4Q 2022 passive income: More resilient portfolio.

AK did not get to be lazy in 4Q 2022 as reallocation of resources continued in the quarter.

2022 has turned out to be quite a demanding year.

In equities, I reduced exposure to a plethora of stocks to raise funds to increase exposure to the local banking sector.

This is consistent with what I shared in a blog published in the middle of October.

See:

DBS, OCBC and UOB at 40% of portfolio.

The banks are in a good place to enjoy a strong tailwind provided by rising interest rates.

Even in a recession, the banks should continue to bring home the bacon as they are well capitalized and should have no problem paying dividends.

Nothing was sacrosanct in the reallocation exercise and several very small positions in my portfolio were closed down while some larger positions were reduced in size.

Apart from OCBC and UOB, I could not resist increasing the size of my investment in IREIT Global as the fundamentals remain sound and the REIT's unit price hit what I felt to be distressed levels.

It would be impossible to buy any asset owned by IREIT Global at about 40% discount to valuation but we could if we bought some of IREIT Global from mid 3Q to 4Q 2022.

To be fair, that 40% discount to valuation could reduce somewhat as the REIT is going to take some time to backfill the space at Darmstadt vacated by Deutsche Telekom.

The valuation of that particular property could come under pressure, therefore.

However, if we are investing in properties for the longer term and we should be, it isn't a tragedy that it might take some time to see results as the space will be leased out eventually.

IREIT Global has the most defensive financials I can find amongst the REITs which I own while offering a distribution yield of around 8%.

With the accumulation of IREIT Global in 4Q 2022, it is my largest investment in the S-REIT universe today.

See:
IREIT Global: Short term pain.

I also added to my investment in Wilmar International as the business became more profitable in spite of a challenging environment.

In the worst case scenario where we see stagflation, I have an inkling that Wilmar International could outperform as the world faces a food crisis.

I nibbled at LION-OCBC Hang Seng Tech ETF as it overshot the low formed on 15 March 2022 but like I said in an earlier blog, it would likely be the last time I added to my position in the ETF as I am not too keen on trading regularly in order to make money.

Too lazy.

I did subsequently reduce exposure when the unit price rebounded in November. 

I reduced exposure again in early December as the ETF's unit price rose to test resistance provided by the descending 200 days moving average which was approximately at 71c:

See:
Hang Seng tech ETF: BUY or SELL?

Those couple of trades produced a capital gain of around 23% and reminded me of why I spent so much time trading the stock market many years ago.

Some readers might remember that I shared in my blog as well as during one or two "Evening with AK and friends" that I made around half a million dollars in my adventures as a stock trader many years ago.

Trading stocks could be financially more rewarding than investing for income but it requires more activity and some knowledge of technical analysis.

I have decided to become more laid back in recent years to spend time on other things in life.

Anyway, the average price for my remaining position in the ETF is probably low enough to make Chinese tech stocks look cheap even to value investors.

A simple reversion to mean would result in a capital gain for me.

I do not need to see euphoria and the ridiculously high valuations when the market was sloshing with almost free money in order to have a good result here.

However, it is a tiny position in my portfolio and it would not move the needle much.

In bonds, I have put money earmarked for contribution to my CPF account into Singapore Savings Bonds (SSBs) while money from maturing fixed deposits went into Singapore Treasury Bills as yields of these government bonds reached levels which I found to be more attractive.

Blogs on SSBs and Singapore Treasury Bills:
1. SSB 2.44x oversubscribed (27 Oct.)
2. 4.19% yield on T-bill!(28 Oct.)
3. 3.47% 10 yr average yield! (1 Nov.)
4. 3.47% p.a. fully allotted (28 Nov.)
5. 4.4% yield on T-bill!(9 Dec.)
6. 4.28% 6 mths T-bill. (21 Dec.)
7. SSB: Mission accomplished.

The changes made in 4Q 2022 to my investment portfolio is consistent with what I have said many times before and that is not to be overly optimistic nor overly pessimistic but to stay pragmatic.

Having a percentage of my portfolio in fixed income like SSBs and Treasury Bills now while staying invested in equities which I feel will likely outperform fixed income (including my CPF savings) in the longer term should result in a more resilient investment portfolio.

If I feel that equities would outperform in the longer term, why am I still putting money in fixed income?

It is about having peace of mind as an investor.

Fixed income instruments are important for investors who cannot afford or at least feel that they cannot afford to be too adventurous as fixed income helps in reducing the volatility in our portfolio.

Not everyone is able to stomach greater volatility, whether it is due to a lack of financial ability or  mental strength to do so.

Now that yields are reasonably attractive, they also help to reduce the cost of insurance that is the opportunity cost of not getting possibly higher returns.

There were times when I was very adventurous as an investor and I was fortunate to be well rewarded many times but I also suffered losses sometime.

The emotional roller coaster that came with being more adventurous wasn't a lot of fun either.

Anxiety and depression are only interesting topics to psychiatrists.

See:
1. Peace of mind as an investor.

2. When to worry? What to do?

Having said this, I am also partial to fixed deposits which offer relatively high interest rates as I continue to maintain a meaningful cash position which is mostly my emergency fund and float.

This cash position has helped to keep me sane during bad times and it still does.

What about the opportunity cost of not being invested?

Ahem.

Do you believe in insurance?

I do.

I know that some people don't.

The cost of insurance is worth it, in my opinion.

See:
4% p.a. 6 months fixed deposit.

What about my war chest?

There isn't much left in my war chest as the funds have been substantially deployed.

Well, regular readers would have an inkling that there wasn't much in my war chest to begin with as I lack an earned income and consume most of my passive income.

See:
Inflation, passive income and budget.

Sadness.

Even the government takes pity on me and gives me money every year.

Anyway, enough of self pity.

So, how much passive income did my portfolio generate in 4Q 2022?

S$ 25,331.81

It is a relatively small sum compared to passive income in 3Q 2022.

However, to put things in perspective, 4Q 2021's passive income was:

S$ 21,283.82

So, year on year, 4Q 2022's passive income came in 19% higher.

Looks more impressive percentage wise but I get it that the dollar value increase is smaller compared to 3Q 2022 which saw a smaller percentage increase at less than 10% improvement, year on year.

4Q 2022 passive income includes income received from 6 months Treasury Bills which I started buying only in October.

This new passive income component is a relatively small trickle but every little bit helps.

My passive income for the whole of 2022 is:

S$205,999.73

This is almost 20% higher when compared with S$171,854.30 generated in 2021.

Average passive income per month in 2022 was about:

S$17,166 per month.

Can't really complain.

I am contented.

Now, I ask an important question.

What is 2023 going to be like?

It is more likely than not that recession is coming to many parts of the world even as we get used to the idea that higher inflation is going to stay with us for some time to come.

So, with inflation high and economic growth evaporating thanks in part to rapidly rising interest rates, we could also see stagflation.

Therefore, I would be quite happy if my passive income in 2023 is similar to 2022, give or take a few percentage points. 

Not going to raise the bar as I could be disappointed.

What else am I telling myself?

As an investor for income, I cannot dictate how much my companies should pay me but I can certainly tell myself how to spend my money.

What to do?

Will have to tighten my belt.

Buckle up for a bumpy ride.

Don't throw caution to the wind.

Hold on tight to our emergency funds for dear life!

See:
50% do not have enough savings!

I continue to remind myself that fixed income investments are more attractive than before. 

Having a meaningful percentage of risk free and volatility free T-bills and SSBs in my portfolio is not a bad idea.

The CPF might not be as sexy a "fixed income" instrument but it isn't wrong to keep thinking of it as an investment grade bond with a significant annuity angle.

The CPF still works as a risk free and volatility free investment grade sovereign bond which helps to provide a greater degree of certainty when it comes to retirement funding.

These fixed income options help to form the large base of my investment pyramid.

See:
Motivations and methods in investing.

I also remind myself the importance of staying invested in bona fide income generating businesses which generate meaningful and sustainable income for us.

Getting rich slowly isn't as sexy as getting rich quickly but like I said before, the journey to financial freedom is not a race: HERE.

In summary, for regular folks, don't be too adventurous as having strong and reliable cashflow is important. 

To be clear, it has always been important but with heightened rising costs in so many forms and much greater economic uncertainty, it is probably more important than ever.

Focusing on our portfolio's ability to generate income and not our portfolio's market value (now or in the future) might not be a bad idea.

Remember, I prefaced these highlighted paragraphs with the words "for regular folks."

If you are a very rich or "jin satki" person, it might not apply to you.

If you are not very rich or "jin satki" but act like you are, good luck to you.

Very rich people can take a few hard knocks and still survive.

For example, they could lose a few hundred thousand dollars or more in Tesla or Alibaba but still stay rich.

Those who are not very rich might find themselves in financial distress especially if they had borrowed money to do the same.

Peace of mind is priceless.

2023 is likely to be a relatively difficult year for most regular folks.

Stiff upper lip and stay the course.

As long as we are moving in the right direction, we should make incremental improvement and move towards financial freedom. 

Discipline and patience will be rewarded.

All in good time.

Happy New Year.

References:

Growing passive income: Equities, CPF and bonds.

3Q 2022 passive income: Stunned!

4Q 2021 passive income: Don't lose hope!

Singapore Savings Bond: Mission accomplished.

How did my recent application for Singapore Savings Bond go?

The application used the remaining $14,000 I originally earmarked for CPF voluntary contribution in 2023?

The results are out.

Fully allotted.

No need to carry forward any remaining money into the new year.

Nice!

So, money which was meant for CPF voluntary contribution in 2023 went into three Singapore Savings Bonds this year.

1. $10,000 with 10 year average yield of 3.21% p.a.

2. $14,000 with 10 year average yield of 3.47% p.a.

3. $14,000 with 10 year average yield of 3.26% p.a.

So, no voluntary contribution will be made to my CPF OA and SA in 2023.

For readers who do not know why I am doing this or if you want to refresh your memory, see:

Singapore Savings Bond or CPF?

Regular readers know that my plan was to continue with voluntary contributions to my CPF OA and SA at least till I turn 55 years old.

Although I still consider the CPF to be a risk free and volatility free investment grade bond that pays a reasonably attractive coupon, with higher yields, recent Singapore Savings Bonds were more attractive.

I plan to continue putting aside money at least until I turn 55 years old in order to add to this bond component in my portfolio.

However, the money might not go to my CPF account but the Singapore Savings Bond as long as the latter's 10 year average yield remains higher than 3% per annum.

In 2023, I will still top up my CPF Medisave Account (MA) because that pays 4% per annum.

If Singapore Savings Bond's 10 year average yield should exceed 4% per annum, then, I might not top up the MA either.

However, if such 10 year bonds should pay a coupon of more than 4%, we could see the CPF SA getting its interest rate pegged to long term bond yields and not remain at 4%.

How like that?

Cross the bridge if we come to it.

Speculating now is like "on paper discuss soldier."

I am also too lazy to think too far.

Yes, I know I think a lot but that is a bit too much even for me especially in my old age.

So, does AK mean he would continue applying for Singapore Savings Bond in 2023 with money which was supposed to be for CPF voluntary contribution?

Yes, that is the long and short of it.

Source: MAS

I might even frontload and apply for Singapore Savings Bond from 1Q 2023 with money which would have been earmarked for CPF voluntary contribution in 2024.

For example, if I should have a spare $5K on hand early in the year, I could apply for Singapore Savings Bond with that $5K in 1Q 2023.

I don't have to wait till 4Q 2023 to make applications like what happened this year.

I will have more fixed income by frontloading.

I could even do more extreme frontloading by getting more than $38K of Singapore Savings Bond in 2023 if the 10 year average yield stays relatively high.

Basically, I should have another 4 times of $38K meant for CPF voluntary contribution.

That makes a total amount of $152K which could be frontloaded into Singapore Savings Bond.

This is a clue as to the number of years left before I turn 55.

Another $152K is pretty demanding and would not happen all at once. 

It would happen gradually as and when I have some spare cash on hand.

Frontloading is something that the CPF would not allow, of course, with its annual contribution cap.

Anyway, that is the plan with regards to money meant for CPF voluntary contribution (for now.)

Next blog will be on my passive income for the full year 2022 and also what to do in 2023.

Likely to be published only in the new year.

Happy New Year!

Recently published:
4.28% yield T-bill.

4.28% 6 months T-bill is very nice!

Well, the results are out bright and early this time.

I know it is the afternoon and not morning but it is still very bright.

4.28% p.a.

Very nice or even if you don't think so, I think it is not too shabby.

More than the promotional interest rate of 4.0% p.a. offered by CIMB for a 6 months tenor makes me happy enough.

In fact, it is more than the 4.2% p.a. offered by CIMB for a 12 months or 18 months tenor.

As an investor for income, I can't complain.

Well, I suppose I can but I won't.

What makes it even better?

I got 100% of my application filled!

Source: MAS.

Contented.

Now, I wait for the Singapore Savings Bond allotment results.

That is coming next week.

As for the next T-bill auction in January, I will probably try my luck again. 

However, if the banks hike their promotional interest rates for short term fixed deposits by a lot, I might hedge by splitting the funds 50/50.

Huat ah!

Recently published:
Investing this week? What to do?

Investing this week? What to do?

This is just a quick blog to remind myself what I am going to do this week.

Yes, more of AK talking to himself.

Eavesdrop at your own risk!

If you are not the risk taking type, stop reading now. ;p

Don't worry.

You are not going to miss out on anything, I feel.

This blog isn't going to be about anything earth shattering or mind numbingly ingenious.

It is just going to me sticking to my plan which is to generate more passive income.

It is about being pragmatic and putting money to work in bona fide income producing instruments.

No PONZI schemes please.

I want to continue my exposure to fixed income as their yields have become reasonably attractive in recent months.

So, I will be applying for Singapore Savings Bond with the remaining $14K originally set aside for CPF voluntary contribution in 2023 as planned.

I will also try my luck again with the upcoming 6 months T-bill. 

I was lucky to get some 4.4% p.a. yield 6 months T-bill in the last auction.

Yes, it is luck, despite what some people might say.

It is an auction.

Who knows what is going to happen with any degree of certainty?

I know I don't.

Let's see what we will get in the T-bill chocolate box next.

I know many people want to know what the T-bill yield might be and some people will probably do some crystal ball gazing.

However, I am not going to bother anymore as when people thought that the yield would be higher, it came in lower and when they thought that the yield would be lower, it came in higher.

Alamak.

I blur liao lah.

How like that?

What does AK think about this?

Well, here is the brutal truth.

With a sum of $10,000 to $20,000 per auction, it won't move the needle much whether the yield is 3.9%, 4.2% or 4.4%.

Am I right to say that?

OK, I know. 

Bad AK! Bad AK!

This applies only to AK!

Move on now.

Nothing to see here.

The next thing I want to do is still to increase exposure to the local banking sector.

I blogged about my intention to average up on my investments in OCBC and UOB in October. 

However, I only managed to increase my investments in the banks by 11% and 19% respectively before their stock prices rose much higher.

There is a chance that OCBC might retrace to test support. 

I see the longer term 200 days moving average at just under $12 while the shorter term 50 days moving average at just above $12.

So, that is probably the immediate band of support for OCBC.

That is probably where I would be buying again.

I remind myself that technical analysis shows where the supports are but it cannot tell if the supports will hold or break.

What if it breaks?

Looking at the weekly chart, the 200 weeks moving average is at $11.

I do not believe it would go that low as there is a trendline that is rising and should provide support at around $11.60 to $11.70 in the next couple of weeks.

Of course, Mr. Market does not care what I believe in and will do what he wants to do.

OK, this blog is probably longer than what I had in mind.

Stopping here.

In case I do not blog again until the new year, Merry Christmas and Happy New Year!

References:
1. Walk F.I.R.E. enter demon.
2. 4.4% yield T-bill: Sanity or...?
3. DBS, OCBC and UOB at...

4.4% yield T-bill: Sanity or herd mentality?

Regular readers might remember that AK didn't sound too interested in 6 months T-bills anymore in a recent blog.

Why?

Simply put, the yield was falling and promotional fixed deposit interest rates from the banks were equally attractive or getting more attractive for a 6 months tenor.

Too lazy to go into details again here and some might be offended if I do.

So, for those who don't remember or would like to refresh their memory, see:
SSB, T-bill, "Fed up."

Still, I was expecting at least a smelly smelly 3.8% p.a.

That would not be very attractive but it would still make sense for people trying to get a higher return with their CPF OA money.

Although I was not very interested, at the back of my mind, I was wondering if I should try my luck?

After all, it is an auction and I could be wrong and I said so in the blog.

However, what piqued my interest was a reader's comment in the said blog.

Keng speculated that some people might play hard to get and push up the yield.

I found his comment interesting and I even made a YouTube video out of it:

Anyway, I put in a $10,000 non-competitive bid just to tikam.

Well, the rest is history.

Source: MAS

4.4% cut-off yield!

This is the highest ever since I started my T-bill adventure in October!

100% allotted too!

Alamak!

Should have put in a larger sum.

LOL.

Imagine betting on 4D and getting the first prize when we betted only $1.

Yes, similar feeling.

LOL.

It is like a box of chocolates.

We don't know what we might get.

Auctions are like this.

So, did sanity return to the T-bill auction?

Or was it simply a case of herd mentality?

Quite possibly, like me, many were expecting the yield to be lower.

So, quite possibly, many who participated before did not participate in this auction.

Now, with this "earth shattering" 4.4% p.a. yield, could we see an increased interest in the next auction this month?

I could hazard a guess but I think I will not.

Too hazardous.

LOL.

Huat ah!

Related post:
4% p.a. 6 months FD promo. 

Recently published:
Buy crypto in 2023. Jialat.

Buying crypto in 2023 despite big losses! Barbers jialat.

I am just talking to myself about some things an article in The Straits Times has mentioned.

How to help young people who are still enamored with cryptocurrencies despite the horrific crash?

OCBC says about 1 in 5 Singaporeans are invested in crytocurrencies.

On average, Gen Z and millenials who made losses lost 40 per cent from crypto investments.

Surprising thing is 39 per cent of those in their 20s are still likely to invest more in cryptocurrencies in the next 12 months despite their losses.

I will say 2 things here:

1. Buying cryptocurrencies in the hope that prices will go up so that they can make money by selling to someone else is not investing but it is speculating.

2. Buying more of any asset when Mr. Market offers a lower price is only a good investing idea if that asset is a bona fide income generating asset.

Anyway, how to help these young people?

World Economic Forum suggests that financial literacy education is key and suggests that people can use trusted blogs to learn about investing fundamentals.

AK wonders how can we tell which blogs are trustworthy and which are not?

Article went on to say that regulators should require companies selling or promoting financial products to have a "fiduciary standard of care."

Alamak.

Then, what happens to all the bloggers and Youtubers telling people to put money here and put money there for higher returns?

Some are also promoting get rich quick schemes in various forms?

Many if not most are sponsored to do promotions.

All will kena like that?

Remember not to ask barbers if we need a haircut?

Now, the barbers will tell you what haircut is better for you because they need to provide "fiduciary standard of hair."

Am I right to say that?

Barbers jin jialat like that if I am right.

The article says setting higher standards for financial services firms could protect young people better.

Operative word here is "better."

It won't protect anyone who is stubborn and who still wants to follow "evil" investment gurus.

Ignorance is bliss?

Blissfully ignorant?

Very headache but what to do?

References:

1. Gold, silver, and Bitcoin as insurance. (AK has some too.)
2. Walk F.I.R.E. enter demon?

Recently published:

Where to park emergency fund?

Park emergency fund in fixed deposits or SSBs?

A reader asked if it is better to put our emergency funds in Singapore Dollar fixed deposits or in Singapore Savings Bonds?

Read the very thoughtful comment from the reader: HERE.

This is my reply:

For the longest time, I favored fixed deposits over Singapore Savings Bonds for my emergency fund.

This is largely because I am able to get my hands on the money immediately upon breaking a fixed deposit. 

On the other hand, as you have rightly pointed out, we have to wait for a month before we can get our money in the case of Singapore Savings Bonds if we were to make early redemptions. 

In an emergency, I probably need the money in a hurry. 

Waiting a month before I could get the money might be a luxury I could not afford. 

Even now, I am using the Singapore Savings Bond only as an alternative for money which I had planned to make voluntary contributions to my CPF account with. 

10 years is relatively long term and mimics what the CPF does for me and at least for people who are 45 years old or older.

Why do I say this?

From an interest income perspective, the Singapore Savings Bond makes more sense now than voluntary contribution to our CPF accounts.

CPF or Singapore Savings Bonds? It is a no brainer!

In using fixed deposits to store my emergency fund, I make sure that each fixed deposit is relatively small with sums of between $10K to $25K each. 

This is because if I were to break a smaller fixed deposit, I would lose less interest income compared to breaking a larger fixed deposit. 

It is a reason why fixed deposit promotions like the recent one from UOB which requires a minimum sum of $50K in fresh funds to qualify are not viable for my emergency fund. 

This is only my belief, of course, which applies to my own circumstances and, maybe, eccentricities.

The following blog is probably most relevant to this discussion and you might want to read it if you have not done so before: 

Singapore Savings Bond: Good or not? 

Here are more references: 

1. A special chest for emergency fund 

2. Why fixed deposits over structured deposits?

Happy emergency fund building!

Recently published:
SSBs, T-bills, Fed up!

"Walk F.I.R.E. enter demon?" SSB, T-bill, "Fed up."

The Fed has spoken and does Mr. Market like it?

Well, to be clear, interest rates are not going down anytime soon.

In fact, interest rates will be going higher albeit at a slower pace.

Indeed, another 0.5% hike is expected this month and we could see another 0.5% in 1Q 2023.

However, in the near term, there is some celebration.

It is like being in a COVID 19 lockdown for too long and there is just so much pent up energy waiting to break free.

Human beings are like that.

Anyway, it seems that yields are all softer in the near term and we see this in the latest Singapore Savings Bond offer.

3.26% p.a. 10 year average yield.

This is lower than the 3.47% p.a. before.

In case some think it is not a big deal, it is a pretty big deal when we realize it is more than 6% lower.

If our boss tells us we are getting a 6% pay cut, I am sure we won't be happy.

Yes, for the gainfully unemployed like me, interest income is part of our income!

For most people who are unemployed, interest income could be their major source of income.

It is true that it is passive income and not earned income but it is income.

Still, I will be applying for this Singapore Savings Bond as the 10 year average yield remains above 3% which is what I need to see in order to park my funds originally meant for CPF voluntary contribution in the new year.

$14,000 is all that remains to be deployed and with the a lower 10 year average yield, I am hopeful that I will get full allotment.

Of course, it is hard to say what Mr. Market might do.

Those who applied for more mostly got $14,000 allotment for the 3.47% p.a. Singapore Savings Bond but they mostly got only $10,000 allotment for the 3.21% p.a. one before that.

Alamak.

Higher yield, people less interested.

Lower yield, people more interested.

I am confused.

How like that?

Anyway, for those who are interested like I am, remember to apply by 27 Dec 22.

What about the 6 months T-bill auction?

We will have to submit a bid by 8 Dec 22 if we are still interested in it.

AK doesn't sound too interested, does he?

You so clever to think so.

I think we can take a hint from the lower yield offered by the Singapore Savings Bond that the yield on the upcoming 6 months T-bill is probably going to be lower.

Of course, I could be wrong.

After all, my hopes for higher yields from the 6 months T-bills last month were dashed although the Singapore Savings Bond last month offered a higher 10 year average yield.

With people using their CPF OA money to chase higher returns from T-bills and with their opportunity cost so high compared to people using cash on hand, I expect yields for 6 months T-bill to soften further.

This is made more likely with more latecomers joining the bandwagon. 

So, what do I think the yield for the next 6 months T-bill might be?

3.8% p.a. smelly smelly or lower if the pong gets really intense.

As long as the CPF OA interest rate stays at 2.5% p.a., the 6 months T-bill could see yield trending lower as even 3.5% p.a. still makes sense.

Although it might seem stupid and irrational to some that these people bid very low in order to get full allotment, it really is quite rational.

It is very natural human behavior.

I could join the "madness" but the thought of having to get behind a long line at the bank is too off putting.

Anyway, for those using non CPF money like me, we can get higher returns from fixed deposits now.

With interest rates still on an upward trajectory, I expect fixed deposit rates to stay firm and eventually rise in tandem.

There is talk of interest rates possibly reducing in 2H 2023 or in 2024 because the world is probably going into a recession.

What does AK think?

I think I will believe it when I see it.

Crystal ball gazing is all very interesting to some people but I find it pretty boring because all I see is the crystal ball most of the time.

Well, when I am hallucinating, I might see something else.

For now, staying invested in income producing assets and having a meaningful fixed income component in my portfolio is still the strategy.

The strategy is boring and has not changed in years.

Yes, it doesn't make me rich quick like going big into cryptocurrencies has for some people but it is a sound and grounded strategy that is time tested.

Those who made a lot of money in some  more questionable cryptocurrencies and got out early must realize that they got lucky in a Ponzi scheme.

They might not be so lucky next time.

Most people crashed and burned because that is how Ponzi schemes work.

OK, the last few sentences just happened spontaneously.

Didn't plan to say anything like this as all I wanted to blog about was the upcoming Singapore Savings Bond and T-bills.

Alamak, getting old and nagging too much.

OK, I will stop.

Recently published:
1. 4% p.a. 6 months fixed deposit.
2. 50% don't have enough savings.
Achieving F.I.R.E. is not impossible.
See: 59% want to achieve F.I.R.E.
Just don't "walk fire, enter demon."

Singapore banks see higher investor interest in T-bills as inflation rises. CNA reports: 

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

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.

Almost half don't have enough savings for an emergency.

The Straits Times has an article titled "Close to half of Singaporeans don't have enough savings to tide through an emergency."

Although I know that there are people who do not believe in having an emergency fund and although I know that many do not have an emergency fund or a big enough emergency fund, this is still pretty mind boggling.

If the article is true, one in two Singaporeans are at risk of crashing hard financially in an emergency.

I know there are some "investment gurus" who tell people that there is no need for an emergency fund and that we can always borrow money from the banks.

I think these "gurus" are simply evil.

They shouldn't going around peddling such dangerous ideas which might work for them but not for ordinary people.

They should know that everyone's circumstances are different or maybe they know but they simply don't care.

Why do I say that?

Banks are fair weather friends.

Banks would lend money to people who already have money.

When we are really in distress and have nothing of value, try borrowing money from the banks and see what they say.

When we really need to borrow money, we are probably scrapping the bottom of the barrel.

There is most probably nothing left but despair which is worth nothing.

These "gurus" peddling such ideas could be financially well off and could easily borrow money from the banks (but I don't see why they would since they probably make so much money from selling their courses already.)

If their students are in distress and if no one is going to lend them money, will these "gurus" step in to help?

Seriously, no one cares about our money more than we do.

We genuinely care about our financial health or at least we should care.

No one else does.

What about AK?

Does AK care?

Today's weather is quite good hor?

Things might look OK now in Singapore but there is no way of knowing how long this will last.

Things could take a turn for the worse and it could happen quite quickly.

Don't be overly optimistic.

Having an emergency fund is not being overly pessimistic.

Having an emergency fund and an adequate one is being pragmatic.

For new readers of my blog and for readers who need a refresher, read these:

1. Compared to anger and fear, shame is worse.

2. How to have peace of mind as investors?

3. How much to have in our emergency fund?

Gambatte!

Recently published:
Singapore Savings Bond: Fully allotted.

Singapore Savings Bond: Fully allotted!

The Singapore Savings Bond (SSB) was 2.44x oversubscribed in October which led to almost every applicant who applied for more than $10,000 getting only $10,000.

As the Singapore Savings Bond this month in November has a higher 10 year average yield of 3.47%, oversubscription is very much expected.

I had $38,000 set aside for voluntary contribution to my CPF account in 2023.

With $10,000 of Singapore Savings Bond bought in October, I had $28,000 left.

As my plan is still to channel money originally meant for voluntary contribution to my CPF account into Singapore Savings Bond as long as the bond's 10 year average yield is 3% or higher, I submitted an application for $14,000 this month.

Why not the full $28,000 which was the refund from October's application?

Well, two reasons:

1. With interest rates still rising, could December's Singapore Savings Bond offer a higher 10 year average yield?

2. I expected the oversubscription rate to be even higher and, so, we might even see a lower than $10,000 allotment per applicant in November.

No point applying for more.

Yes, I prepared myself mentally for some of the money to be refunded which I think is prudent so as not to set myself up for disappointment.

So, what's the result?

Source: MAS.

Surprise!

Although oversubscribed, it was less so compared to the preceding month's SSB.

Yes, my expectation for an even higher oversubscription rate didn't materialize which isn't a bad thing.

Allotted: $14,000.

Amount refunded: $0.

So, I got 100% of what I applied for!

Bullseye!

Jackpot!

So lucky!

This also means that I was right not to apply for more because if I had applied for $28,000, I would most probably have ended up with $14,000 allotted anyway.

Now, of the $38,000 earmarked for CPF voluntary contribution, I still have $14,000 available.

Am I applying for next month's Singapore Savings Bond?

As long as the 10 year average yield of Singapore Savings Bond is higher than 3%, I am interested.

What about money earmarked for topping up the CPF-MA?

The CPF-MA pays 4% p.a.

So, unless the Singapore Savings Bond offers a 10 year average yield of 4%, I will still top up my CPF-MA.

Recently published:
6 months T-bill disappointing.

Related post:
1. SSB 2.44x oversubscribed.
2. 3.47% 10 year average yield!
3. SSB or CPF? It is a no brainer.

6 months T-bill auction disappointing. My view.

In response to the lower than expected 4% p.a. yield in the 6 months T-bill auction which happened in the first half of this month in November, I expressed my disappointment.

I also expressed my disgust but maybe that was a bit too much as desperate people are just behaving like desperate people.

See:
4% yield T-bill 3.2x oversubscribed.

In that blog, I also wondered if the subsequent T-bill auction would see a lower yield with massive oversubscription expected once again?

It would be massively disappointing if the yield should be even lower than the promotional fixed deposit interest rates offered by the banks for a 6 or 12 months tenor.

If I am not mistaken, UOB offered 3.85% p.a. for a 6 months tenor fixed deposit while DBS offered 3.8% p.a. for a 5 months tenor fixed deposit recently.

Anyway, I decided to go ahead and give it a go.

Crossing fingers that we won't get too many low ballers dragging down the yield.

To be honest, I would be quite happy if the cut-off yield is 4% p.a. again.

Setting the bar pretty low given where promotional interest rates on fixed deposits are at.

Not setting high expectations means a lower chance of being disappointed.

So, what's the result?

Cut-off yield for the latest 6 months T-bill auction:

Only 3.9%!

This is only slightly better than the best fixed deposit promotional interest rates we have seen lately.

As if Mr. Market was expecting the yield to be rather uninteresting this time, this T-bill auction was "only" 2.48x oversubscribed!

Source: MAS

Now, do I apply for more T-bills in December or just stick with fixed deposits?

I am leaning towards fixed deposits if the banks' promotional interest rates remain relatively high.

Greater transparency.

Zero suspense.

Better for my weak heart.

However, if fixed deposit promotional interest rates become less interesting too, then, I could try to get some T-bills again next month.

Related post:
Growing passive income.