Tuesday, August 21, 2007

CPF rates increase; new rules for chinese to invest in HK

2 news to share over here.

First is the proposed increase in CPF interest rate. Government is going to increase the interest rate earned for the first $60,000 in combined CPF accounts by 1%. That's a rather hefty sum if you put it in for 20-30 years because of the magic of compound interest. Haha, this might make me put more into it to take the news into account.

This interest rate of 5% (for CPF-SA) plus inflation 3% - total of 8% will set the benchmark for my investments. I hope to earn more than 8% returns in my investments averaged over a long term. This is actually quite achievable and I'm aiming to get around 15-20% returns actually. No problem beating the max interest rates for CPF plus inflation.

The other news is the new ruling by China that its residents can now invest directly into HK stock markets. This opening up of the rules will see a flux of chinese money flooding the market at hongkong (congrats HH!). This might explain why the futures of HSI went up to 600 plus this morning before it opened. HSI responded by rallying up 1200 points yesterday and around 100o pts just now.

All these influx of funds are good for us, though we are not the direct beneficiaries of the money. Some of the listed companies in STI have dual listing over at HK too, so this influx of capital will be good for everyone at the end of the day.

As for STI, it is powering up 35 pts up now, after a morning drop. The next point to look out for is whether STI will go up to 3400 level. Another 50 pts more to go, not entirely impossible. The worst might not be over yet, and we'll have to see how FED plays out the balance between the risk of inflation and the risk of downright economic recession. Crazy times these days :P