Den of The Lion Investor

The NTUC Capital Plus promotion has been extended. The new closing date is now 30th December 2008, 12 noon.

To recap, the NTUC Capital Plus is a single premium endowment plan giving a fixed return of 2% p.a. with a minimum investment of $10,000. The term of the plan is 2 years and is available to everyone.

My mum was asking me about a 3% p.a. FD rate that she saw in the newspapers the other day. The minimum sum required was $40,000.

3% for a fixed deposit at this time?

Surely there was a catch. To be precise, the rate she saw was 3.08% p.a.

The deal was too good to be true so I went to have a look at the advertisement.

In big bold print, there was the 3.08% p.a. figure. Beside it were the terms:

10/10 S$ time deposit rates* of 3.08% p.a. for the first 10 days and 1.05% p.a. for the next 10 months.

*effective interest rate of 1.11% p.a.

Just as I suspected, there was no free lunch. The bank gives you 3.08% p.a. for only ten days and then locks up your money with a 1.05% p.a. rate for the next ten months.

As pointed out in the advertisement, the effective interest rate was only 1.11% p.a.

What the effective rate means is that if you were to put your money in a FD with an interest rate of 1.11% p.a. for the same period of time, you will earn the same amount of interest as this promotion.

I wonder how many people are actually mislead by such marketing gimmicks.

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CPF board will be holding a complimentary talk specially designed to help prepare people who are turning 55. It will address issues like:

• How much CPF you can withdraw when you reach 55
• What is the CPF Minimum Sum Scheme (MSS)
• What happens to the investments purchased using CPF

Details of the talk are as follows:

Date: 13th Jan 2009

Time: 730pm to 900pm (Registration starts from 630pm)

Venue: 6 Shenton Way, DBS Building Tower 1, DBS Auditorium, Level 3

Registration period: 11th Dec 08 - 12th Jan 09 (seats available on first-come-first-served basis)

Click on this link to register.

Tan Kin Lian provides some updates of legal proceedings with regards to Lehman-linked products. Summary notes can be found here.

Part 1

Part 2

Part 3

Part 4

Mandarin Version

It has been reported in the news that the distributors of the Minibond products will be contributing money to the receivers’ cost of obtaining legal opinions. This is required due to the complex issues raised from lawyers dealing with Lehman Brothers in the US.

Even DJ newswire picked up the news from our MAS announcement and if you read the DJ report, you will probably interpret it at face value - distributors footing the legal fees.

Lehman Minibond Distributors to Help Pay Legal Fees (DJ newswire)

However, if you read the announcement by MAS carefully, you will find this sentence:

“The expenses will be refunded to the distributors from any proceeds of enforcement in the usual manner.”

Distributors of Lehman Minibond Notes to Contribute to Legal Defence (MAS announcement)

So in actual fact, the legal bill will be paid by Minibond investors.

Legal War Chest Beefed Up (Straits Times)

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