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Following my last three blog posts, I checked three accounts today.
My bank account.
My SRS account.
My CPF account.
Why?
To see how much pocket money I am getting from the recent T-bill auction, the one that took place on 14 September.
People sometimes look down on small sums of money, especially in today's environment of high inflation.
"Walao! $2 only you also calculate!"
$2 is also money.
Small sums of money add up to big sums of money.
Being careful with small sums of money can only help in our journey towards financial freedom.
Don't kick a pup because when the pup grows up, it will come back to bite you.
OK, this is true for regular folks like AK.
For "jin satki" people or high-flyers who make hundreds of thousands or millions of dollars per year, please stop reading.
You have come to the wrong blog.
Still here?
OK, shocking numbers up next.
Anyway, here is the breakdown:
$186 from $10,000 cash.
$148.80 from $8,000 SRS money
$216.16 more in interest income from $52,000 CPF OA money.
So, $186 goes into my current day pocket.
$148.80 goes into my pocket which can only be unzipped 10 years later from age 62.
$216.16 goes into my pocket which can only be unzipped 3 years later from age 55.
Shocking, right?
Some people might be wondering why "rich" AK bought so little T-bills.
AK is just a regular guy and not "rich".
Why some people don't believe me?
Sigh.
T-bills are risk free and volatility free.
Not a bad way to make sure I have more pocket money now and in the future.
However, I am very aware of re-investment risk as high interest rates might not be around for long.
I will continue to wait for better opportunities to invest for dividend income.
While waiting, there is nothing wrong with getting relatively attractive risk free returns.
If AK can do it, so can you!
Bloggy Award
18 comments:
Hi AK
what do you think of this? 2Y endowment at 3.5%
https://www.greateasternlife.com/content/dam/corp-site/great-eastern/sg/gels-ftrp-imc-cm/wealth-accumulation/great-sp-12/great-sp-12-brochure.pdf
Hi Yv,
I can't help but think of the 3.92% p.a. for a 2 yr endowment I got from DBS back in April.
DBS SavvyEndowment11.
Personally, I feel that 3.5% for 2 years is a little bit low as I can still get 3.45% for a 6 months FD from CIMB.
I think DBS is now offering SavvyEndowment12 which gives a 3.65% p.a. guaranteed but the duration is 3 years.
Hi AK
thanks for speaking to yourself. i got the DBS 11 too previously.
Hi Yv,
That was a good one. :D
Pity I didn't have much spare cash back then. :(
Hi AK, love all these "free" $. It adds up slowly. I guess with T bills and SSB at such good rates, we need to be super selective in stocks/REITs to compensate us for the risks we are taking
Hi HH,
I wouldn't call them "free" money but more money is more money. LOL.
With risk free rates being higher, we certainly wouldn't be wrong being picky when it comes to other investments.
However, we have to remember that there is reinvestment risk, especially with T-bills.
We want to primarily invest in assets which are able to generate good income for us in the long term, after all.
Hi AK, thanks for the wise words. Just take advantage of the higher interest rates while it lasts. Since not much attractive options available to buy, t bills good place to park the funds instead of leaving in bank account. Haha
Hi HH,
I also like that say. :D
If it is money we don't need and if it is just sitting in a regular savings account, put it to work! ;p
Hey Grand Admiral AK, what do you think of Maribank savings interest rate of 2.5%?
Is it worth to open an account and park some funds in while waiting for better opportunities etc.?
Hi Rellangis,
If we can fulfill the conditions set out by UOB ONE account, that is a more rewarding option.
If we have money in excess of $100K, parking in FDs with the foreign banks like CIMB, RHB or Bank of China will pay us more than 2.5% p.a. for a 6 months duration.
Of course, if we feel more comfortable keeping cash very close to us and if we cannot get more than 2.5% p.a. elsewhere, Maribank would have to do. ;p
Hi AK,
What do you think of foreign current Fixed Ds? e.g. US currency FD? the interest is higher than SGD FD now.
Thank you for your thoughts!
VT
Hi AK, I went to look at the DBS Savvy Endowment 12 product, and it seems quite risk free with a guaranteed 3.65% interest p.a. Comparing this against Singapore t-bills which only provide nominally higher rates but do not have a non-guaranteed portion, all things being equal, would you say that the DBS product is superior? Thank you!
Hi VT,
I don't want to have to worry about fluctuations in exchange rates.
So, not for me. ;p
Hi Gary,
I got DBS Savvy Endowment 11, and 12 is the same product except that it comes with a lower guaranteed return per year and it is for 3 years instead of 2.
I would not say it is superior to T-bills since they are different animals but I rather like it. :)
Hi AK,
Will you be bidding for the 6mths Tbills? If so, will it be competitive or non-competitive? Can you talk to yourself what's the bid range if it's competitive? Thanks! :)
Hi EX,
I will only do competitive bidding if I am using money from CPF OA.
I won't be doing it for the upcoming auction because I will only be using cash on hand.
That will go the route of non-competitive bidding.
As for how much to bid, you might want to watch the video I released a few days ago:
T-bills: Bidding sensibly.
Again, I won't do competitive bidding unless it is with CPF OA money. :)
Thanks AK. Found this CPA Tbill calculator...you might find it useful. :)
https://growbeansprout.com/tools/tbill-calculator
Hi EX,
I don't need it but I am sure some might find the calculator useful. :)
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