A short introduction on MMF. It's something like a unit trust that do not guarantee the principal. However, it invests in low risk short-term deposits and high quality debt securities. You can do an EPS to POEMS and they would put the money into the MMF. Basically once the money is in, they would buy as much units as your money allows (there is a minimum of $1000 before they can start buying though). The bid price in which you enter can be seen by clicking ACCT MGMT then ACCOUNT DETAILS...look for the MMF (Bid price). I've been tracking the MMF bid price since I had money inside...that was in May 2007. Here's the data:
It's a pretty long one I know :)Take note that I only update the table if I see that there's a change in the bid price. Otherwise, I won't update it. I've tallied up the monthly % increase since May, so here's the results:
May 0.17%
June 0.18%
July 0.17%
Aug 0.20%
Sept 0.16%
Oct 0.15%
Nov 0.15%
Dec 0.14%
This means an average monthly % increase of 0.17%. If I annualised it by dividing by 8 and multiplying by 12, I'll get a rate of 1.98% per annum.
To look at historical performance, have a look at this website. It shows the performance since inception. 2% per annum to me is a much better deal than putting it in savings account, earning you a miserable 0.25% per annum. Of course, putting money into MMF won't make you rich (gosh, it can't even beat inflation at 3% average), but it does serve as an alternative savings account. I tried before, it's highly liquid...within 1 to 2 working days I can withdraw the funds by clicking an online form in POEMS website. According to them, if instruction is given to withdraw funds before 0930, the money can be sent to you on the same day. If not, it's the next working day.
Beats fixed D to me too, because there is no lock in period nor high minimum deposit (only $1000 to start the thing going).
Pls decide carefully before going in...I'm just sharing what I know about this product. Talk to your broker/financial advisor before jumping in. There are certain risks involved in putting your funds in MMF (I didn't put in all my funds).
8 comments :
Hi LP,
I'm using Phillips MMF to park my excess investment funds. However, I'm not using it as my savings account because unlike the banks, Phillips MMF does not have the Depository Insurance Scheme.
I park my savings in E$aver where I'm protected to up to $20K. Of course, the trade off is a slightly lower interest rate.
Cheers
Derek
Hi derek,
Yup, I know what you're talking about. In case POEMS is bankrupt, all my money put in will be gone too, as it's not protected unlike banks.
I don't intend to even put it there for long periods...just my transitionary location to hold my excess cash (less than 1 yr) without going into investment.
Thks for the knowledge...never heard of E$saver before...i'll look more into it. Care to share how much interest they give?
Hi LP,
e$aver is a savings account offered by Standard Chartered. It has been around for quite sometime now. It's a simple no frills account with no ATM card or passbook. Everything is done via internet banking.
When it was first launch, their interest rate was 1.88% and over 2% for X sum of money and above. Can't remember the exact number.
Currently, the interest rate for e$aver stands at 1.2% for $50K and less. You can check it at their website. Another perk is that there is no minimum amount or balance required.
Cheers
Derek
Hi derek,
A bit on the low side...For the safety, is it worth it?
A 0.8% difference means for every $1000, you'll lose out on $8 per annum (haven't even compound yet) Could be substantial for the relative safety. Nothing wrong lah, just make sure don't put too much in it. Treat it like a place to hold cash loh, haha
Hi LP,
I'm fine with that, because once my e$aver reach a certain amount, I will park the rest into a high yielding instrument like POEMS MMF.
Sorry that I didn't make myself clear, but I separate my Savings and Emergency fund. Emergency fund is park in my e$aver.
Cheers!
I have been meaning to write something like this on one of my blogs and this has given me an excellent information about money market funds. Cheers.
ideas
Hi sophia,
Thanks. Do take note that the most recent aug figures for the same poems mmf now stands at a very low 0.026%, annualized to be around 0.3% pa.
Quite pathetic.
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