Invest in Singapore Government Securities

Hi Mr Tan,
What is your view on the SGS (Singapore Government Securities)? Is it worth buying the bond for retail investors like me?

YS

REPLY
The interest rate paid on SGS is quite low, less than 1% per year, but it is safe.

If you can get a higher interest rate from bank deposits (which is guaranteed by the Government), it is better to put on bank deposit. The foreign banks offer higher interest rate and are still guaranteed by the Singapore Government.

If you wish to have a higher return, it is better to invest in a ETF (exchange traded fund). The return may be volatile in the short term, but it should give an attractive return over 10 years or longer.

What is cheating?

Read this article.

Politics of Fear

Singaporeans are a fearful people. What can be done to overcome the fear? Read this article.

Give your views here.

Australia: List the names of underlying securities

Dear Mr. Tan,
The monetary authorities of Singapore and Hong Kong were foolish to approve the toxic products to be sold by financial institution and security firms to retail investor. They both wanted to compete to be financial centre, so they approve these products blindly.

When Australia approved these products to be sold, they insisted that the investment bank list out the names of the underlying securities. If people don't recognized these companies, they will not buy.

ST

Best fixed deposit rates

A reader asked me to post the best fixed deposit rates available in Singapore. As I do not have the time to be doing this research, I have to engage someone to do this research and to pay this person for the time spent.

I hope that FISCA can do this work at a later date. FISCA will also have to pay people to do the work.

I enourage Singaporeans to join FISCA and pay $36 a year as membership fee for FISCA to meet its expenses. Please support FISCA, so that it can take care of your interest. FISCA will be calling for membership in August, when its website is ready.

SCMP:Minibond victims try to storm bank in protest

2 July 2009

Thousands of investors who lost money on Lehman Brothers minibonds held a noisy and sometimes emotional rally yesterday, calling on the chief executive to step down, and saying the fiasco had yet to be resolved.

Waving black banners with the slogans "Lehman [saga] unresolved" and "[Chief Executive Donald] Tsang Yam-kuen step down", the group marched from Victoria Park to the Bank of China tower in Central.

However, protesters became emotional outside the bank, and several tried to storm it. "Give me back the money, Bank of China!" shouted protester Peter Lee as he tried to break through the police line and pull away metal barriers. The 47-year-old had bought more than HK$1 million of minibonds from the bank, the biggest seller of Lehman Brothers-linked investment products in Hong Kong.

"A 100 per cent buy-back!" shouted another protester.

Trying to calm protesters, Peter Chan Kwong-yue, chairman of the Alliance of Lehman Brothers Victims, organiser of the rally, called on them to gather at the building again on National Day, October 1, if the bank had failed to settle the dispute.

Organisers said 25,000 took part in the march, but police said about 4,000 left Victoria Park for Central.

About 48,000 Hongkongers lost most of the HK$20 billion they invested in credit-linked derivatives, such as minibonds, issued or guaranteed by Lehman Brothers, when the American investment bank collapsed in September. Minibonds are not corporate bonds, but consist of high-risk credit-linked derivatives. They are marketed as a proxy investment in well-known companies.

The protesters said they took to the streets because Mr Tsang and the regulators failed to force financial institutions to offer a 100 per cent buy-back of the minibonds. "I'm here today because the bank has cheated me of all my money. I want my money back," Yu Shing, 79, said. Mr Yu insisted on joining the march even though he had difficulty walking after a stroke in November.

Sandra Chow, 45, said she wanted to show her support for other victims although she had already settled her case with the bank.

A government spokesman said that the administration recognised the difficult circumstances faced by minibond investors, and expressed the hope "that the institutions involved will expedite the proper handling of the matter".

He said banks and trustees had been urged to safeguard the interests of holders.

MRT train lines to come under a single operator

There are advantages for all the MRT train lines to come under a single operator. However, there is a snag. How can this be overcomed? Read my suggestion here.