CPF Interest Rates for SMRA Accounts for Jan 09 – Mar 09
CPF Board has announced that the CPF Ordinary Account (OA) interest rate for Jan 09 to Mar 09 will be 2.5%. The interest rate for Special, Medisave and Retirement Accounts (SMRA) will be announced in December. My calculation shows that the SMRA interest rate should be at the minimum 4% as the 10 Year Singapore Government Securities (10YSGS) yield + 1% is 3.79%. Refer to my previous post CPF Interest Rate for SMRA Accounts for more information. The following graph shows the historical 10YSGS yield and the 12 month average yield from June 98 – Nov 08.
As shown in the previous posting, 10YSGS yield is expected to trend down from September 08 due to the flight to quality in the volatile market condition.
The result has not sprung any surprises and has indeed continue to trend down from September 08 to Nov 08.
How will the yield perform going forward? That’s the million dollar question as the yields are inversely related to the price which is in turn inversely related to the market conditions. A low yield indicates a bear market while a high yield indicates a bull market. The yields should stay low for a while longer.
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