With more than 70% of Singaporeans being a homeowner, many of us have a home loan to service. It…
“In the short run, the market is a voting machine but in the long run, it is a weighing machine”. Those are the famous words of the world’s best investor Warren Buffett. These words are especially poignant at a time like now when everyone is panicking. From stock investors to crypto investors (bye FTX) to everyday consumers, everyone has been spooked.
The speculation that the world economy will head into recession is now no longer a speculation. It seems to be almost confirmed with the latest round of layoffs from tech companies like Meta, Microsoft, and Salesforce. The trigger that sparked all of these? The Fed raising interest rates for the past few quarters.
While the Fed is raising interest rates at a much faster pace than it had for many decades, it is not all gloomy. Here are some reasons why things are not as bad it may seem.
The first thing you want to do in a rising interest rate environment is to relook at your existing debt obligations. That’s because higher interest rate will eventually lead to higher financing cost for you.
With home ownership at over 90% in Singapore, many of us will be impacted by this. Therefore, the first thing you want to do is to relook your existing home loan package for your mortgage.
Because interest rate had not moved much in the last few years, some of you might have overlooked your home loan for a few years simply. But if you compare the interest rate that you are paying right now against what you paid at the start of 2022, you might be surprised how much it grew.
Fortunately, you are still not too late. You can still sign a new home loan package that can offer you a better rate than your existing one. This will help you to save on interest rate charges on your home loan and help you to save some money.
If you are not sure whether your existing home loan package is giving you the best deal, you can approach Moneyline for our free home loan service where we help you to compare the best refinance rates and make you refinance with a better deal.
Not everyone is a risk taker. Not everyone wants to put your savings in the stock market where it is so volatile right now. That’s why there’s an asset class known as bonds that gives you a safe way to grow our savings steadily with lesser risk.
One of the good things of rising interest rates is that the coupon on bonds is also increasing. For instance, Singapore Government Treasury Bill (T-Bill) and Singapore Saving Bonds (SSB) are at record high. You can grow your savings at more than 3% interest for bonds that are backed by the Singapore Government who has an AAA rating at the Big 3 credit rating agencies (Moody’s, Fitch, and S&P).
If you need a safe place to park your money, you can consider diversifying some in the bond market.
Bonds are not the only asset class that is giving out better returns. In fact, banks are also responding to this higher interest rate environment by rewarding you for just parking your money with them.
Interest rates on saving accounts with local banks and foreign banks in Singapore are rising. For instance, with OCBC 360 Savings Account, you can earn as high as 4.65% on your first $100,000 deposit. DBS is also offering a similar interest rate of 4.1% on the first $100,000 deposit when you bank with their DBS Multiplier Account. UOB is always slower to the market, but you can definitely expect them to keep pace with the other two local banks as well.
It is not just savings account that are seeing a spike in higher interest rates. Fixed deposits that banks offer are also giving you much better returns. Pure cash fixed deposits can go as high as 1.7%, depending on how long you lock it in.
And if you are looking for even higher returns, endowments are also a good option to consider. Gone are the days when endowments give you only 2+% returns. You can find out what’s the latest (good) deals on endowment plans by simply getting quotes from here. And if you are keen on letting your savings work hard for you, Moneyline can do that for you.
2022 has been a really bad year for all asset classes. Most asset classes, except commodities and real estate, are down for the year. Even the crypto market is down (or perhaps going to be decimated?).
But here’s the thing. If you play the long term game, now is actually a good time to slowly deploy your capital. Remember back in 2008 when the markets crashed? Those who had the capital to hold out their investments were able to benefit from the crash and pick up bargain buys. As history repeats itself, you can find some interesting bargain buys at this moment too.
Perhaps some of you might be unsure about what you should be investing next, given the volatility in the market. You may want to consider something that is suitable for your profile.
To do so, Moneyline can help you with a comprehensive financial health check to help you understand your financial profile. With that, you will know what’s the right investment for you, regardless of what happens in the market. Moneyline can also provide you with suggestions on what could potentially be the right investment for you.
It may be soon that endowment plans are starting to pay attractive rates due to high yielding safer bonds. If you’re in for the long run why not look at longer term maturity endowment plans?