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4% p.a. 6 months fixed deposit! T-bill please give way.

Thursday, December 1, 2022

One week ago, I blogged about the 6 months T-bill with a yield of 3.9% p.a.

I said that I was disappointed.

However, I was not massively disappointed as 3.9% was still higher than the promotional fixed deposit rates from DBS, UOB and OCBC for a 6 months tenor.

Today, I woke up to a 4% p.a. promotional fixed deposit interest rate for a 6 months tenor!




Granted that it is not from DBS, UOB or OCBC but from CIMB but it is still exciting for me since I have a relationship with CIMB and can place fixed deposits easily using the phone app without having to visit the bank.

Yes, I don't particularly enjoy visiting banks.

Some readers might remember that I said I was leaning towards fixed deposits as long as their promotional interest rates remained relatively high after the last T-bill auction.

Well, 4% p.a. for a 6 months tenor fixed deposit has really done this for me.

Same interest rate as the CPF-SA albeit short term with reinvestment risk as is the case with all fixed deposits (and also T-bills) is good enough for me.




Still remember how the queue lasted for hours all for a 2.6% p.a. promotional fixed deposit interest rate on a 12 months tenor at UOB in September?



Tsk tsk.

Singaporeans so kiasu.

AK is not like that.

AK is very cool.

You believe me or not?

So, Mr. T-bill, please give way to 4% p.a. 6 months fixed deposit.

Thank you very much.

Oh, for those who joined the queue in September for 2.6% p.a. 12 months fixed deposit, CIMB offers 4.2% p.a. for the same tenor now, in case you are interested.

Cheong ah!




Recently published:
1. Half don't have enough savings.
2. SSB: Fully allotted.
Related post:
6 months T-bill auction. My view.




10 comments:

The Dreamzola Traveller said...

Mu hahahaha, don't forget our fixed deposit is protected under the The Deposit Insurance Scheme too. :) cough cough up to $75,000 per depositor per bank anyway, thou it is unlikely the bank would go haywire. LOL.

AK71 said...

Hi TDT,

Singapore's banking system is well regulated.

Yes, I like that there is insurance too.

Huat ah! :D

Rellangis said...

Hi AK,

The 4% interest is for preferred banking customers with deposits of 250k with them... else personal banking is 3.95%.

AK71 said...

Hi Rellangis,

I only put $20K in the fixed deposit as the minimum required is only $10K.

Oh, I see what you mean.

We have to be a preferred customer to get 4% p.a.

Hmm.

3.95% p.a. for a 6 months fixed deposit is not bad too. ;)

Or there is a 9 months option for 4.05% p.a. :)

Yv said...

Hi AK

Thanks for the headsup, I am going to place some 6mths FDs with CIMB. Huat ah!

AK71 said...

Hi Yv,

I like your strategy. :D

I usually place several smaller fixed deposits instead of one big one.

Just in case I need more money than what I have in my float, I won't lose as much breaking a fixed deposit this way.

$10K to $25K per fixed deposit is the norm for me.

So, the UOB promotional 3.85% p.a. 6 months fixed deposit which requires a minimum of $50K is a no go for me.

Aa said...

Hi ASSI
For these who use CPF OA for T-bills and getting about 3.8 percent for 6 months. Is it better for them to placed it with OCBC that give 3.4 percent for one year.
This is to factor that t-bill will drop after 6 months and OCBC lock up at 3.4 percent for a year.
Thanks

garudadri said...

Dear AK
A flurry of fixed income related posts from you! I do not usually do fixed income and chance my arm almost always wit( equities and REITS. I know this is very risky
However, with my limited war chest, I am always happier with easy cash access or “cash equivalent” access to pounce on what I consider opportunities that keep coming very regularly in these volatile markets
By cash “equivalents”, I mean stocks or ETF options such as the VOO ES3 Netlink QAF Sheng Siong like very low beta stocks
I sell them even if 5-10% down if there is a big market correction and deploy them into the local banks or good REITS! Almost invariably, within an year, 7/10 times this trade nets me a 7-15% yield over the next 6-18 months
I know this is tricky and potentially dangerous and that I am comparing apples and oranges!
On another note, the treasury yields are starting to drop and inflation will most certainly come down, if not reach baseline levels that we were used to
Do remember that the consumer price inflation here in SG is still around 6-8% and actually more in the real market! That means that even the best FD options offer negative REAL returns despite the notional 4% yield
This is what irks me and makes me tread the dangerous risk-on path
Best wishes
Garudadri


AK71 said...

Hi Aa,

The difference between 2.5% and 3.5% is so small.

It is even smaller when we factor in the loss of 1 month or even 2 months worth of interest income from the CPF OA (depending on when the funds are extracted and refunded.)

To be honest, I don't know if the 6 months T-bill yield would decline 6 months later or not although it has certainly been softening and could continue to do so.

Anyway, having said this, the OCBC offer is viable. :)

I won't do it because I am too lazy. ;p

AK71 said...

Hi Garudadri,

Thanks for the very thoughtful comment, as usual. :D

I get where you are coming from.

Even though interest rates are higher now, they are still lower than the inflation rate which leads many to say that we are losing money by leaving money in fixed deposits.

However, this is the cost of having insurance. ;)

I always say that if the stock market crashes badly and if stocks stop paying meaningful dividends, at least I have fixed income and the CPF is a big part of this although it will only kick in a few years later when I turn 55.

Of course, I am approaching this topic from the perspective of a person with no earned income.

It wasn't so long ago that I had a blog on this:
Worried as dividends and interest income reduced.

I am a born worrier.

So, don't mind me.

We have to stick to whatever plan works for us. :)


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