Investment Archives | Page 18 of 20

Leading Fixed Deposit Rates In Singapore

First, you must know the nature of fixed deposits (FD), its advantages, and disadvantages. A fixed deposit is a financial tool offered by the bank, which, provides clients (like YOU) with a higher rate of interest than a savings account.

In Singapore, a minimum deposit of S$1, 000 is required to open an account. The fixed deposit rate will only be given within a maturity term. The term ranging from 1 to 36 months depends upon your bank here. Once the money matures, you will get back your initial deposit with the interest.

FD’S ADVANTAGES

a. SAFETY

Fixed deposit is a more stable and safe route than other investments. Since not everyone is willing to risk it all with bonds and property investments, fixed deposits offer guaranteed money back.

b. WORKABILITY

Because the rates vary based on the time on hold, the amount you put in, and the bank you chose…there is a good chance to get the highest interest rate possible. All you have to do is to research and compare the workability or flexibility of the FDs available.

c. LIQUIDITY

Your money that resides in a fixed deposit account is a surefire liquid asset (i.e., can be converted to cash). So, after the money matures, you can withdraw cash for any purpose such as weddings or medical emergencies.

FD’S DISADVANTAGES

a. NO DIVERSIFICATION

If you invest all of your wealth to FDs then, you will not indulge on the benefits of diversification. Diversification is having investments in real estate, gold, and stock markets.

b. VULNERABILITY TO INFLATION

The returns of the FDs are lower if the inflation is very high. To put it in perspective, the interest rate may not change but you will still lose money if the Singapore dollar significantly drops.

To the most exciting part, we shall go…

LEADING FIXED DEPOSIT RATES IN SINGAPORE

Here are the banks that provides the best interest rates if your savings is S$10, 000 within an annum:

1. RHB Singapore Dollar Time Deposit

Interest Rate: 0.63%

Returns: S$63

2. CIMB Why Wait Fixed Deposit-i Account

Interest Rate: 0.50%

Returns: S$50

3. UOB Grand Senior Citizens Fixed Deposit

Interest Rate: 0.38%

Returns: S$38

4. Standard Chartered Singapore Dollar Time Deposits

Interest Rate: 0.35%

Returns: S$35

Here are the banks that provides the best interest rates if your savings is S$100, 000 within an annum:

1. CIMB SGD Fixed Deposit

Interest Rate: 1.30%

Returns: S$1,300

2. Maybank iSaVvy Time Deposit

Interest Rate: 0.85%

Returns: S$850

3. Maybank Singapore Dollar Time Deposit

Interest Rate: 0.70%

Returns: S$700

4. Bank of China SGD Time Deposit Account

Interest Rate: 0.60%

Returns: S$600

Image Credits: Will Clayton via Flickr

The data above goes to show that the strength of the fixed deposit rate truly varies upon the amount you saved and the bank you chose. Hence, it is important to educate yourself first before diving in.

Sources: 1, 2, & 3

Newbie’s Guide To Singapore Banking

Image Credits: Tax Credits via Flickr

WHY SHOULD YOU KEEP YOUR MONEY IN THE BANK?

1. Protection

A potent reason why people prefer to keep their wealth in the bank is its security. Keeping your money at home may increase the risk of it getting stolen or damaged by unforeseen events such as fire. The banks are equipped with facilities to guard your money the best they can possibly can.

2. Accessibility

With the modern times, banking had become easier. More and more banks allow online banking and even Smartphone Apps to help its users to transfer money with the stroke of their fingertips. No need to endure a long queue! Furthermore, you can access your money anywhere as there are ATMs nationwide.

3. Saving and Investing

The money you park in the bank will have returns depending on the yearly interest provided by your bank. Also, you can take the opportunity to grow your savings even more by investing it in the stock market through the bank’s investment services.

TRUSTED BANKS IN SINGAPORE

Singapore is one of the strongest developed countries all over the world. This is why aside from local banks; renowned International banks have branches located here. With a myriad of choices which, shall you trust your money with?

To answer this question, Focus Singapore, a website that provides useful information on travel, business, and education, had ranked the “Top Banks In Singapore”. This ranking is solely based on the available data and research. On that note, here are 7 of Singapore’s premier banks:

1. Developmental Bank of Singapore (DBS)

2. Post Office Savings Bank (POSB)

3. United Overseas Bank (UOB)

4. OCBC Bank

5. Standard Chartered Bank

6. Citibank

7. HSBC

These commercial banks include the functions of universal banking such as allowing deposits, provision of cheques, and other businesses authorized by the Monetary Authority of Singapore. With these transactions, you may encounter abbreviations such as GST (Goods and Services Tax) that you may not be familiar with.

That said here are 10 COMMONLY-USED BANKING ABBREVIATIONS that you may see on your bank account statement:

1. ATM: Automated Teller Machine

2. BGC: Bank Giro Credit

3. INT: Interest

4. DIV: Dividend

5. CD: Cash Deposit

6. CW: Cash Withdrawal

7. S/O or SO: Standing Order Payment

8. IFT: Internet Banking Fund Transfer

9. IBP: Internet Banking Bills Payment

10. SC: Service Charge

Image Credits: 401(K) 2012 via Flickr

May these nuggets of knowledge help you in the future!

Sources: 1, 2, 3 and 4

Isn’t Investing Just Buying And Selling?

What is investment? Isn’t it just buying and selling an asset? That was what I thought so too when I first began investing. Along the way, I learnt a great deal about what investment is about. It goes beyond just buying and selling. I remember when I first begun investing, the questions that went through my head were questions like “What stocks should I buy?” or “How much does it cost?”. It was simple as that. Perhaps like me, you asked yourself these two questions and found your answers. Subsequently, the ‘Buy’ button was clicked and now you own your very own stock. You were happy, with emphasis on the word ‘were’. Maybe you got lucky, things went your way for awhile, and suddenly it happened. Your stocks went from profit to loss. You’re not alone and it’s not uncommon. When losing, you begin to enter the denial phase and convince yourself that it’ll go back up again. Weeks passed, and you suddenly realise that you’re holding onto a 20% loss. What now? Now, you learn that investing is not just buying and selling.

I’ve been there and done that, but most importantly, I’ve learnt from it and I want to share with you the lessons I’ve learnt so you don’t have to go through it yourself. But just like investing, easy to understand, hard to apply. However, I will still attempt to offer some practical tips that I use in my investment process. “Investment process”? You mean it’s not just buying and selling? Plainly speaking, it is, but there’s more to it. There’s a whole lot of thought process going on before the ‘Buy’ button is clicked.

The Plan

“If you fail to plan, you plan to fail.” – The overused quote indeed. But it’s only because indeed, it works. Here are some of the questions that go through my mind before I click that ‘Buy’ button.

What is this company that I am about to buy involved in? What is its business like and is it profitable? – This is your fundamental analysis phase.
What’s the price now, can it fall further or should I take action now? – This is your technical analysis phase.
What price am I going to buy at, and why? – Based on the above two analyses.
If I buy at $X, when do I take profit and when do I stop my losses? – Contigency plan: Setting profit targets and stop losses.
Why am I buying this stock? – Are you in for the long-run or a quick bite off the market?

If you can answer these questions, you’ve already answered “What”, “When”, “Why” and that should be almost good enough. Feel free to add on more questions to this list. The more you plan, the better prepared you are when emotions try to block out your rational thinking. When you plan well, you’re setting up barricades against emotions that confuse the rational mind after the ‘Buy’ is clicked. It will be useful to know that it has served me very well and I am confident that it will serve you well also.

The Execution

“Plan your trade, trade your plan” – So after you’ve done your planning and have convinced yourselves that this is a good and profitable company, you click the ‘Buy’ button. Congratulations, you’re now an official stockholder! The real challenge of investing starts now – “Trade your plan”. Anyone can plan, but how many can execute without allowing emotions to get in the way? When things go your way, you pat yourself on the back and say to yourself “Good job!”. Perhaps like myself, you were 20% up, and before you know it, it became 20% down and you feel the pinch. Now, what would you do? As good as my plan was, I found out that my emotions blocked out rational thinking and I started creating false beliefs and adopting a whole new plan(that’s based on emotions) to make myself feel better. Check if you’re saying or doing the same things to yourself.

From a short-term trade, you turned it into a “long-term investment”. – You’re suddenly trading for a whole new reason which doesn’t make sense.
Cut your profits and let your losses grow – Don’t get mixed up! It should be the other way around.
“It’s cheaper now, maybe I should buy more?” – It’s not a bad plan, but it only works if you’ve got deep pockets. Do you? And is it deep enough? Remember, you are adding to a losing position, why not add to a winning position?
Ignored your stop losses and allowed it to be breached.

If you’re saying or doing these things, sit down and reflect for awhile. Think about what your game plan was and if you are still following your plan. If you’re no longer trading the same plan based on rational thinking, you’re likely to be trading based on emotions. If you allowed yourself to trade on emotions, be prepared to see yourself wiped out of the market. It’s okay to lose a few battles, but win the war. Don’t get wiped out in one bad hand because you allowed your emotions to run wild.

The Review

After all is said and done, it’s always good to look back and ask yourself these two questions:

What went right, and what could I do to make it better?
What went wrong, and what could I have done instead?

Two simple questions, yet packed with so much wisdom and knowledge that will guide you on your next investment.

Hope this helps you realise that there’s more to investment than just buying and selling. When you have a comprehensive plan and discipline to carry out your plan, you immediately become a successful investor just based on that two criteria. Keep working on it with undying persistence and improve the accuracy of your trade plan. All the best in your investments!

Secrets That Are Possibly Hidden By Your Life Insurance Agent

Not all life insurance agents are trusted advisors. So, the simplest way to prevent being exploited is to seek for an independent agent that will save you time and money. Here are the other secrets that your Life Insurance Agent may be keeping from you…

1. THEIR INCOME IS BASED ON COMMISSION

The agent’s income is solely compensated from the commission. It is one of the possibilities for the agent to have a personal interest that leads to you buying the highest premium possible equating to their highest commission possible. Thus, it may change his/her perspective of things, as well as the type of products clients are introduced to.

2. CASH VALUE WILL NOT BENEFIT YOU RIGHT AWAY

Yes! Cash value will build-up. But it takes about five years to have the cash value equal to the amount you paid for the whole life insurance.

3. BUY TERM AND INVEST THE DIFFERENCE

The term insurance is significantly less expensive than the whole insurance. This is why you can buy term then invest the difference on mutual funds. In fact, the combination of term and your investment for mutual funds may be less costly that the whole life insurance.

4. YOU MAY NOT NEED CHILD LIFE INSURANCE AFTER ALL

Renowned experts namely: Dave Ramsay, Suze Orman, and Neal Frankle are on a arguing against buying life insurance for kids.

“The only reason you need life insurance is if anyone is dependent on your income…please, you new parents, do not let anyone talk you into buying a life insurance policy on your child.” said Suze Orman.

Image Credits: State Farm via Flickr

According to them, if your child is not at the risk of a serious illness and you are financially stable to cover foreseen medical bills then, you are better off without it. Instead, save up for your child’s education until tertiary level.

Portfolio and Risk Management

It’s a boring topic, but when money is involved, is it still boring? I hope not! Investing is more than just buying and selling, it’s the art of handling risk and emotions. Having read through many blogs and seen many portfolios, there’s one similarity among all of them. They all have Portfolio Management. If the rich are doing it, there must be a compelling reason why they are doing it right? Having a good portfolio management can help enhance returns and reduce risk. Not everyone wants to have a portfolio that moves together all in the same direction, and not everyone realise that they may be having it. A good portfolio should comprise of several forms of assets and preferably in different industries because that way your risk will not be concentrated in a single industry. Yes, you may have a chance of making it big when the sector goes into a boom, just like the technology stocks prior to the .com bust. It is one thing to be overweight on an industry, but it is foolish to allow yourself to take on a risk that you may not be able to afford. The last thing you want to do when investing is to be wiped out completely. In this article, I wish to share using a top-down approach and gradually zoom in on how one can have a good Portfolio Management and avoid undertaking too much risk.

Portfolio Management

As mentioned, a good Portfolio would be one that can withstand years of market movements and still stand strong. The word ‘Diversification’ may come to your mind when Portfolio Management is mentioned. There tend to be a misconception about diversification, especially towards investors. To most investors, diversification simply means diversifying your money into different sectors of the market. This isn’t entirely wrong, and there are indeed benefits to diversifying into different sectors. However, may I present to you a broader view of what diversification means. Diversify into different asset classes. A truly good portfolio should be one that is invested into different asset classes – Stocks, Bonds, Commodities, Forex, Properties, etc.

Having a portfolio that is diversified into different asset classes will save you from having your hard-earned money from being wiped out in a black swan event. You can be sure that even if the stock market crashes, you still have other streams of income from your different asset classes like bonds or rental income from your residential properties (Note that REITs is still classified as stocks). Imagine if all your money were in just the stock market alone, perhaps even diversified into a few sectors. Your portfolio would have experienced a hard pounding and it served as a wake-up call for many who did not diversify across the different asset classes. That’s not to say that being diversified into different asset class will make you immune to any big worldwide crisis like this, but at least it mitigates the damage dealt.

Risk Management

In theory, everything sounds perfect. However, not everyone of us can afford the luxury to be invested in all the 5 asset classes mentioned. It would be nice to try to be as diversified as possible, but even if it’s just stocks, there’s another way to manage your risk. A part of portfolio management is Position Sizing. Always consider how much risk you are willing to take in a trade, preferably in dollar amount rather than in %.

Step 1: Consider the maximum loss(in $ amount) you’re willing to accept.

Step 2: Set a stop-loss level

Step 3: Calculate the capital exposure per unit (Entry price – Stop loss price)

Step 4: Maximum position size = Step 1 / Step 3

This formula can be found in Robert C Miner’s High Probability Trading Strategies book. If you’re interested, do head down to NLB to borrow because that’s where I got the book from! Although not everyone has the luxury to take up the maximum position size for every trade, it will still serve as a good gauge as to how much the maximum should be. This prevents you from over trading beyond your risk tolerance level. There are many strategies available and this is one of the strategies that I have found to have served me useful because I know exactly how many shares should I limit myself to. Hopefully you would re-look at your investment strategies and identify if you are carrying too much unnecessary risk.

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