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How to fight inflation with moomoo Cash Plus

13 Sep 2022

Worried that the value of your savings will get eroded by inflation? moomoo Cash Plus offers a yield of approximately 2.5% per annum^ with no lock in period.

moomoo Cash Plus fight inflation

This post was created in partnership with Moomoo Financial Singapore Pte. Ltd. All views and opinions expressed in this article are Beansprout's independent and professional opinions. Neither Moomoo Singapore or its affiliates shall be liable for the content of the information provided. This advertisement has not been reviewed by the Monetary Authority of Singapore. 

What happened?

One of the questions we get most often is what’s a good way to fight inflation through our investments. 

After all, Singapore’s headline inflation reached 7% in July. Core inflation, which excluded accommodation and private transport costs, rose to a 13-year high of 4.8% in July, exceeding economists’ expectations. 

The Ministry of Trade and Industry (MTI) said that core inflation is “projected to stay elevated over the next few months before it begins to ease towards the end of the year”.

For 2022, the Monetary Authority of Singapore (MAS) has forecast that core inflation will be 3-4%, while headline inflation will be at 5-6%. 

It is no wonder that MAS Managing Director Ravi Menon has said that Singapore must get used to higher prices as “the era of cheap money, cheap labour and cheap energy is over.”

Likewise, Singapore’s Prime Minister Lee Hsien Loong shared in his National Day message that the world is unlikely to return to low inflation levels anytime soon.

One of the ways we can fight inflation, is to evaluate different investment options that allow us to earn higher risk-adjusted returns. 

This will make sure the value of our savings does not get eroded by inflation and we can still meet our retirement goals. 

Is moomoo Cash Plus a good way to fight inflation?

Earlier, we looked at the Singapore Savings Bonds and shared how they provide you with a simple and low-cost way to generate safe returns. 

As many of you shared that you are not able to get enough allocation for the Singapore Savings Bonds, we also looked at how the SGS bonds and T-bills can also offer a sound way to earn a regular interest payment. 

Each of these options has its advantages and disadvantages. 

For example, the Singapore Savings Bonds are flexible but carry some liquidity risk as you will only receive payment on the 2nd business day of the following month when you redeem.

The SGS bonds are subject to interest rate risks and you may suffer capital losses if you sell the bond before its maturity date.

As a result, we started looking at other options in the market.

We were hence interested in moomoo Cash Plus, especially with the many advertisements that you would see on train stations these days. 

What is moomoo Cash Plus?

If you are an active stock investor in Singapore, moomoo should be a familiar name to you

However, what you might not know about is moomoo Cash Plus, which aims to generate potential returns for your idle cash with greater flexibility. 

What it aims to do, is to preserve your principal value and maintain a higher degree of liquidity while generating a potential return. 

When you put your money into moomoo Cash Plus, you have a choice of investing in either the Fullerton Cash Fund (Singapore Dollar) or the CSOP USD Money Market Fund.

These funds offer a 7-day annualised yield of 2.18-2.21%^ as of 28 August 2022. 

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Source: moomoo app

 

Curious as to what these funds invest in? We helped you to do the work by looking at the Fullerton Cash Fund factsheet. 

The investment objective of the fund is to “provide investors with liquidity and a return that is comparable to that of the Singapore Dollar Banks Savings Deposits rate”

What it does is really to hold assets in Singapore Dollar deposits with eligible financial institutions.

For example, based on its July 2022 factsheet, the Singapore Dollar deposits are held with financial institutions such as Landesbank B-Wurttemberg, Qatar National Bank, and Bank of Tokyo-Mitsubishi UFJ-Singapore. 

The placement period to maturity of these assets is generally very short term, with 89% of assets maturing within 4 weeks. 

Table

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Source: Fullerton Fund Management

 

According to moomoo SG, one of the benefits of moomoo Cash Plus is that the funds have not seen any negative monthly return to date#. This is because they are held generally as Singapore dollar deposits. 

The other suggested benefit is that this is a low-cost investment option as subscription and redemption fees are zero. 

The fee incurred lies mainly in the expense ratio of the funds. For example, the Fullerton Cash Fund has an expense ratio of 0.15% for financial year ended 31 March 2022. 

Lastly, you can invest from as low as $0.01, which is great if you want to start with a small amount. 

Graphical user interface

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Source: moomoo SG

What are the key risks of putting your money with moomoo Cash Plus?

Looking at the historical returns of Fullerton Cash Fund since its inception in 2009, it is true that there has not been any negative monthly return.

Fullerton is a reputable fund management company and part of Seviora, a holding company established by Temasek. NTUC Income is also a minority shareholder of Fullerton. 

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What do we have to worry about then? 

moomoo Cash Plus is not capital guaranteed. Also, deposits into moomoo Cash Plus are not insured under Singapore Deposit Insurance Corporation Limited (SDIC).

This means that there is still a possibility that you might lose your money.

What would Beansprout do?

If you are looking for another place to park your spare cash outside of the Singapore Savings Bond and SGS Bond, the moomoo Cash Plus would be another option to explore.

It offers you the following advantages:

  • Quick subscription and redemption as the funds can be withdrawn at any time
  • Relatively safe underlying fund selection investing in Singapore dollar deposits 

To make this an even better deal, new account holders who open a moomoo SG Universal account and subscribe at least S$100 to the Cash Plus from September 1 to September 30, 2022 can earn a cashback S$2 every day for up to 30 days*. 

This means that if you put S$100 into moomoo Cash Plus and keep it there for 30 days, you can earn up to S$60 in cashback!*

Source: moomoo SG

 

Of course, for new investors, you are also eligible for the welcome bundle offered by moomoo SG. This includes $0 commissions* on your US stock trades forever, a S$40 cashback Coupon, a free stock* worth up to S$50 to S$150 (up to one Amazon share), and real-time US market data* with a S$2,700 deposit.

So if you are looking for a way to fight inflation, sign up with moomoo SG to take advantage of the current promotions and make your spare cash work harder for you today!

 

#Terms and conditions apply. The data is accurate as of 24th August 2022 and is derived from the past performance of the money market fund on moomoo Cash Plus.

^Terms and conditions apply. The indicative 7-day annualised yield is derived from the past performance of the USD money market fund.

*Terms and conditions apply. Cashback is given for a total of 30 days. 

Important Information

This advertisement has not been reviewed by the Monetary Authority of Singapore. 

Any information provided in this article is meant purely for informational and investor education purposes, and should not be relied upon as financial or investment advice, or advice on corporate finance.

The information provided in this article are on an “as is” and “as available” basis without warranty of any kind, whether express or implied. Beansprout does not recommend any particular course of action in relation to any investment product or class of investment products. No information is presented with the intention to induce any person to buy, sell, or hold a particular investment product or class of investment products.

You may wish to seek advice from a financial adviser before making a commitment to purchase the product; and in the event that you choose not to seek advice from a financial adviser, you should consider whether the product in question is suitable for you.

The information provided herein may contain projections or other forward looking statements regarding future events or future performance of countries, assets, markets or companies. Actual events or results may differ materially. Past performance figures are not necessarily indicative of future or likely performance.

Please refer to the Moomoo Financial Singapore Pte. Ltd’s website for more information on the full T&Cs and disclaimers.