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How The FSMOne Auto-Sweep Account Can Earn Us Returns Even When Our Investment Monies Are Undeployed
How The FSMOne Auto-Sweep Account Can Earn Us Returns Even When Our Investment Monies Are Undeployed
MONEY INSURANCE INVESTING TRADING PROPERTY POLICIES & COLUMNS HONG KONG ESG BUSINESS #THENEWNORMAL
NEWS
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BUDGETING 101
It’s a score that may put a frown on some people’s faces. Singapore has clinched the top spot – 4 Investment Trends To Watch
Out For In 2H2023
together with New York – as the world’s most expensive cities to live in.
Not a newcomer too, as this is the eighth time in 10 years that the Republic has topped the C O LU M N S
Economist Intelligence Unit’s (EIU) Worldwide Cost of Living index. 5 “Milestone” Ballots That All
Singaporeans Can Relate To
The bi-annual EIU survey compared more than 400 individual prices across more than 200 products
and services in 172 cities. These included prices for food, clothing, household supplies and transport. LIFESTYLE
According to the survey, Singapore has faced a consistently high cost of living. We explore four L I F E H AC K S
test-iq.org Open
#1 High In?ation
EIU pointed to high inflation as a major contributor to higher costs, which has led to the cost of living
soaring in the world’s major cities, including Singapore.
According to the survey, the average price of goods in local currency terms surged by 8.1% this year
in the world’s biggest cities. To compare, the rise in prices was 3.5% in 2021.
This is the fastest rate for at least 20 years. Petrol prices have seen the most rapid increases, but
utility and food prices have also increased sharply, according to EIU.
In Singapore, overall or headline inflation is expected to average around 6% for this year, the
Monetary Authority of Singapore and Ministry of Trade and Industry noted in their latest update on
consumer prices. Food and accommodation are contributors to the increase.
Read Also: Singapore’s Core Inflation In August 2022 Hits A 14- Year High: What Is More
Expensive?
A stronger currency will tend to cause a city to rise in the rankings as prices are higher when
expressed in international common currency. EIU converts local currency prices into US dollars to
calculate each city’s index. The rankings are also driven by exchange rates against the greenback.
Therefore due to Singapore’s strong currency, it has a tendency of ranking highly on EIU’s index.
This year has seen the dollar strengthen against many currencies as the Federal Reserve hikes
interest rates. The Singapore dollar has shown resilience to the hikes, thanks to its high foreign
currency reserves and a strong current account surplus.
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Read Also: Coping With Inflation In Singapore: What Can MAS Do (And At What Cost)?
The price of a litre of petrol has risen by 22% year-on-year on average in local-currency terms, amid
higher global oil prices and a stronger US dollar.
Singapore, being an open economy, is not spared from global trade headwinds. Fuel pump prices, for
example, breached S$4.00 for the first time in June this year, due to talks of a ban on Russian oil and
increased post-pandemic demand from economies.
The high prices of energy commodities caused utility bills for electricity and gas to be up by an
average of 11% in local-currency terms across the 172 cities in the survey.
A person living in Singapore who wants to have a lifestyle slightly above average, is bound to spend
on such items.
In fact, a study by DBS found that discretionary spending in Singapore had risen over the past year.
More people splurged on food and alcohol, entertainment, and travel, potentially driving prices higher
due to increased demand.
It stated that the consumption basket tracked by EIU is not based on typical Singaporean
households. The index includes items like international foreign daily newspapers, which is not a
common product consumed by Singaporeans. The government noted that it has also been helping
provide some relief to people’s living concerns with support measures to ease living costs.
Singaporeans can expect prices to start easing over the coming year, as supply bottle-necks start to
ease and slowing economies weigh on consumer demand. The backlog caused by supply chain
disruption should start to ease too as freight rates come down and demand softens.
Overall, EIU forecasts that global consumer price inflation will fall from an average of 9.4% this year
to 6.5% in 2023.
Unless the war in Ukraine escalates, EIU predicts that commodity prices for energy, food and for
supplies such as metals are likely to fall sharply in 2023 compared with 2022 levels, albeit higher
than previous levels.
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This article was written in collaboration with FSMOne. All views expressed in this article are the
independent opinion of DollarsAndSense.sg based on our research. DollarsAndSense.sg is not
liable for any financial losses that may arise from any transactions and readers are encouraged to
do their own due diligence. You can view our full editorial policy here.
Whether we profit through capital gains or dividend income, all of us know we need to invest to earn
higher returns. If we leave our savings uninvested in a savings account, the meagre interest we earn
(which can be as little as 0.05% p.a. for some savings accounts in Singapore) would definitely not be
enough to keep pace with inflation, let alone grow our investment portfolio.
While we can all agree that it’s important to invest, the reality is that we may not stay invested with
all of our money at all times. LATEST TRENDING
Many investors, including myself, tend to keep some cash reserves so that we can choose to deploy B R A N D E D C O NT E NT
our funds when good investment opportunities present themselves. Other times, we may receive Freedom Planning Vs Short-
Term Planning – Which Is the
proceeds from a divestment but not immediately look to reinvest them in the market. Right Approach for You?
However, the problem that we face with holding cash is that it gives us no returns. While we wait for B R A N D E D C O NT E NT
our next investment opportunity, our undeployed investment monies are not being put to use, and How To Maximise The Benefits
On Your American Express
we don’t earn anything from them. Thus, merely channelling funds from our savings account into an Platinum Card
investment isn’t the best way to optimise our investment returns.
BUDGETING 101
Another problem that we may face is that if we are investing in overseas companies, the purchase 7 Air Coolers In Singapore From
$56 To $300 To Help Beat The
and sales of the stocks would likely be in a foreign currency such as the USD. Thus, if we were to pay Heat
for the purchase via our Singapore Dollar savings account, we will incur a foreign currency conversion
B R A N D E D C O NT E NT
fee. Likewise, if we sell our investment and the proceeds, which is in USD, are deposited in our Work & Invest: How Our
Singapore Dollar savings account, we will also incur a foreign currency conversion fee. Lifelong Learning Journey Is
Similar To An Investment
To solve this problem, a conduit, such as the FSMOne Auto-Sweep Account can be a simple Journey
investment solution. Available in SGD and CNH, USD is the latest addition since the start of July L I F E LO N G L E A R N I N G
How it works is that it automatically transfers and sweeps all our excess cash, be it SGD, CNH or What Happens When You Buy
A Property Above or Below
USD, such as sales proceeds, bond maturities, dividends, and coupons, into a cash management Valuation?
account that can give us a higher yield.
HDB
Managed by FSMOne, the Auto-Sweep Account (available in SGD, USD and CNH) will invest in various Complete Guide To Defects
Liability Period (DLP) For HDB
high-quality and conservative investment products, such as Money Market Funds and Short Flats And What To Look Out For
Duration Funds to achieve a higher return. A part of the fund’s holdings will also remain in cash.
I N S I G HTS
C O LU M N S
LIFESTYLE
It’s important to point out that the yield shown is only indicative based on the current holdings and BONDS AND FIXED INCOME
Traditionally, higher returns may come with a liquidity trade-off. For example, if we put our money in Understanding JD.com (HKEX:
9618): A Chinese E-Commerce
a fixed deposit account, we will likely earn higher returns as compared to a savings account.
Giant
However, the problem is that, from a liquidity standpoint, we can’t easily access those funds if we
want to make any unplanned opportunistic trades. Thus, fixed deposits are unsuitable options to
keep our unused investment monies.
This is where the Auto-Sweep Account has an advantage over fixed deposits. Not only are the
returns higher but investors can also tap into the funds without any penalties to pay for their
investments as and when needed.
For the FSMOne USD Auto-Sweep Account, you can use it instantly as a payment method for Stocks
and ETFs, Unit Trusts, Bonds, and other investment products on FSMOne. In the event that you wish
to withdraw the balances from the USD Auto-Sweep Account back to the FSMOne USD Cash
Account or to your bank account, you can expect to receive it back as quickly as the same day,
provided you submitted your withdrawal instructions before 10 am. Otherwise, you will receive the
proceeds back the next working day. This short redemption cycle provides us huge flexibility when
managing liquidity needs.
Through the FSMOne USD Auto-Sweep Account, we can buy and sell stocks that are denominated in
USD without needing a separate USD savings account. Furthermore, we can earn a good interest
return from the FSMOne USD Auto-Sweep Account without incurring any unnecessary fees or
foreign currency conversion fees.
Currently, FSMOne offers the Auto-Sweep account in three currencies: USD, SGD, and CHN. By opting
in to the Auto-Sweep account, we no longer have to feel pressured to turnaround our investments
quickly in order not to lose out on the opportunity cost of holding on to cash for an extended period
of time. Instead, we can wait patiently for an opportune time to make our investments.
Read Also: Investing During A Bear Market: Could A Dollar Cost Averaging (DCA) Approach Make
More Sense?