Comments on: What is the best risk-free rate in Singapore? http://thefinance.sg/2007/12/26/what-is-the-best-risk-free-rate-in-singapore/ Top Personal Finance and Investing Blogs in Singapore Thu, 02 Feb 2012 00:29:34 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Panzergrenadier http://thefinance.sg/2007/12/26/what-is-the-best-risk-free-rate-in-singapore/comment-page-1/#comment-302 Panzergrenadier Fri, 28 Dec 2007 01:46:03 +0000 http://thefinance.sg/2007/12/26/what-is-the-best-risk-free-rate-in-singapore/#comment-302 Dear Derek While the returns are guaranteed, the age when you can use the money is not. Liquidity risk is also a risk because if you are unable to liquidate your capital either in part or in full, you do not have cash to spend for living expenses. The irony of the CPF system and specifically medisave is that many have the maximum amounts in their accounts but cannot use it for outpatient treatment unless it is for one of the chronic diseases allowed by the Government and even so is capped at a fixed amount a month. The classic Singaporean dilemma of being asset rich (our homes) but cash poor when we retire is a real problem because if you cannot downgrade or somehow monetise your home for cashflows especially during times when the property market is in the doldrums, you may not be able to retire comfortably even when on paper you may be worth a couple of hundred thousands from your home value. Dear Derek

While the returns are guaranteed, the age when you can use the money is not.

Liquidity risk is also a risk because if you are unable to liquidate your capital either in part or in full, you do not have cash to spend for living expenses.

The irony of the CPF system and specifically medisave is that many have the maximum amounts in their accounts but cannot use it for outpatient treatment unless it is for one of the chronic diseases allowed by the Government and even so is capped at a fixed amount a month.

The classic Singaporean dilemma of being asset rich (our homes) but cash poor when we retire is a real problem because if you cannot downgrade or somehow monetise your home for cashflows especially during times when the property market is in the doldrums, you may not be able to retire comfortably even when on paper you may be worth a couple of hundred thousands from your home value.

]]> By: Derek http://thefinance.sg/2007/12/26/what-is-the-best-risk-free-rate-in-singapore/comment-page-1/#comment-292 Derek Thu, 27 Dec 2007 14:00:50 +0000 http://thefinance.sg/2007/12/26/what-is-the-best-risk-free-rate-in-singapore/#comment-292 Hi Panzergrenadier, Thanks for feedback. I agree with you but in terms of returns, at least it is guaranteed. Cheers! Hi Panzergrenadier,

Thanks for feedback. I agree with you but in terms of returns, at least it is guaranteed.

Cheers!

]]> By: Panzergrenadier http://thefinance.sg/2007/12/26/what-is-the-best-risk-free-rate-in-singapore/comment-page-1/#comment-290 Panzergrenadier Thu, 27 Dec 2007 08:26:03 +0000 http://thefinance.sg/2007/12/26/what-is-the-best-risk-free-rate-in-singapore/#comment-290 The CPF monies are also not truly risk free as there is a huge liquidity risk in your CPF monies being locked up for even longer when either of the following is raised by the Government: 1) Minimum sum 2) Minimum withdrawal age Sad to say but if the 10YSGS yield for the last year is anything to go by, our CPF returns will yield even less when the Government decides to stop providing the 1% additional for the first $60k (first $20k of OA) of the SMRA accounts. The CPF monies are also not truly risk free as there is a huge liquidity risk in your CPF monies being locked up for even longer when either of the following is raised by the Government:

1) Minimum sum
2) Minimum withdrawal age

Sad to say but if the 10YSGS yield for the last year is anything to go by, our CPF returns will yield even less when the Government decides to stop providing the 1% additional for the first $60k (first $20k of OA) of the SMRA accounts.

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