Market Update – recession
Recession risks are getting higher each day.
For those who are into the market news would have realized that the conditions of the market are getting more and more volatile each day. It can up a lot one day and then down a lot for the another day (I mean for US market).
For Singapore Market, it is generally quite stable since most investors are just holding for dividends. However, do not forget that when the big brother sneeze (US), the rest of the world might get a cold too. If big brother sneeze consistency (perhaps coming soon), let’s better be careful. No matter how stable, it will still be affected somehow.
Interest rate
For those who remembered, the market started off quite well this year but starts to get a little volatile in mid-February. The interest rate also drop as people expects and think Fed “will pivot” early Feb.
We can see from the Singapore Saving Bonds for those who are more into Singapore. This month bond rate (SBMAR23 GX23030A) is 2.9% for 10 years are much lower than previous month rate of 2.97%.
Disclaimer: I have not applied for this month bond as I have already built my SSB bond ladder. I want to keep my cash more liquid to take advantage of the possible upcoming market weaknesses.
Besides Singapore Saving Bonds, we can also see from the Fixed Deposit Rate. They have dropped a lot since February. You can refer to my previous post SAVERs – Best Options to maximize your interests (2) to see how much it has dropped. Just look around the local banks or even foreign bank like CIMB, you would have realized it in early Feb.
Things start to change
However, after a while, things start to change in mid-February (see below: Screenshot 23 Feb 2023 from CNBC). You can see that the US treasury rates start to go up after more news from US Fed. Seems like people thinking pivoting not happening?
Let’s Compare
If you refer to my earlier article dated 13 Feb 2023, about 10 days ago (Portfolio Update: Feb 2023 and Reflection at half-life (hopefully) mark – 40 Years old), both the 6 months and 10 years rate have gone up with US6M even exceeding 5% from then.
If we look at the history for FED, interest rate tightening doesn’t end well. Some investors may believe that this time is different, but I don’t think so. Hence, I will only fast trade now for good counters while holding 50-60% cash as per my update on 13 Feb 2023.
Transaction
To be most transparent, I only aim to trade as of now. Unless the price is super attractive, I won’t buy and keep. For example, today, I bought Wilmar at $3.96 for trade (if I get stuck, it’s fine too. Long term Wilmar will be good especially with potential food shortages). The price is not super excellent but is decent enough especially it still drops after good results. DBS and UOB also dropped despite giving special dividend and increased dividends. All these shares long term will be good, but meanwhile, I am taking the risk off mode. I will only trade for now unless super good price come which my guess should be in the next couple of months. Disclaimer: Please do your own due diligence.
Savers
Ok, enough of ratting about market and my personal opinion. Let’s go back to saving.
Saving is important especially in such high interest rate environment. With such high interest rate environment let’s not waste it and put our money to good use 🙂 However, as mentioned earlier, Fixed deposits rate have gone down for this month but quite likely it will go up again next month due to rising rate)
For me, I want to keep my cash liquid. I have already locked few hundred Ks in Singapore Saving Bonds (SSB) for the past few months as liquid emergency funds. Unless SSB for next month reaches above 3% again, then I may consider putting in more. Meanwhile I preferred to put into more liquid options.
What options are available for savers?
Recently I have put some money into Fixed Deposit with the most attractive being the 4.88% P.A. SR1B for 3 months with DBS. I posted this in private group but not the public telegram group. Next time, maybe if got good lobang, I should post in the public group too.
For now, I think there are only few attractive options which are still available (excluding the UOB One and OCBC 360 which require salary and some spending).
Personally, my eSaver exclusive bonus will end by 28 Feb 2023, I need to find a place to put these money. Quite likely I will put the money into one the options below. Most likely will be option 2 or 3 which are much more liquid as I want to take advantage of the market in case of market weaknesses.
Option 1: OCBC 4.08% Fixed Deposit Promotion
8 Month Fixed Deposit at 4.08% for OCBC 360 Customers. Don’t miss it! The caveat is you will need to have OCBC 360 accounts in the first place.
Option 2: MoneyOwl WiseSaver
MoneyOwl Wisesaver is investing in Fullerton SGD Cash Fund – Class A (SGD) which invested mainly in SGD Fixed Deposit and backed by Temasek. MoneyOwl itself is under NTUC income. It is as safe as you can get!
The latest rate is around 3.99%. This is liquid and you can take out anytime.
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To earn the first free $20, simply sign up for WiseSaver which the underlying fund is Fullerton Cash Fund – invested in rolling SGD Fixed Deposit and backed by Temasek. Then put in minimum $10 via FAST transfer to fund this account to earn full liquid ~4% yield. Since free money and risk free, why not?
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Option 3: Fundsupermart Autosweep
The latest yield is 2.751% which is very decent. But the most attractive part of this option is that I am able to use the fund to trade directly and immediately. Option 2 may take a few days to transfer the money out.
Personally, I am using FSMOne.com to invest in funds & ETFs (including money market funds).
FSM is good due to the low comms and the free transfer from FSM to CDP (last year I did a few transfers and took less than a week to transfer. However, my most recent transfer was initiated on 4 Feb 2023 but the transfer to CDP was only done on 23 Feb 2023 around 2pm). Hence, user might want to take note.
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Option 4: MAS Treasury Bills
This is one of the safest options as these bills are backed by Singapore Government. However, the money will be locked up for 6 months. If you confirm don’t need the funds for 6 months, it will be a good option. Moreover, the rates are going up. Quite likely you should be able to get more than 4%.
For those who are unsure what are Treasury Bills; what are the difference between competitive/non-competitive, do read this article (Treasury Bill: Competitive or Non-Competitive?). Personally, I would do competitive auction for at least 4% in case there is some weird freak result.
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