The interest rate for the first $50k held at PSOB will be cut from 0.25% to 0.125% while DBS Savings Plus account holders will get 0.1% for the first $50k.

Rates at other banks are similarly low. For example:

UOB - 0.125% on first $15k

OCBC - 0.125% on first $10k

SCB - 0.125% from amount between $1000 and $2500

With the cut by DBS and POSB, the 3-month treasury bills could be an alternative to those who has excess cash but do not wish to park it into a long tenure fixed deposit. Currently, the 3-month T-Bill is yielding about 0.25% p.a. You can apply for it on a weekly basis via ATMs of the local banks without the hassle of going down to the bank branches.

SGS are the safest products around as your capital is only at risk if the Singapore Government defaults. These debt instruments require a minimum investment of just $1000 and can be bought using both cash and CPF.

However, take note that if you sell them before maturity, you might get back more or less than your initial capital. This is because the price of bonds has an inverse relationship to the movement of interest rates. When interest rates goes down, the price of bonds goes up, and vice versa. The longer the duration of the bond, the greater this effect will be.

Starting from tomorrow, application for SGS can be done in a more convenient manner. All you need is a valid CDP account and you will be able to apply for new issues at the ATMs of the three local banks.

The yield of recent SGS issues are as follows:

3-month T-bill: 0.25% p.a.

1-year T-bill: 0.35% p.a.

2-year bond: 0.65% p.a.

5-year bond: 1.44% p.a.

7-year bond: 1.75% p.a.

10-year bond: 2.58% p.a.

Some of the yields of the SGS are at pretty low levels now. (You can view current and historical prices at the MAS data room)

For example, the 3-month T-bill was giving 2-3% p.a. as recently as 2006-2007. I remember it being a favourite instrument for some people to park their temporary cash. The only thing was that it was a hassle making a trip to the bank every few months. With the ATM system in place, things would be much more convenient.

As at last month, $105 million worth of settlement was offered to 3600 of these investors. A quarter of these investors were offered full compensation.

For the record, over $660 million worth of Lehman-linked investments were sold to more than 10,000 investors.

Over in Hong Kong, it was reported that Bank of China Hong Kong (BOCHK) will buy back Lehman Minibond from all their customers at 60 percent of their cost.  An extra 5 percent will be payable after Lehman’s liquidation while old-hand customers will receive an additional 10 percent.

Customers who purchased mini-bonds three to four years ago are eligible for a total of 80 percent rebate.

This means that all of Bank of China Hong Kong customers will get back amounts ranging from 60-80% of their original investment.

Peter Chan, chairman of the Lehman Brothers Victims Alliance, told the Global Times Monday that BOCHK’s proposal was unfair to most investors and that banks should pay back all of the capital invested.

The POSB Invest SingGrowth account is a 5-year equity-linked structured product that promises a fixed yearly payout with the potential of a bonus payout if a redemeption event takes place.

A redemption event takes place when the share prices of Singapore Telecommunications Limited, United Overseas Bank Limited, Singapore Press Holdings Limited and SembCorp Industries Limited have all risen 15% or more above their original prices on specific fixing dates.

When that happens, the original investment will also be returned and the product will terminate.

The minimum amount for this investment is $5000 and here are some examples of how the payout will look like (using $10,000 as an investment). Note that the analysis and examples might not be exhuastive. I am relying only on the information found on the POSB website.

Case 1: No redemption event

You will collect:

End of year 1: $278

End of year 2: $108

End of year 3: $118

End of year 4: $128

End of year 5: $10138

Case 2: Redemption event occurs at end of year 2

You will collect:

End of year 1: $278

End of year 2: $10158

Case 3: Redemption event occurs at end of year 3

You will collect:

End of year 1: $278

End of year 2: $108

End of year 3: $10218

Case 4: Redemption event occurs at end of year 4

You will collect:

End of year 1: $278

End of year 2: $108

End of year 3: $118

End of year 4: $10278

Case 5: Redemption event occurs at end of year 5

You will collect:

End of year 1: $278

End of year 2: $108

End of year 3: $118

End of year 4: $128

End of year 5: $10338

Case 6: DBS/POSB goes bust

You will get back nothing as this product does not fall under the Singapore Deposit Insurance Act.

While the 2.78% payout for year 1 might look attractive, the actual yield for the 5 different cases are computed as follows:

Case 1: 1.55% p.a.

Case 2: 2.19% p.a.

Case 3: 2.02% p.a.

Case 4: 1.96% p.a.

Case 5: 1.94% p.a.

Conclusion

For a 5-year product, there are currently other better options around.

Depending on your annual income and house you stay in, the amount will range from $100 to $250.

Senior citizens aged 55 and above will get $50 to $250 more. 2/3 of this extra money will be in cash with the balance going to Medisave.

To check your eligibility or to sign up (you need not do this if you have done it before), you can visit the GST Credits website.

1. Confinement in Community Hospital (max 45 days stay)
2. Letter of Guarantee (LOG) for selected government hospitals
3. Absorption of costs from obtaining medical records
4. Enhanced benefits for major medical transplant

The LOG enhancement takes effect immediately while the rest only takes effect on your policy renewal. Premiums will also go up by about 10% across the board.

For enhancement to Myshield Plus (the rider to Myshield)

1. Increase in Hospital Cash benefits up to S$300 per day from current S$100 per day

Premiums for Myshield Plus remains unchanged.

Shares trade ex-rights: 17 June 2009 (Wednesday)

Dispatch of Offer Information Statement: 24 June 2009 (Wednesday)

Start of nil-paid Rights Trading: 24 June 2009 (Wednesday)

End of nil-paid Rights Trading: 2 July 2009 (Thursday) at 5pm

Last date for acceptance and payment of Rights Shares: 8 July 2009 (Wednesday) at 5pm (930pm for electronic)

Expected date for trading of Rights Shares: 17 July 2009 (Friday) from 9am

That figure is based on compound interest and is the most relevant indicator (annualised yield or annualised returns) for you to compare against other similar lump sum investments.

Let’s say you put $1000 in a bank for a year at 2% interest. Assuming the interest doesn’t change at all, after the end of each year, you will have:

1000*1.02=1020

1020*1.02=1040.4

1040.4*1.02=1061.208

1040.4*1.02=1082.43

1040.4*1.02=1104.08

As all your interest in reinvested, your actual annualised yield is also 2%.

1000*1.02*1.02*1.02*1.02*1.02=1104.08

Suppose you use the $1000 to buy a bond that pays you 2% in coupon every year and the principal is returned at the end of 5 years.

After 5 years, you will end up with $1000+20+20+20+20+20=1100.

Even though you are paid an interest of 2% on your bond, your annualised return actually works out to be only 1.92%. This is because your coupons are not reinvested at the same interest rate of 2%.

1000*1.0192*1.0192*1.0192*1.0192*1.0192=1100

For the HSBC Guaranteed Saver Plus product, the annualised yield is obtained by comparing your initial investment and the final maturity value. There is no coupon or yearly payment.

Before the current promotion, this is how the initial investment, maturity value and annualised yield looks like for the different categories:

$25k, $27943, 2.25% (25k*1.0225*1.0225*1.0225*1.0225*1.0225=27943)

$50k, $55885, 2.25%

$75k, $83828, 2.25%

$100k, $113143, 2.5% (100k*1.025*1.025*1.025*1.025*1.025=113143)

With the premium discount that is offered by HSCB, you do not need to fork out the full investment amount upfront. Taking into account the discount, this is how the numbers will look like:

$25k (no discount), $27943, 2.25% (25k*1.0225*1.0225*1.0225*1.0225*1.0225=27943)

$49.4k (1.2% discount), $55885, 2.50% (49.4k*1.025*1.025*1.025*1.025*1.025=55885)

$73.2k (2.4% discount), $83828, 2.75% (73.2k*1.0275*1.0275*1.0275*1.0275*1.0275=83828)

$98.8k (1.2% discount), $113143, 2.75% (98.8k*1.0275*1.0275*1.0275*1.0275*1.0275=113143)

Hope this makes it clear.

P.S. I have been working on too much excel sheets. The * in the posts actually means x (or multiply).

With the premium discount campaign, the annualised yield could go up to as high as 2.75%. The yield is guaranteed and not a projection.

The discount for various investment amounts is as follows:

20k-49,999 : No discount

50k-74,999: 1.2% discount

75k-97,999: 2.4% discount

>=98k: 1.2% discount

How the discount works is that you only have to put in the premium net of discount. For eg, if you are investing $100k, you will need to fork out $98.8k.

Applying the discount, the annualised yield works out to be:

20k-49,999 : 2.25% p.a.

50k-74,999: 2.5% p.a.

75k-97,999: 2.75% p.a

>=98k: 2.75% p.a.

This premium discount campaign is only effective from 1st June 09 to 30th June 09.

There is no medical underwriting required for this plan and is available on a first-come-first-served basis.

Valid acceptances came up to 636,950,142 Rights Shares, which was about 98.12% of total Rights Shares available.

Excess application came up to 317,078,445 Rights Shares, which was 48.84% of total Rights Shares available.

The 12,235,230 Rights Shares which were not taken up will be used to satisfy the excess Rights application.

The new shares will start trading from 12th June 2009.

A temporary counter to facilitate the trading of shares in board lots of 100 shares will be available for 1 month. The name of the counter will be Keppel Land 100.