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Update on my plan to save for income. Money I forgot I had. DBS SavvyEndowment11 and 3.92% p.a. guaranteed.

Saturday, April 22, 2023

This is a quick update on my plan to save for income published in a blog at the beginning of April.

Back then, I said that I should be able to set aside $10,000 to apply for Singapore Savings Bond this month.

However, I have increased that figure to $22,000.

This is because a 5 months fixed deposit placed with DBS matured and I forgot I had it.

So, with more money at my disposal, I have decided to apply for $22,000 instead of $10,000.

Why $22,000?

If I should be successful in getting a full allotment, together with the $16,000 in Singapore Savings Bonds allotted in March, I would have hit $38,000.

$38,000 is the amount I had planned on setting aside for voluntary contribution to my CPF account in January 2024.

CPF or SSB? No brainer?

I also made a non-competitive bid for the T-bill  auction closing on 25 April with $15,000 instead of $5,000.

Apparently, I had mistakenly thought that I had a T-bill maturing on 24 April when it matured on 18 April.

So, instead of completing soon, my T-bill ladder is actually complete.

Ladder completing soon.

Finally, with some excess cash on hand, I decided to put some money in an endowment plan suggested by DBS Digibank.

This is a 2 years endowment plan that pays a guaranteed 3.92% per annum.

This is almost as good as the CPF Special Account's 4% per annum.

Endowment plans are really savings plans with a tiny life insurance component thrown in.

I just think of this as a pseudo top up to my CPF Special Account which I am not allowed to do anymore, of course.

The product is "SavvyEndowment11" and it is available to anyone with a DBS Digibank account.

Minimum amount required is $5,000.

The application process is very easy and fast.

This is not an advertorial but here is the link for anyone who might be interested in saving money: 

DBS SavvyEndowment11.

"A spokesperson for Hong Leong Finance said that rates for fixed deposits have generally dropped slightly in the past two months. 

"Singapore Overnight Rate Average (SORA) remains relatively high and inflationary risk will take time to ease. 

"At the back of an uncertain economic outlook, rates are likely to soften later in the year. 

"A Maybank spokesperson highlighted the impact of US Federal Reserve interest rate hikes on interest rates in Singapore. 

"As Singapore dollar interest rates have a positive correlation to the US dollar, we can expect that if inflationary pressures recede, interest rates should soften if there is a recession risk."
Source: CNA.

So, for anyone with a fixed income component in their investment portfolio, it is probably not a bad idea to lock in higher interest rates now, if possible.

Recently published:
1. More in equities or fixed income?
2. Tesla's results and valuation.

Saving for income.


SgFire said...

Hi Ak, this wld lock up your warchest for two yrs. How to fire shots if opportunity arrive sooner

AK71 said...

Hi SgFire,

The money I used to buy the endowment plan isn't for investing in equities.

It is money that is part of the fixed income component in my portfolio.

That's why I made a comparison with the CPF SA in the blog because I treat my CPF savings as the investment grade bond component in my portfolio.

So, for example, when I used funds in my CPF OA to get T-bills, to me, they are in the same asset class.

War chest is will continue to be refilled with incoming dividends. :)

More in equities or fixed income?

Just said...

Ak, I am interested in this endowment plan. However, at the last step there is a document about the product fact stating that the guranteed maturity benefit maybe less than the premium paid. Is 3.92 guranteed? Or I misunderstood something. Sorry, I don't know how to attract the document here.

AK71 said...

Hi Just,

I believe that the 3.92% p.a. yield is guaranteed.

They provided an example which included non-guaranteed benefit which would result in a return of 4% p.a.

I have yet to buy an endowment plan that returned less than what I put in. :)

YiS said...

Thanks AK for sharing. I also managed to get the same endowment plan too. timely reminder as the FD rates are sliding.

AK71 said...

Hi YiS,

I think it is a pretty attractive income instrument in the current environment.

Huat ah! :D

Sandra said...

Thanks AK, for sharing about this DBS endowment plan, I got some too:) Safe to follow your step 😆

AK71 said...

Hi Sandra,

Don't thank me but thank yourself for eavesdropping on AK. ;p

With fixed deposit interest rates softening, 3.92% p.a. is not too shabby.

If the product is still available next month, I might stash away a bit more money.

I just think of it as a topping up of my CPF SA but with a relatively short lock up period of 2 years. :)

ironmao said...

Hi AK,
I read the Manulife product documents for the Savvy Endownment11 on DBS website and my interpretation is the 3.92% "guaranteed" return is actually based on illustrative returns. It was not clear in the policy that 3.92% is really guaranteed. Seems confusing?

In any case, there is a 14 day free look / refund period if in doubt :)

AK71 said...

Hi ironmao,

That is odd because I understood that 3.92% p.a. is guaranteed while there is a non-guaranteed portion which could bump the return to 4% p.a.

If the guaranteed return turns out to be non-guaranteed, it would be a first for me as I have bought many endowment policies in the last 30 years and guaranteed has always meant guaranteed.

Anyway, we will know 2 years later. ;p

Jacq said...

Hi AK, how do I subscribe to your blog posts so that I can receive it via email when you update your blog? When I click on [Subscribe to: Posts (Atom)], it just brings me to this page [].

Dunno why, I have not been receiving email updates on your blog posts for a while and thought you stopped blogging... I realize I have been missing a lot after I checked your blog today.

AK71 said...

Hi Jacq,

I used to have a subscribe for email notifications widget but it broke.

Readers told me they were not receiving updates.

So, I removed it.

I checked the feedburner button and it has 2 other options apart from Atom.

Maybe, try those instead?

The follower button seems to work too.

I don't know how else you could stay updated other than maybe checking my blog once a week?

AK is IT dinosaur. (TmT)

Jacq said...

Thank you for your reply. Hmmm... finally found the other 2 options... which require signing up for another account/service. Seems like checking your blog once a week is the way to go. Will be doing that. Cheers!

AK71 said...

Hi Jacq,

Ah, thanks for letting me know that the other two options in Feedburner works. :)

Yes, checking my blog once a week is much easier.

Just bookmark my blog.

That's what I do for websites I visit often too. :)

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