53 upvotes, 2 direct replies (showing 2)
View submission: Chocolate Finance has paused all instant withdrawals due to high demand
Like most trust and money market funds, these are all not insured. Plus CF is not a custodial entity, so the deposits are not insured as well. Money is held in CF’s custodial accounts, so even if those money are insured, it is insured to CF.
In the event of a liquidation, customer of CF might not be able to get back their money as financiers of CF (bond holders) might still be the first to get their money.
~~This is different from if you deposit in a brokerage (say IBKR/Moomoo/Tiger etc…), they are custodian of you, so each account that is open in them is SDIC insured up to 75k SGD. However, the money used to invest in money market funds, trust or other securities are not insured. So if your Fullerton money market goes bust, even if you use these brokerage, you will also have to say bye bye to your money. The only protection you have is in case you redeemed your investment, and they sit in your brokerage account, and your brokerage goes bust, you will be insured up to 75k.~~
Edit. I am absolutely wrong about brokerage (even if they are custodians) being insured. As long as the money is not sitting in a bank, CPF and insurance, it is NOT insured under SDIC. However brokerage may be under foreign insurance such as SIPC, but is subjected to accounts opened under such protection, for example Moomoo US and are protected if you owned US securities.
Do be mindful of the difference in what is insured as savings and what are investments. CF is an investment. They invest in safe products. But they are not a bank or a custodian. So you are taking an additional risk of your counterparty going bust being the issue, but not the underlying investment.
Additional note: When you put your money into any forms of fund or into a fund house, always read their prospectus or fact sheet to ensure you know what you are investing into.
If you want absolute safety, then just go for Fixed Deposits in a bank (SDIC insured) or just put in CPF (high yield savings, and definitely insured) and or SSB or sovereign debt from countries like US. Else every other form of investment has counterparty risks present, some higher than others (like fintech).
Comment by hannorx at 10/03/2025 at 03:08 UTC
4 upvotes, 0 direct replies
Learned something from you. Thanks!
Comment by princemousey1 at 10/03/2025 at 06:13 UTC
3 upvotes, 1 direct replies
I think I understand what you are saying. So if Endowus goes down my MMF or whatever are custodised so I am “protected”.
But why do you say CF is not a custodial account? I thought same concept as Endowus et al, no?