Like I said in the past, this means it makes more sense for me to buy Singapore Savings Bond than to make voluntary contribution to my CPF account.
This is because the average interest rate I get from CPF for my age group is about 3% p.a.
This takes in the allocation to OA and SA as prescribed by the CPF.
Nothing into the MA as my MA has hit the prevailing Basic Healthcare Sum.
However, since I have already used all my funds meant for CPF voluntary contribution in 2023 and also 2024, I would be tapping in 2025's funds if I were to buy this Singapore Savings Bond.
This is not a bad idea since bond yields could fall later in 2024.
Well, problem is my war chest is complaining after my recent large withdrawal for IREIT's rights issue.
A hungry war chest is an angry war chest.
Must replenish war chest first.
2. The recent 6 months T-bill auction saw a cut-off yield of 3.75% p.a.
Not fantastic but not too shabby either when compared to what a 6 months fixed deposit offers.
Happy that my non-competitive bid was fully filled.
Looking forward to the next auction happening on 17 August.
I would probably be increasing the application quantum for that auction too as I continue to strengthen my T-bill ladder.
I will do this by using some of the dividends received from AIMS APAC REIT, adding to funds returning from a maturing T-bill.
3. OCBC announced results!
Dividend per share of 40 cents declared!
This is much higher than last year's 28 cents!
As my investment in OCBC is much larger than my investment in either UOB or DBS, this is going to have a huge impact on my passive income for 2023.
Still feeling giddy from my recent blogs on UOB and DBS.
Now, I feel even more giddy.
So, I shan't say anything else about OCBC.
I give you a picture instead.
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| Click to enlarge. |
I remind myself that OCBC is only paying out half of its earnings as dividends.
This means that the common stock of OCBC is growing more valuable over time.
Congratulations to all fellow shareholders!
Financial freedom is not a dream for most of us in Singapore, and investing for income can only help.
If AK can do it, so can you!
Hi AK,
ReplyDeleteAny concern regarding this ?
https://www.theedgesingapore.com/capital/results/ireit-global-1hfy2023-dpu-falls-238-y-o-y-following-july-preferential-offering
Hi Betta man,
ReplyDeleteI replied to another reader last night on the matter.
See comments section of this blog:
IREIT and plan...
It isn't unexpected and it is most likely a temporary situation.
Hi AK
ReplyDeleteAs a fellow OCBC shareholder, I am very pleased with the results too!
Didn't manage to get the 6mths Tbills as the competitive bid I submitted was higher than the 3.75%.
Planning to contribute to SRS account this month and using that to buy the 3.06% SSB. Good idea?
Huat la
ReplyDeletehello ak, since banks had climbed up so much, is it sensible or senile to scoop up reits now and wait till increase rate falls - which many are believing that we are at the start of the end cycle.
ReplyDeleteHi Yv,
ReplyDeleteGong xi fa cai on OCBC! :D
As for SRS, as long as we are paying income tax, we should have a SRS account and make contributions, I feel.
What to do with money in SRS?
We cannot withdraw the money without penalty until we are much older.
So, a risk free option like SSB certainly sounds like a viable idea especially when the return mimics what CPF pays now, I feel.
If I were contributing to my CPF account already, however, I will consider using the SRS money for T-bills to help strengthen the ladder and also hold the funds as another war chest to be deployed when Mr. Market goes into a depression again. ;p
Hi SgFire,
ReplyDeleteHuat ah! :D
Hi Chenheyuan87,
ReplyDeleteThe experts are mostly of the view that the Fed would have to pivot sometime in 2024 or latest by 2025.
REITs will naturally benefit then and in more ways than one.
However, we still want to be careful and invest in REITs which can stay defensive until the pivot happens.
This is why I keep emphasizing balance sheet strength. :)
Hi AK & local bank’s stock investors,
ReplyDeletePerhaps this article by Reuters will provide some clue/insights on the interest rates going forward…
Cheers! “)
《"We are assuming interest rates to start to fall next year but not substantially to pre-cycle," OCBC Group Chief Executive Officer Helen Wong said in an earnings briefing, adding the bank forecast a 150 to 200 basis points drop in rates in major global economies by 2025, but on a gradual basis.》
https://www.reuters.com/business/finance/singapores-ocbc-q2-earnings-rise-sees-global-growth-slowing-2023-08-04/
Hi Eddy,
ReplyDeleteThanks for sharing the article. :D
That sounds like what many experts are expecting too.
A 200 basis points decline in interest rate would be huge for REITs, especially those which would have to refinance in 2025 onwards.
Unfortunately for REITs with weaker balance sheet or shorter debt maturities, they would have to take the higher interest rates in the meantime if they can get loans approved.