Food for the Mind
Dammit. I am so way behind on my reading that I am reading late August's edition of The Edge here. Just some investment insights I found worthy:
"Streamlining the CPF"
- 1 Jan 2008 onwards, an extra 1% interest would be paid on the first $60k in CPF members' combined totals, up to a max of $20k from the Ordinary A/c (OA).
- however, the interest rate on the OA remains unchanged at 2.5% (which makes sense for me to continue my investment with Aviva since it offers 3.5% plus 101% insurance coverage)
- on the other hand, the interest rate for the SMRA (Special, Retirement and Medisave Accounts) will be pegged to a long term bond rate (which kinda sucks since most government bond yields now are less than 4%, which was the guaranteed rate before these changes)
- also, the first $20k in the OA cannot be invested (which doesnt cut ice with me since there are products out there which can give better returns than 2.5%. And to save more than $20k so you can invest the excess is going to be hard when you are using CPF to pay for your home)
"Gold will continue to shine"
- traditionally, gold is regarded as an asset to hedge against inflation and a safe-haven instrument that people take to in troubled times
- but today, inflation and political threats arent quite the main drivers of gold prices
- about 70% of the demand for gold comes from the demand for gold jewellery but buyers tend to adjust their purchases depending on the gold price e.g. holding back when prices are high
- the rest of the demand comes from industry and increasingly, investors
- industrial demand is relatively stable so it is chiefly the growing investment demand for gold thats driving gold prices
- hence gold cannot be regarded as a good hedge against inflation anymore
- on the supply side, there's a decline due to low exploration activity and stable bank sales
- demand, on the other hand, has been picking up as more portfolio managers and Asian central banks (the European central banks hold considerable amount of gold reserves for historical reasons)look to buy
- also, the emergence of commodity-backed exchange traded funds and the sharp appreciation in commodity prices have fuelled interest in this sector
- the report also states a negative correlation exists between the US dollar and gold prices i.e. it is a good hedge against depreciation of the dollar
- gold prices are currently weak due to a stronger US dollar, increased sales by European central banks and higher interest rates around the world (which makes holding gold less attractive since it's a negative cashflow asset - no dividend or coupon plus holding costs)
"Streamlining the CPF"
- 1 Jan 2008 onwards, an extra 1% interest would be paid on the first $60k in CPF members' combined totals, up to a max of $20k from the Ordinary A/c (OA).
- however, the interest rate on the OA remains unchanged at 2.5% (which makes sense for me to continue my investment with Aviva since it offers 3.5% plus 101% insurance coverage)
- on the other hand, the interest rate for the SMRA (Special, Retirement and Medisave Accounts) will be pegged to a long term bond rate (which kinda sucks since most government bond yields now are less than 4%, which was the guaranteed rate before these changes)
- also, the first $20k in the OA cannot be invested (which doesnt cut ice with me since there are products out there which can give better returns than 2.5%. And to save more than $20k so you can invest the excess is going to be hard when you are using CPF to pay for your home)
"Gold will continue to shine"
- traditionally, gold is regarded as an asset to hedge against inflation and a safe-haven instrument that people take to in troubled times
- but today, inflation and political threats arent quite the main drivers of gold prices
- about 70% of the demand for gold comes from the demand for gold jewellery but buyers tend to adjust their purchases depending on the gold price e.g. holding back when prices are high
- the rest of the demand comes from industry and increasingly, investors
- industrial demand is relatively stable so it is chiefly the growing investment demand for gold thats driving gold prices
- hence gold cannot be regarded as a good hedge against inflation anymore
- on the supply side, there's a decline due to low exploration activity and stable bank sales
- demand, on the other hand, has been picking up as more portfolio managers and Asian central banks (the European central banks hold considerable amount of gold reserves for historical reasons)look to buy
- also, the emergence of commodity-backed exchange traded funds and the sharp appreciation in commodity prices have fuelled interest in this sector
- the report also states a negative correlation exists between the US dollar and gold prices i.e. it is a good hedge against depreciation of the dollar
- gold prices are currently weak due to a stronger US dollar, increased sales by European central banks and higher interest rates around the world (which makes holding gold less attractive since it's a negative cashflow asset - no dividend or coupon plus holding costs)
posted by Ming at 10:54 PM
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