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Singapore Dollar Fixed Deposit/Time Deposit

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the lynx
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Singapore Dollar Fixed Deposit/Time Deposit

Postby the lynx » Mon, 05 Mar 2012 10:16 am

I was doing my homework on Singapore Dollar FD rates and I find that the rates across banks in Singapore vary greatly.

SGD20K for 1 Year: (% p.a)
Citi: 0.100
DBS/POSB: 0.072
HSBD: 0.19
Maybank and RHB: 0.625
OCBC and UOB: 0.250
StanChart: 0.350
(as of 02.02.2012)

(due to the rules of this forum, I cannot post the links of these rates above)

The funnier thing, the rates provided by lesser known banks (especially Malaysian banks in Singapore - Maybank and RHB) is way up so high.

My question is: What's the catch?

Note: I am just another layperson trying to work out money matters. Would be grateful if someone who is very familiar with these can enlighten me on this.

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Postby Mad Scientist » Mon, 05 Mar 2012 11:14 am

Interest rate in SGD is very low. If you have that amount of money and has the stomach go for DCD . I would suggest you monitor SGD / GBP , SGD / USD and SGD/NZD , SGD/ AUD. Alternatively convert directly to OZ or NZD where they pay 4 to 4.5 5 or 5.5 % for AUD. Place it TD .
Foreign Banks always pay more in local currency to my limited knowledge or their tranche is higher
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Postby carteki » Mon, 05 Mar 2012 11:22 am

MS - Doing a AUD FD sounds like an option, but there is the added complication of foreign exchange risk. If the AUD depreciates you could - in SGD terms - end up with less money than you started with and given how strong the AUD is at the moment this (in my mind) is way more likely than it strengthening.

TL - To answer your question about the "lesser" banks offering better rates. This is because they're not tier 1 banks and according to my source they are not monitored as closely as the local banks by the MAS. Hence you're paying a "premium" for the increased likelihood that they'll go under. As your amount is S$20k it is covered by the Singapore Deposit Insurance amt, so this should to some extent cancel out the risk. Stan Chart and ANZ are both hunting deposits with special offers at the moment. Their step-up deposits offer a slightly better (effective) interest rate than a fixed deposit and the plus side is that you will receive some interest if you withdraw early (which doesn't happen in a FD)


Disclaimer: This is my personal opinion and is not for reliance on making a decision. Please contact a professional if you want specific advice to your case

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Postby the lynx » Mon, 05 Mar 2012 2:23 pm

Thanks MS and carteki for the info. It now makes sense why the lesser banks offer such rates.

Actually DCD never crossed my mind before, so will read up more about it. But would it mean that I need to constantly monitor the forex rate from time to time and be prepared to withdraw any time when situation suggests so?

And thanks carteki for the heads-up on step-up deposit, it is actually new to me so I will look it up further. Looking at the info now, it actually sounds good. But if SUD is so good, why is it still offered alongside with the 'traditional' FD by banks? Because from what I am comparing now, the initial deposit amount required by both types seem similar. Aside from the fact one has to contribute to the SUD on monthly basis and play up with the interests, what's the catch?

Sorry if my questions seem naive. But I really appreciate the input :)

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Postby Mad Scientist » Mon, 05 Mar 2012 2:33 pm

Yes, Kim , I agreed on risk on currency fluctuation BUT over a period of 10 years never once AUD depreciate dramatcally and not recovered. More likely to appreciate as the country has mineral resources that China , biggest buyer of minerals, always on the lookout for their growth and expansion
DCD is more for those with elastic stomach . If you fear this then do not do. The best way is direct conversion then on place it in foreign TD in local banks. Still pays you more than local currency rate
To make money you cannot use SGD as the base currency as it is a controlled currency flush with Gahmen funds. Only when it fluctuates will you be able to make or LOSE money.
I am doing the trading myself . Read up and understand but I cannot assures you on win or lose as this takes time and practise. Lots of it.
I am only giving you options but it is up to you to choose wisely
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Postby aster » Mon, 05 Mar 2012 5:19 pm

carteki wrote:MS - Doing a AUD FD sounds like an option, but there is the added complication of foreign exchange risk. If the AUD depreciates you could - in SGD terms - end up with less money than you started with and given how strong the AUD is at the moment this (in my mind) is way more likely than it strengthening.


If the markets crash again you could lose 30% in the short term on your AUD holdings compared to the USD. Of course until that happens you will enjoy a nice rate of return given the high interest rates in Australia.

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Postby Mad Scientist » Mon, 05 Mar 2012 5:42 pm

aster wrote:If the markets crash again you could lose 30% in the short term on your AUD holdings compared to the USD. Of course until that happens you will enjoy a nice rate of return given the high interest rates in Australia.


Now , I am baffled. How can you lose 30% in the short term if you are holding AUD per se if the market crash. You only lose when you spot fix futures, or just hedging i.e no real transaction per se until you are force to make the margin call .
If you exchange it to AUD currency and hold it in long term e.g 2 years is far better than keeping it in SGD which pays bugger all interest rate.
You only lose value if you do short call.
During WFC 08, the currency market was in topsy turvy but for those that kept real currencies the loss is less than 15%. Three currencies stand out during that time AUD, GBP and Yen
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Postby teck21 » Mon, 05 Mar 2012 11:14 pm

The A$ did crash to 1:1 during the GFC, and has recovered and then some.

So whoever bought into the Aussie before the GFC certainly have come out unscathed.

However, buying into it at $1.30 before the GFC and enjoying yields of 6% and marginal capital appreciation means very little considering one could have bought into the Aussie at 1:1 at the height of the crisis.

Just because one doesn't really 'lose' any money doesn't mean one hasn't. Especially if it's purely investment.

Opportunity cost is a cost most people don't take measure of.

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Postby aster » Tue, 06 Mar 2012 12:52 am

Losses in the short run don't mean losses in the long run, just missed opportunities.

If you switched to the AUD before the crisis hit then you wouldn't have lost anything if you held on until today. But... if you hadn't made that move you could have bought the AUD at 30% less and made a real killing.

Same for Apple shares. If you bought them at their peak before the GFC, you would still be ahead today if you held on to them. But you would have made a mega-profit if you bought them after the markets brought Apple stock to around the $100 mark. :)

Personally I'd rather switch to the USD and be patient, very patient, but then have the widest smile of anyone around you when things get shaky again.

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Postby Mad Scientist » Tue, 06 Mar 2012 3:21 am

Agreed with your POV Teck.
The loss will only be realise if you revert the conversion back to original currency. However this is not what we are talking about as loss on speculation will be hard on everyone even for this seasoned fighters like me.
USD appreciation will not be now until the US GE is over. Only then we can tell. FOMC, PMI and Housing is a real indicator month to month for US. As long as they keep on printing money , it will take a wee while. M'sia did albeit similar currency control during 97 crash. It takes about 10 years to stabilise.
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Postby aster » Tue, 06 Mar 2012 12:20 pm

You do realise that if really bad news were to come from the US then the Aussie Dollar would fall MUCH, MUCH more than the US Dollar? :)

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Postby zzm9980 » Tue, 06 Mar 2012 1:30 pm

To the original topic, Standard Charter has a 1.88% interest rate promotion as long as you spend at least S$500 a month on one of their cards. Sounds like easy money if you're disciplined enough to pay the card off in full each month.

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Postby the lynx » Tue, 06 Mar 2012 11:19 pm

zzm9980 wrote:To the original topic, Standard Charter has a 1.88% interest rate promotion as long as you spend at least S$500 a month on one of their cards. Sounds like easy money if you're disciplined enough to pay the card off in full each month.


Yeah. Saw that. The advertisement is EVERYWHERE! But it means that I need to own a SC card to be eligible. Anyway I'm gonna do more homework on its step up deposit package so I guess I can pop the question as well when I dig around later.y

On another, the preceding discussion is really an eye-opener, considering that I'm a noob about it. Go on guys, don't stop :-)

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Postby Mad Scientist » Wed, 07 Mar 2012 3:58 am

aster wrote:You do realise that if really bad news were to come from the US then the Aussie Dollar would fall MUCH, MUCH more than the US Dollar? :)

WHich bad news? enlighten me. Pegging USD is a norm as oil and many commodaties is traded in US. Now that Euro is in a spot. US economy more like yo-yo to me.

Currencies trading is different as you will have a big basket to compare.
I am not into shares or blue chips as I have very little knowledge. JR8 will be a better person to comment.
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Postby JR8 » Wed, 07 Mar 2012 4:20 am

Mad Scientist wrote:
aster wrote:You do realise that if really bad news were to come from the US then the Aussie Dollar would fall MUCH, MUCH more than the US Dollar? :)

WHich bad news? enlighten me. Pegging USD is a norm as oil and many commodaties is traded in US. Now that Euro is in a spot. US economy more like yo-yo to me.

Currencies trading is different as you will have a big basket to compare.
I am not into shares or blue chips as I have very little knowledge. JR8 will be a better person to comment.


Kind thought MS but I'm sure BillyB and others are far more in tune with the markets than I am these days...

I'm not into currency trading as I haven't time to study the macro-economics involved, and I've seen too many newbies burned. I prefer it longer term, less racey... slow 'n steady. Consistently performing high yield/(boring) household name blue-chips that you buy and forget is my thing these days :)

Either way I don't know what Aster is talking about, as he does not amplify beyond the usual melodramatic broad-brush and unattributed statements. You are not alone MS in waiting for enlightenment ;)


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