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At the beginning of this month, I blogged about my intention to divert money earmarked for my CPF account in 2023 into Singapore Savings Bonds (SSB.)
I would keep doing this as long as the average 10 year return of SSBs is higher than 3% per year.
For the full explanation on this, if you don't remember or if you want a refresher, here is the blog:
CPF or Singapore Savings Bond? It is a no brainer.
So, as I earmarked $38,000 for voluntary contribution to my CPF account in 2023, that was how much I used in the SSB application this month.
So, what is the result?
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| Source: MAS. |
As expected, the Singapore Savings Bond was pretty much oversubscribed as the average 10 year return was a relatively attractive 3.21%.
2.44x oversubscribed in fact.
How much of my application was filled?
I am going to assume that I got $10,000 since there is less than 1 in 3 chances of getting $10,500.
What now?
I will have to see what the Singapore Savings Bond next month in November offers.
It is likely that the average 10 year return is going to be higher than 3% per year too or at least I hope so.
In such an instance, I would apply with $28,000 which should be refunded to my savings account soon.
What if the average 10 year return offered by the SSB next month is lower than 3%?
Then, I will wait to see what December brings.
There is always the option of putting the money in my CPF account in the new year.
Nothing to worry about here.
Good luck to us all.
Gambatte!
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10 comments:
Hi AK
When I saw my measly SSB allocation, I was expecting a quick update from you on this :)
Hedged my bets with the 6mth T-bills, wasn't half bad.
Hi Yv,
I did the same thing. :D
I will blog about the latest round of T-bills tomorrow.
Got to go adventuring now. ;p
Looking at the 10 y SGS daily yield, the Nov SSB yield should be at around 3.5% which is higher than this month
Hi Siew Mun,
I share your view on this.
Might end up getting $10,000 again as it would probably be heavily oversubscribed too.
Hi AK, do you think it is prudent to use CPF OA monies to buy STI ETF and keep these for the long term? Would this reasonably beat the 2.5% OA interest in the long run? Thank you.
Hi cd-rom,
It depends on whether you have the stomach for volatility.
The STI ETF tracks the stock prices of a basket of stocks.
So, it will go up and down according to Mr. Market's mood.
For me, I treat my CPF savings as a risk free, volatility free investment grade bond component of my portfolio.
So, I remind myself to only use it for risk free and volatility free options.
Gives me peace of mind. :)
Reference:
Peace of mind for investors.
Thank you for sharing your views.
Hi cd-rom,
All of us need a plan, our own plan, of course.
Just talking to myself, as usual. ;p
On another note, would you consider buying 10-yr SGS Bonds with your CPF OA monies? (https://www.mas.gov.sg/bonds-and-bills/Singapore-Government-Bonds-Information-for-Individuals) I think the current annual is 3 44%. Thank you.
Hi cd-rom,
My preference is for short durations given rapidly rising interest rates.
1 year duration used to be considered short but with rapidly rising interest rates, even 1 year might be too long.
The Singapore Savings Bond is an exception because it can be terminated at any time without any risk of capital loss.
Reference:
Avoid this in a rising interest rate environment.
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