Singapore SGS Bond

[reddevil0728]

and because i intend to reinvest the coupons back to CPF via VC3A every 6 months it should narrow the difference between remaining and compounding in OA vs buying this 10 year bond ? thanks again.

Yep

 

[vsvs24]

Alright, amending the calculation:

$100 at 2.5% pa compounded after 10 years is $128.

$99.26 in this SGS bond earning $2.625 coupon annually gives in total $126.25. Return is $126.25-$99.26 = $26.99.

It is still lesser.

But the interest I assume will be credited to CPFIS which will in turn be returned to OA ( manual refund to OA faster or will only auto 2 mths later). But the interest will only earn OA interest 1 mth later. But still will close the gap a bit

The gap not so big with this yield now so still ok. But the thing that will put me off on using CPF OA is the charges by the bank for CPFIS.

If I recall correctly, have charges for holding and when interest is received.

 

[lzydata]

But the interest I assume will be credited to CPFIS which will in turn be returned to OA ( manual refund to OA faster or will only auto 2 mths later). But the interest will only earn OA interest 1 mth later. But still will close the gap a bit

The gap not so big with this yield now so still ok. But the thing that will put me off on using CPF OA is the charges by the bank for CPFIS.

If I recall correctly, have charges for holding and when interest is received.

Good point about the coupons being reinvested in CPF OA, yes. Or possibly into other investments.

For CPFIS and stocks, it seems they charge service fees of $2 per counter per quarter hence $8.56 per counter per year, but they do not charge for receiving dividends. Not sure if bond interest received is treated differently.

So there has to be a much bigger difference between any bond investment and CPF OA to make it worth the while. And all this is even before considering the fact that the value of the bond may go down as well.

 

[reddevil0728]

Good point about the coupons being reinvested in CPF OA, yes. Or possibly into other investments.

For CPFIS and stocks, it seems they charge service fees of $2 per counter per quarter hence $8.56 per counter per year, but they do not charge for receiving dividends. Not sure if bond interest received is treated differently.

So there has to be a much bigger difference between any bond investment and CPF OA to make it worth the while. And all this is even before considering the fact that the value of the bond may go down as well.

But the value of bond wouldn’t matter if you hold to maturity no?

 

[lzydata]

But the value of bond wouldn’t matter if you hold to maturity no?

Yes, but 10 years is a long time to wait. The value of the bond might go up, if the world returns to a zero-interest rate environment. But that's not the current outlook right.

 

[reddevil0728]

Yes, but 10 years is a long time to wait. The value of the bond might go up, if the world returns to a zero-interest rate environment. But that's not the current outlook right.

Ya. If the plan is to sell.

if not capital will be the same.

 

[vsvs24]

Good point about the coupons being reinvested in CPF OA, yes. Or possibly into other investments.

For CPFIS and stocks, it seems they charge service fees of $2 per counter per quarter hence $8.56 per counter per year, but they do not charge for receiving dividends. Not sure if bond interest received is treated differently.

So there has to be a much bigger difference between any bond investment and CPF OA to make it worth the while. And all this is even before considering the fact that the value of the bond may go down as well.

These are the charges by DBS for CPFIS. It shows for Singapore Government securities :

S’PORE GOVT SECURITIES
- For every purchase, sale and interest received.
$2.50 for each transaction

FUND MANAGEMENT ACCOUNTS
FIXED DEPOSITS
INSURANCE POLICIES
INVESTMENT ADMINISTRATORS
S’PORE GOVT SECURITIES
STATUTORY BOARD BONDS
PRIVATISATION EXCHANGEABLE NOTES
- Service charge is levied for the maintenance of the account and for services rendered.
$2 per counter per quarter

https://www.dbs.com.sg/iwov-resources/media/pdf/invest/cpf_schedule_charges.pdf

 

[lzydata]

These are the charges by DBS for CPFIS. It shows for Singapore Government securities :

S’PORE GOVT SECURITIES
- For every purchase, sale and interest received.
$2.50 for each transaction

FUND MANAGEMENT ACCOUNTS
FIXED DEPOSITS
INSURANCE POLICIES
INVESTMENT ADMINISTRATORS
S’PORE GOVT SECURITIES
STATUTORY BOARD BONDS
PRIVATISATION EXCHANGEABLE NOTES
- Service charge is levied for the maintenance of the account and for services rendered.
$2 per counter per quarter

https://www.dbs.com.sg/iwov-resources/media/pdf/invest/cpf_schedule_charges.pdf

Under the same section Singapore Government Securities, UOB only mentions "purchase or sale transactions", not interest received. UOB charges $2. OCBC also does not mention interest received but charges $2.50. All figures before GST.

So DBS is ripping off its CPFIS customers...?

https://www.uob.com.sg/web-resource...cial/cpf-investment-account/CPFIS-charges.pdf
https://www.ocbc.com/assets/pdf/investment/cpfia_schedule_of_charges_201112.pdf

 

[vsvs24]

Under the same section Singapore Government Securities, UOB only mentions "purchase or sale transactions", not interest received. UOB charges $2. OCBC also does not mention interest received but charges $2.50. All figures before GST.

So DBS is ripping off its CPFIS customers...?

https://www.uob.com.sg/web-resource...cial/cpf-investment-account/CPFIS-charges.pdf
https://www.ocbc.com/assets/pdf/investment/cpfia_schedule_of_charges_201112.pdf

Looks like UOB is cheapest.

 

[jayou8]

Under the same section Singapore Government Securities, UOB only mentions "purchase or sale transactions", not interest received. UOB charges $2. OCBC also does not mention interest received but charges $2.50. All figures before GST.

So DBS is ripping off its CPFIS customers...?

https://www.uob.com.sg/web-resource...cial/cpf-investment-account/CPFIS-charges.pdf
https://www.ocbc.com/assets/pdf/investment/cpfia_schedule_of_charges_201112.pdf

They just promoting they motto .... ask you to bank less with them :- )

 

[reddevil0728]

They just promoting they motto .... ask you to bank less with them :- )

What's their motto? maybe they too big to bother

 

[maumu]

my application amount for SGS refunded (UOB, cash).

sigh! hope next issuance for 5-year (new) will be better...

 

[lzydata]

Looks like UOB is cheapest.

Yes and I also find that they have gold products whereas the other 2 banks don't. Not to say that it is for gold fans but they are offering something the others don't, whereas I don't think DBS or OCBC is offering anything in their CPFIA that UOB doesn't have. Anyhow, investing CPF does have these costs.

 

[reddevil0728]

Yes and I also find that they have gold products whereas the other 2 banks don't. Not to say that it is for gold fans but they are offering something the others don't, whereas I don't think DBS or OCBC is offering anything in their CPFIA that UOB doesn't have. Anyhow, investing CPF does have these costs.

But a lot of stuff e.g. like ocbc bcip or DBS invest saver, I think uob only got unit trust one.

and uob tech quote jialat.

but I guess cause uob diff from the other 2 cause more family owned

 

[fr33d0m]

Alright, amending the calculation:

$100 at 2.5% pa compounded after 10 years is $128.

$99.26 in this SGS bond earning $2.625 coupon annually gives in total $126.25. Return is $126.25-$99.26 = $26.99.

It is still lesser.

Your refund and interest still earns 2.5 compounded

 

[churnmaster]

These are the charges by DBS for CPFIS. It shows for Singapore Government securities :

S’PORE GOVT SECURITIES
- For every purchase, sale and interest received.
$2.50 for each transaction

FUND MANAGEMENT ACCOUNTS
FIXED DEPOSITS
INSURANCE POLICIES
INVESTMENT ADMINISTRATORS
S’PORE GOVT SECURITIES
STATUTORY BOARD BONDS
PRIVATISATION EXCHANGEABLE NOTES
- Service charge is levied for the maintenance of the account and for services rendered.
$2 per counter per quarter

https://www.dbs.com.sg/iwov-resources/media/pdf/invest/cpf_schedule_charges.pdf

I think for now T bills look better especially with none of these charges.

 

[reddevil0728]

I think for now T bills look better especially with none of these charges.

Eh what u quoted is about using cpf

if u use cpf, there still charges

 

[churnmaster]

Eh what u quoted is about using cpf

if u use cpf, there still charges

Oh ok . . I thought with no interest there won’t be any charges but as you mentioned there’d be a charge while buying

 

[lzydata]

Oh ok . . I thought with no interest there won’t be any charges but as you mentioned there’d be a charge while buying

Not only buying but also selling and possibly even when receiving interest.

And $2 or $2.50 per counter per quarter service charge, similar to buying stocks with CPF.

 

[d5dude]

Yes, but 10 years is a long time to wait. The value of the bond might go up, if the world returns to a zero-interest rate environment. But that's not the current outlook right.

CPF OA is even longer duration, and there is no upside (unlike 10 yr SGS) even if the world returns to a zero interest rate environment. If rates go up CPF OA is also unlikely to pay higher interest rate unless major commercial banks start paying >2.5% interest on regular savings accounts (hasnt happened since 1998?).

In my view CPF OA is a poor long term investment, its worse than a 2.71% 10 year SGS, I'd rather stick it in CPF SA or use it for something like housing.