that thing lo...
but buy odd lots all that not considdered IPO ah??

if not ipo what else can i buy ah ?

 

[Dividends Warrior]

honestly speaking? i dunno wtf i am doing.
i just poking around SGX and then i go to that thing lo...
but buy odd lots all that not considdered IPO ah??

if not ipo what else can i buy ah ?

You actually need to "ballot" for the IPO. There is no guarantee you will get the amount you want.

Some people even got 0 lots.....

For me, I usually dun go for IPO. I prefer to wait for the stock to list first and see how it performs.

On a lighter note, Warren Buffett once said IPO stands for "It's Probably Overpriced".

I would say going for IPO is a different ball game to normal buying of stocks.

 

[yihao93]

You actually need to "ballot" for the IPO. There is no guarantee you will get the amount you want.

Some people even got 0 lots.....

For me, I usually dun go for IPO. I prefer to wait for the stock to list first and see how it performs.

On a lighter note, Warren Buffett once said IPO stands for "It's Probably Overpriced".

I would say going for IPO is a different ball game to normal buying of stocks.

question : i found the prospectous file on the sgx website ah , but it was dated 2006 la ,so means now is provably listed le right ( if not wont be in the website also right)
So this means whatever i buy on SGX is stocks, not IPO right ?

On another note , it was kinda interesting to see how price of stock change over the years... ^^ like 09 period alot drop like nobody business.. hahaha.
Later i going borrow book that studies stocks as well i guess. haha (so far i onlly know about the p/e ratio only .alamak-_-

 

[Sinkie]

You actually need to "ballot" for the IPO. There is no guarantee you will get the amount you want.

Some people even got 0 lots.....

For me, I usually dun go for IPO. I prefer to wait for the stock to list first and see how it performs.

On a lighter note, Warren Buffett once said IPO stands for "It's Probably Overpriced".

I would say going for IPO is a different ball game to normal buying of stocks.

Starhub ipo price was below $1 leh.. Haha

 

[Dividends Warrior]

Starhub ipo price was below $1 leh.. Haha

I know, but most people subscribe to IPO for quick profits mah.......

I seldom see people here keep IPO for many many years huan.......

 

[Dividends Warrior]

question : i found the prospectous file on the sgx website ah , but it was dated 2006 la ,so means now is provably listed le right ( if not wont be in the website also right)
So this means whatever i buy on SGX is stocks, not IPO right ?

On another note , it was kinda interesting to see how price of stock change over the years... ^^ like 09 period alot drop like nobody business.. hahaha.
Later i going borrow book that studies stocks as well i guess. haha (so far i onlly know about the p/e ratio only .alamak-_-

Ya. Listed oredi.

You really have alot to learn.....

The prospectus is like a marketing tool to attract investors to buy the company stocks. Machiam shouting "Lelong Lelong!!!!!Come and look ah!!!!!" at pasar malam market.

Dun waste your time looking at past prospectuses.

Stay tuned for future IPOs. Hearsay MapleTree going to IPO a China REIT next year.