Chocolate Finance 4.2% Return | Should You Invest? #Finance

So, after almost an entire year of keeping us waiting, Chocolate Finance is now finally opening up their signups again. And despite its return being now lowered to 4.2% p.a.,

Chocolate Finance is still giving better returns as compared to many other platforms out there, such high Yield Savings accounts, fixed deposits and

Money Market funds. So, I’ll be doing an updated CashNews.co to share with everything you need to know about them. How does it work? How does it compare to its competitors? Is it actually safe? And who is this suitable for? Also, do join my 9,000 members Telegram chat group to

discuss or ask any questions that you might have. Alright, here’s a quick refresher on what Chocolate Finance is. It is a company founded by Walter de Oude, who was also the founder of

Singlife.Yes, the same Singlife which back in the early days, was also doing a similar thing where they were offering a 2.5% return while most other banks were giving a lower interest. The best part about Chocolate text-decoration: none;">Finance is that the 4.2% return doesn’t require you to fulfill any complex criteria, all you need to do is just deposit in money and you’ll start earning a daily return. Plus there’s no lock-in period, and no additional fees. And I quote “When your money is

happy, you are happy too”, which is super cheesy, but hey, if it works, it works. Now you might be wondering, what took them so long to finally open up? Didn’t they start accepting sign ups last year? So, what happened was that back in 2023, they wanted to do an early beta phase to test out the

product before fully releasing it to the public. And to do that, they partnered with Havenport Investments Pte. Ltd. to do the launch. Then, over the past 6 months, they started working towards getting their own MAS license, which they finally did, under the name of Chocfin Pte

Ltd. And now, they are finally ready. Now, let’s talk about the 4.2% return, how are they even able to give such high returns when almost everyone else is giving less than that? Is this real life? Ok, the most important thing you need to remember here is, this is an investment, and not a

Savings account. This means, it’s not Capital guaranteed, there’s no SDIC Insurance, and the returns are not guaranteed. Basically, what I’m saying is, with higher returns, comes higher risk. Oh uh. Ok, but the risk is relatively low,

here’s why. Currently, they are investing in short-duration fixed-Income funds and Money Market funds, namely 40% in Dimensional Global Short-Term Investment Grade Fixed Income Fund, 25% in Fullerton Short Term Interest Rate Fund, and the

remaining 35% in UOBAM United SGD Fund. These funds invest in Money Market and short term Debt instruments issued by governments, as well as investment grade financial institutions across many different countries. And to lower the risk even further, any

Investments in global currencies are hedged back to SGD to protect against any FX risk. So, currently they are running a Chocolate Top-Up Programme, where you’ll enjoy a promotional rate of 4.2% p.a. return for the first $20k. Which means if the Portfolio

underperforms, they will top up to make up for the difference. Though of course, this programme will not last forever. Currently it is scheduled to run till either 31 December 2024, or when the Assets under management reaches S$500M, whichever comes first. Then for amounts more

than $20,000, they have a 3.5% p.a. target return. There’s no top up programme here, so the returns here will depend on the performance of the Portfolio. But here’s a question, what happens if the Portfolio does very well, and delivers more than the target

return? Will you earn a higher return? Yes, but, only after Chocolate Finance has taken their cut of anywhere between 0 to 2%. What? Got fees one ah? I thought they said no fees? Of course

got fees la, otherwise Walter and team eat what oh? But they will only earn the fees if they manage to outperform the target return. For example, if the Portfolio gave a 5% return, but the target return is only 4.2%, in that case, you’ll only earn the target 4.2% return, while

they get the remaining 0.8% in fees. Or, if the Portfolio gave a 2% return, while the target return is 5%, you’ll earn the full 2%, while they’ll earn nothing. But what if the Portfolio gave a 7.5% return, while the target return is 5%? In that case, since the

fee is capped at 2%, they’ll take up to 2%, leaving you with the remaining 5.5%. Naturally, some people might be wondering, “Eh? If Portfolio earns less, I’ll earn less, but if Portfolio earns more, Chocolate

style="font-weight: bold; color: #1a73e8; text-decoration: none;">Finance will charge up to 2% fees, in that case isn’t it better for me to just copy the holdings and just invest myself?”. Can is can, but here are a few things you’ll need to take note of. One, currently with the Chocolate

Top Up Programme, you’ll be able to earn a 4.2% return on your first $20k. I was rather curious about what the real performance of the Portfolio was, so I went to Endowus to simulate it, and I found out that this Portfolio actually delivered an annualized 1 year

return of 3.85%. So, if you were to invest by yourself while the Top Up Programme is still active, you’ll essentially be earning a lower return. Ok, then why not wait till the programme is over, then switch over to Endowus? That way you’ll get to earn more than the 3.5% return? Yes, that’s

definitely doable. But in return, you’ll be giving up the convenience of someone managing your Portfolio for you, plus the ability to withdraw your funds instantly. Because the benefit of Chocolate text-decoration: none;">Finance is that you’ll be able to withdraw up to $20k immediately within any 1 given day, whereas Endowus requires you to wait anywhere between 3-5 business days to get back your money. Next, how does Chocolate bold; color: #1a73e8; text-decoration: none;">Finance compare against other platforms? Check this out. For high interest accounts, even if you are able to fulfill the salary Crediting criteria, Credit card spend criteria, and increase your average daily balance

criteria, the most you can earn is just 3.85% interest from OCBC 360. But of course, this isn’t exactly a fair comparison since Savings accounts have SDIC Insurance and are risk free, whereas Chocolate bold; color: #1a73e8; text-decoration: none;">Finance is not. So, let’s compare it against other low risk investment products instead. Here you can see that the only ones that can give similar or higher returns are Endowus Cash Smart Ultra, StashAway Simple Plus, and UOBAM Cash+ Xtra.

However, their downsides would be that their returns are projected returns whereas Chocolate Finance returns are fixed at 4.2%, plus Chocolate

style="font-weight: bold; color: #1a73e8; text-decoration: none;">Finance lets you withdraw up to $20k immediately whereas the others require you to wait for a few days before you can get back your money. Wah, say Chocolate #1a73e8; text-decoration: none;">Finance until so good like that, what are the risks of investing in them then? First, as I mentioned earlier, this is an investment, so it’s not Capital guaranteed, the returns are not fixed, and it’s not SDIC insured, so even though you can

currently earn up to 4.2% return on Chocolate Finance, it’s also possible to get negative returns when times are bad, when there’s no Chocolate Top Up Programme. Second, Chocolate

href="https://cashnews.co/finance" style="font-weight: bold; color: #1a73e8; text-decoration: none;">Finance can ji ba boom and close shop. However, even if that happens, our funds would still be safe since MAS requires all client Assets to be kept segregated from the company

and held in a separate custodian account, which in this case are HSBC and State Street. And of course, as a licensed company, Chocolate Finance is subjected to regular checks by the MAS to

make sure that they don’t do any funny stuff. However, if for some wild reason, Chocolate Finance suddenly closes shop just like that, and does not do any handover to another platform,

clients may still need to wait a while before they can access a new platform and get back their money. So, who is Chocolate Finance suitable for? I would say, it is suitable if you are

looking for a place to park your short to mid term Savings, like your cai fan money, wedding money, year end holiday trip money, and if you are ok with the risks that I mentioned earlier, ah, then Chocolate #1a73e8; text-decoration: none;">Finance would be suitable for you, especially right now when they are offering a 4.2% return for up $20k. Otherwise, if you are not ok with the risk, it’s definitely way better to just park your money in Savings accounts, government

Bonds, and fixed deposits and call it a day. Anyway, that’s all for this CashNews.co, hopefully you found it useful. If you are interested in trying out Chocolate Finance

for yourself, you can sign up using my link down below. Like share and subscribe as I’ll be posting new CashNews.cos every Monday, Wednesday and Friday.