CIMB Fixed Deposit Promotion Makes Your Money Work, Not You!

I like the way CIMB says “Your money should work, not you!“. Following my previous post on “Fifty Six Percent Invested Forty Four Percent Cash“, I do have some spare cash to place into a fixed deposit or Singapore Savings Bonds. Both are brainless, effortless investments where you sit and wait till maturity to earn the interests.

If you remember, CIMB offers a fixed deposit promotion during Chinese New Year whereby you can get up to 1.90% interest per annum if you do a placement for 12 months online. It seems that this promotion is here to stay as they are offering the same promotion in the month of March.

You can choose the duration of 3 months, 6 months or 12 months and if you apply online, they offer higher interest rates as shown in the table below.

Interest Rates (% p.a.)
3 Months 6 Months 12 Months
Branch Rate 1.30 1.45 1.55
Online Exclusive Rates 1.55 1.70 1.90

A minimum of S$10,000 per placement is required.

Using S$10,000 as an illustration,

If you place a fixed deposit for 3 months, the total accrued amount (principal + interest) that you will receive is

A = 10000(1 + (0.0155 × 0.25)) = 10038.75
A = $10,038.75

If you place a fixed deposit for 6 months, the total accrued amount (principal + interest) that you will receive is

A = 10000(1 + (0.0170 × 0.5)) = 10085
A = $10,085.00

If you place a fixed deposit for 12 months, the total accrued amount (principal + interest) that you will receive is

A = 10000(1 + (0.0190 × 1)) = 10190
A = $10,190.00

CIMB Fixed Deposit Promotion Versus Singapore Savings Bonds

How does this promotion fair against the latest Singapore Savings Bonds?

If we have placed S$10,000 in the April 2019 Singapore Savings Bonds, we will receive S$196 in interest payout after a year. This will be S$6 more than CIMB 12 months fixed deposit promotion. If we deduct away the S$2 application fee for Singapore Savings Bonds application, then it will be S$4 more.

My Opinion

Both are comparable, risk free investments. If you ask me, I might prefer the Singapore Savings Bonds as there is no lock in period. You can sell off the bonds and there is no penalty should you need the money urgently within the 12 months.

My favorite website, StocksCafe has introduced a new feature to allow adding of Singapore Savings Bonds into your portfolio. If you didn’t know, I signed up as a Friend of StocksCafe as my most favorite feature of StocksCafe is the automated tracking of dividends payout.

Challenger Technologies Delisting

Challenger Technologies Logo

It has almost been four years since I did a analysis on Challenger Technologies (Read more: My Personal Analysis of Challenger Technologies). This week, Challenger Technologies announced that it intend to delist from the SGX with Digileap Capital making a cash exit offer of all shares at an exit offer price of S$0.56 per share.

In their announcement which you can find on SGX, Challenger Technologies highlighted that the exit offer price of S$0.56 in cash per share represents an opportunity for shareholders to realize their entire investment in Challenger, which may otherwise be difficult due to the low trading liquidity of the shares.

The exit offer price of S$0.56 in cash per share represents a premium of approximately 15.1% over the volume weighted average price (“VWAP”) of S$0.487 for the 12-month period up to and including the Last Full Market Day.

One of the reasons given for delisting Challenger Technologies is that the company has not carried out any exercise to raise cash funding on the SGX-ST since 2007. Challenger is unlikely to require access to Singapore capital markets to finance its operations in the foreseeable future. The delisting will eliminate the costs of compliance with the listing rules and regulations, thereby allowing Challenger to focus its resources on its business operations.

Challenger Technologies mentioned that they are facing challenges due to weak retail sentiment and industry disruption. Changes to the business may need to be implemented and dividends could be affected during such time.

Even though I no longer held shares of Challenger Technologies, my personal opinion is that the above two reasons are strong enough to support the delisting. Another deep value stock is going to dissapear from the SGX.

Fifty Six Percent Invested Forty Four Percent Cash

The last time I checked my cash level was in November 2018 where I have only 31% cash on hand and 69% was invested in stocks. If you didn’t know, I considered monies in my DBS Multiplier Savings Account, Singapore Savings Bonds (SSB) and cash benefits payouts from NTUC Revosave as “Cash”. These are monies that I can easily redeem in event of an investment opportunity or in terms of emergency such as a job retrenchment etc.

“Investments” are stocks and REITs that I have bought. If you wonder why I am plotting the above pie chart to track my cash versus my total investments, the reason is meant to ensure that I do not over invest in the stock market. Personally, I felt that the stock market is very unpredictable and you may never know when is the next stock market crisis. Having a healthy cash on hand allows investors to tide over the crisis and not having to sell their stocks that most likely will suffer losses during a stock market crisis.

As of 16th March 2019, I have 44% cash on hand and 56% in investments which I consider as a healthy level. I will continue to build up my cash and deploy them when the investment opportunity arises. Currently, I observed that most prices of stocks and REITs have gone up significantly and thus their dividend yield have also declined.

Over the next few months, I shall continue to build up my cash on hand.