Tag: Finance

Low or no interest? Where to park your funds?

On By RistrettzIn Interest Rates, New Ideas, Personal Finance Series1 Comment

Due to the current covid-19 pandemic, we have seen quite a change in the world’s economic situation. Central banks around the world have reduced interest rates to an extremely low level. In finance, or what we call an emergency fund – has to always be liquid. It is well known to keep 3 – 6 months of funds for a rainy day. As for the amount to keep, it really depends on everyone’s personal situation. I would say, it depends on how much you spend and how willing one will be able to adjust to change their lifestyle. Given the current situation, it may be better to keep up to 9 or 12 months of emergency funds. Again, it depends very much on every individual’s finance situation.

Reduction of interest in “High Yield”saving accounts

Recently, we have seen the banks reducing the interest rates of deposit accounts or “high yield” saving accounts. It is only a matter of time when everyone else will reduce that interest amount so it is important to always keep funds liquid. You will never know what happens so it is important to stick to the rules – Keep your liquid funds liquid. A couple of months back, I found an interesting channel to keep some funds for a pretty high yield of 2.5% pa.

Of course, there are plenty of choices out there to choose from but today we shall talk a little more about an “alternative” choice as compared to a bank. Let’s throw Fixed Deposits out of the equation as well as they are close nothing at this point in time.

Singlife

This is Singlife account. The interest of 2.5% p.a. is capped for the first $10,000 that you fund the account and the next $90,000 will be on 1.0% p.a. Any amount more than $100,000 will earn no interests thus this account will be suitable for anyone who wishes to keep a small sum of funds with Singlife and the hassle of having another account.

As indicated on their website, the Singlife Account is an insurance savings plan and it is neither a bank savings account nor fixed deposit. Each person is only entitled to one Singlife Account policy.) Singlife is also known as an Insurance Technology company that is licensed by MAS.

This is a really good channel to keep funds in however just take note that the 2.5% p.a. is not guaranteed and can be changed anytime. I think that this is fair given how flexible the funds can be taken out at will. In a most recent post, the news state that Singlife has raised 100 million funds in new AUM.

Pros

Below are some of the pointers that I felt is compelling enough to sign up for an account as the pros outweighs the cons at this moment and I am going to discuss more about why we should just get an account online:

First, Singlife is an insurance savings plan coupled with insurance and interest features. Fund placed with Singlife will be capital guaranteed so there will not be any hidden fees.

Second, you can earn up up to 2.5% p.a. for the first $10,000 with minimum funding of $500 to start earning this interest amount.

Third, there is insurance benefits – 105% of the account value and retrenchment benefits.

Fourth, the Singlife debit card is complementary and works like a normal debit card.

Fifth, No Lock-In. No contracts. Funds can be withdrawn anytime with no cost and minimum term.

Sixth, application is easy. Works only on an app and you can use SingPass to register easily.

Seven, funds are covered by SDIC so your funds are safe and protected for up to S$75k if there are any bank run on deposits.

In Summary, this can be a good tool for transition of better interest accounts or a medium terms solutions to parking your own funds.

Cons

There are not many bad points out there but to name a few and mainly only due to requirements and how cumbersome it can turn out to be.

First, they are relatively the new boys in town. In terms of branding and knowing who Singlife is needs to be worked on.

Second, since they are an alternative choice, traditional and conservative folks will just monitor or give it a pass

Third, the threshold of up to S$10k for 2.5%p.a. may not be appealing for some folks out there. 

Fourth, having yet another digital wallet or account is going to be slightly more cumbersome. Hence this might deter more sign ups.

The other choice is to go to Tiq or Dash Easy Earn. The interest option is slightly lower but you can’t avoid opening yet another account. 

Conclusion

The whole idea here is to share what are the different options and alternative available to park your funds. If this works for one person, it might not for the other. There isn’t a one size fits all solution but there are plenty of solutions out there. We just have to dig deeper and find out more about them. Then, we also question about the time spent to research and the effort to track different apps and accounts. It really depends on every individual. To some it might be creating more issues but to others, these solutions may be gems. 

I find that these solutions are a good option for the younger group of graduates and those who have just started to find employment. You have to start somewhere so this is one avenue to do so.

To find out more about Singlife, click here: Singlife Website

Disclaimer

This is not a sponsored post and purely my own opinion that I am writing about in my thoughts. If you like what you are seeing, do remember to check they out and do your diligence. Don’t be too fixated with what is the best.

If you like what I am sharing or if it resonates with you, do use my referral codes for other services and products here at https://atomic-temporary-178675883.wpcomstaging.com/contact/ for the services.

Images seen in this article were take off Singlife website for illustration purposes only.

Exchange Traded Funds (ETF) – Reits Version

On By RistrettzIn Personal Finance SeriesLeave a comment

The Singapore equity market is really slow to say and there are only a handful of reits ETFs that were launched previously (that was like 3 to 4 years ago). Quite a number of people were rather yield starved back then. With that bullish USD interest rate hike (Before Covid-19) it was almost a guarantee that this will happen.

I kind of blame the media for setting off such rumours. The central bank will never act on just pure speculation but rather more than data and in today’s world. There will be even more data that they can ever get. A big economy like the USA is something that most people watch. This trend has slowly diminished after successful propaganda by the emergence of the Chinese. Don’t get me wrong, it is kind of good that they are getting their act together. It is just that there’s much more skepticism more than ever since anything and everything can be fake. The Chinese just look at profits over anything.

Back to the point here. I was trying to look for yield related stuffs that could add on to the portfolio. When I did a quick filter away from reits, there isn’t much that is available on the SGX that is sizeable. (i.e. blue chip enough) To diversify that reits risk, I went into the details and tried to see if I could mimic the fund portfolio. As it turns out, it might be too much of a challenge.

Diversification

Diversity lies in the location: Singapore, Hongkong, China, Australia with the scope to add on more countries according to the fund manager. (Exposes some FX risks along with fees, fund management, platform fees)

Diversity in the types of holdings: Office, retails, industrial, others and more diversified real estates (Exposes to certain sectors that are cyclical in nature)

Lower fees as compared to a fund, as it is structured as an ETF (Exchange Traded Funds), it’s annual management fees are also lesser than usual. (Cheaper but more passively managed)

Yield: Approximately 4-5% p.a. Nett for all the trouble. Perhaps even using different brokers and also different FX rates. Believe it or not, institutions get a better Forex rate just because they have the size to do so and sometimes. The fees on the allocation can be rather cheaper than a retail customer. It’s pretty much how you value it. Some people prefer total control, counting the pennies. (every cents counts) Some prefer to delegate via a fee based model.

Reits ETF

NIKKO AM – Straits Trading Asia Ex Japan ETF (Check that out here: Nikko AM reits ETF)

Philips SGX APAC dividend Leaders reit ETF (Check that one here: Poems reits ETF)

Both are much similar in context just that with Philips, the majority holdings will be Australian reits (about 60%) while Nikko AM will be the majority with Singapore reits (about 60%).

Always do your due diligence, after all everyone has different risk levels. There are always other options. ETFs are just one of the many tools.

The need for an Emergency Fund?

On By RistrettzIn Personal Finance SeriesLeave a comment

Emergency Fund

I discussed with many others about the need for an emergency fund, the purpose of an emergency fund and the reason for an emergency fund. I can’t say more that I am a pro-believer of an emergency fund. The naysayers are out there thinking about the every single penny that is without a higher interest cost. Everyone is programmed differently and we react differently in the response of what we termed as a “decision”.

Situation

With the Covid-19 situation, I do not think that the previous requirements apply now. Taking reference in the medium Singaporean salary on MOM stats in 2019. (~SGD 4,563) A really safe bet is no longer the 6 – 9 months of emergency funds but 12 – 18 months of safety net. Each and every individual is different, as we also adapt to situations quite adequately.

How much one’s emergency fund really depends, a fresh graduate. (For example who make three grand a month) One may not have much disposable income after netting off parents’ allowances, school loan if any and daily expenses. A typical planner would say probably three to six months worth of cash fund to tide through any sudden surge in expenses. I’ll say that is rather quite a decent sum to begin with. How then should the emergency funds look like for someone who is in his 30s, 40s and 50s? A $9k emergency fund ten years down the road does not reflect an emergency fund 20 years down the road. People change, society change, lives change and money value changes certainly.

I can’t speak for everyone but I do see that almost everyone’s spending pattern increases when they get a promotion, get married, buying a house, buying a car, having children, family members becomes sick, friends who are retrenched, friends who fall into financial debt and many more. We are not the person we were at ten years old so neither will we be at twenty years old.

Naysayers

Against others who says there isn’t a need for such funds. Perhaps the only uncertain thing in life is to know that no one ever knows what. When shit hits the fence, it will hit us hard and fast. It is probably then too late to realise so. If there isn’t a need or purpose to think of that in such a manner,. At least think of it as paying/investing in yourself first before other things.

Perhaps we should so away with the thought of “Spend first save the rest or Save first and spend the rest” There isn’t really a one size fit all theory. Afterall, how many of us are blessed to have people taking care of our education, exposures, overseas trips, trend and fashion purchases when we were still young and not understand the meaning behind financial planning.

The use for emergency fund

Perhaps there is that profession certificate that you are aiming for. Some even to build those first $100K before age 30 or 25. Even before you dwell into that, put that emergency funds aside. There will be a time where there will be a use for it. It could prove to be extremely useful when the time comes. We have seen this in the most recent budget release. Our country’s reserves are being utilised to tide through this unprecedented period of distress.

I often hear folks who tells me bonds, equities, funds are liquid. They can easily get funds out when they need them. I’ll probably say no because emergency funds are defined as such. You got to understand the reason why it is called that. The level of ease has to be as liquid as cash on hand. One can argue that cash in bank and at most in Fixed Deposits is the alternative.

Liquidity in investments

Bond price, equity prices, fund prices will rise and fall. During recession, the true sellers outweighs all buyers. There is a false sense of security on the understanding of liquidity. In times where there is immediate use of the cash on hand. Emergency funds gives that comfort and security. In doing so and I find there there is no better way at this moment. Unless there are disruptions that change the way in the future.

A, B, H shares? Types of China shares

On By RistrettzIn Personal Finance SeriesLeave a comment

China Shares

Ever wondered what kind of investments are there available in the China and Hong Kong Stock Exchanges? Well, you could simply goggle them and you will probably find the answers but ask yourself again in 2 months time and most likely you will be doing the same again without putting it right in your memory block. Unless, you have an interest for China equity market that story might be different but if you are in it for the quick kill then it probably doesn’t really matter much from this post down.

A shares

Securities in China market refers to stocks that trade on the Shanghai and Shenzhen exchanges.

B shares

Similarly, B shares are the same as A shares but their shares trade in USD. These stocks, known as “B shares”, and most likely used to raise capital overseas. B shares also allowed foreign investors to invest in the market without the restrictions.

H shares

Securities trade on the Hang Seng Index rather than on the mainland China and they are priced in HKD

Red chips

State-owned Chinese companies incorporated outside the mainland China and traded in Hong Kong.

P chips

Nonstate-owned Chinese companies incorporated outside the mainland China and most often in certain foreign jurisdictions and traded in Hong Kong.

N shares

Chinese companies incorporated outside the mainland, most often in certain foreign jurisdictions, and U.S.-listed on the NYSE or Nasdaq (ADRs of H-shares or P-chips)