Earlier this year I talked about my asset allocation and how I wanted to take advantage of POSB 1.88% promotion. My mom is a firm believer of Fixed Deposits only and when I heard about the 1.88% promotion, I jumped on it and parked half of their funds there.
While on the way to AK's evening with Friends, I checked that I am the first 10,000 to received $88. I am delighted as this works out to 2.1% for one year. However, self doubt starts to creep in. Interest rate is rising and I wonder if I was too hasty. Maybe I should have waited or allocate a smaller sum? I am already hearing about the Singapore Savings Bonds with no penalty for early withdrawal.
During AK's talk, there was a discussion on the interest rate of the Singapore Savings Bonds and the view is that interest rate will not go above CPF interest rate. It also does not make sense to encroach on the banks' business. There was also a comment by a reader that OCBC 360 will be revamping its interest rates. Suddenly, I feel that I've made a wise decision in choosing the POSB 1.88%.
There was a sense of Déjà vu as this reminded me of my stock picking days where I feel vindicated when most brokerage reports publish a buy call and sad if I am holding to a stock that most brokers say to sell. Yes, that was one of my 'investing' methodology then - look at the brokerage reports of a stock and if the majority say buy, I'll buy and vice versa.
It doesn't take long to realized that this 'technique' is flawed and as I learned more about investing, I also realized that it is near impossible to buy at the lowest and sell at the peak, and there is also no need to feel depressed over this because for the person who bought it at a lower price or sell it at a higher price, he is actually taking more risk than me. Should he decided to wait, he could have ended up buying at a higher price or selling at a lower price.
Coming back to the 1.88% POSB promotion, I could have waited for a product with a higher interest rate but if there isn't, I would not even be able to enjoy the 1.88% interest rate. When I signed up for the promotion, my intention is to beat the one year fixed deposit interest rate which was about 1.3% at that time and with a 2.1% now, I am satisfied.
For those who have signed up, I believe you have already notice that the amount that you have pledged to the Fix Deposit is locked. POSB Savings states that there is a $2 fall below fee if the average daily balance for the month falls below $500. Does that mean I will have to maintain an additional $500 on top of the money that I have pledged?
