Best High Interest Saving Account Singapore 2022

Best High Interest Saving Account Singapore 2022

I never thought there will be a day the banks will adjust their interest rates upwards again(DBS, UOB, OCBC). In 2018 period, the local banks came out with a great marketing program to give higher interest. It was heavily discussed. However, it was short lived as the banks slowly reduced the amount of interest.

Learning from the past lessons, I view that this interest increase as temporary in nature and you shouldn’t base your long term planning (insurance or investment) to increase your interest in your bank account.

In this article, I will take on several assumptions to decide which bank account is the best for you in 2022.

Best High Interest Saving Account Singapore 2022
Best High Interest Saving Account Singapore 2022

Assumptions Taken

Marketing Message From The Banks

This is the current marketing message from the banks.

Based on the marketing message, OCBC sounds the best. It is also good to know that OCBC changed their program 1 month after DBS and UOB have made changes.

First Elimination

With our assumptions, we feel that DBS multiplier is the worst out of the 3.

DBS Multiplier Account Working
DBS Multiplier Account Working
DBS Multiplier Account Interest Tiers
DBS Multiplier Account Interest Tiers

Based on our assumptions, we will only hit 1 category in DBS multiplier. I feel that we shouldn’t increase our transaction categories just for the sake of the higher interest.

Effectively, there will be a higher interest on the first $25,000. Your interest of 1% will give you $250 annually.

Best Fuss Free Bank Account: OCBC 360 Account

OCBC is rank the best fuss free bank account in my opinion as they follow a very simple interest tier model.

OCBC 360 Account Interest Tiers
OCBC 360 Account Interest Tiers

Following our assumptions for using only salary crediting and spending on credit card, the effective interest rates (EIR) 1.5% resulting in an annual interest of $1500.

However, I like this more as this is fuss free. If you don’t want to hit the credit card spending of $500 monthly, the salary option will have an EIR of 1.1% resulting in an annual interest of $1100. This is great for people who do not want to keep track of their spending for the sake of the extra interset

Best Higher Interest Bank Account: UOB One

UOB and OCBC comes up very close but UOB wins because of the ease of understanding of their UOB one card.

UOB One Account Interest Tiers
UOB One Account Interest Tiers

The emphasis of UOB is the credit card spend. If you do not hit the minimum of $500/month, then the interest be affected. Hence, this will only work if you are certain to be able to hit the monthly eligible credit card spend of $500.

The total annual interest (inclusive of cash rebates) from UOB One account and UOB One Card is $1,700 making this the best higher interest bank account for now.

 

Final Thoughts

There you have it. Personally, I’m went with the OCB 360 account because of the ease of use.

I believe that choosing your bank account is one of the first steps to plan for your finances. At the same time, I will avoid buying products just to get that extra bit of interest as the interest might change in future again.

That being said, you should always have a long term perspective when it comes to planning. I will recommend you to use the retirement calculator to have an idea how much you need for retirement.

I wish you all the best! Take care.

 

Chengkok is a licensed Financial Services Consultant since 2012. He is an Investment and Critical Illness Specialist. Wealthdojo was created in 2019 to educate and debunk “free financial advice” that was given without context.  

Feel Free To Reach Out To Share Your Thoughts.

Contact: 94316449 (Whatsapp) chengkokoh@gmail.com (Email)
Telegram: Wealthdojo [Continuous Learning Channel]
Reviews: About Me

The views and opinions expressed in this publication are those of the author and do not reflect the official policy or position of any other agency, organisation, employer or company. Assumptions made in the analysis are not reflective of the position of any entity other than the author.

Retirement Calculator Singapore

Retirement Calculator Singapore: How Much You Need To Plan For

In 2022, I having more conversations with my clients whether they should increase their retirement sums due to inflation. I begin to realize that it is not easy for them to project their future needs when they don’t know the perimeters needed.

Hence, I have build up a quick calculator for them to calculate in less than 1 minute how much they need and how much they have to invest NOW to achieve their retirement goals.

Retirement Calculator Singapore
Retirement Calculator Singapore

The Assumptions

Behind every model requires a few assumption. I will go through the ones that require more thought process.

  • Replacement Ratio

This is the percentage of income to maintain lifestyle. Most studies suggest aiming for a target of between 70 and 85 percent of pre-retirement income. Typically, most of us spends a certain portion of our income to maintain our lifestyle. Some of us will spend more, some of us will spend less. To most of us, our spending habits will stay with us for a long period of time.

For Example: Peter earns $6K monthly and spends $4K every month on household needs etc. This means his replacement ratio is roughly 67%.

  • Inflation Rate

Though this is well defined, it is not easy to determine a meaningful figure especially when inflation has been going up in the last few months. From the graph below, you can see that we have spikes in inflation previously. However, it has been maintained at a certain level for prolong periods of time.

While, MAS does not have an explicit inflation target. The MAS has concluded that, on average, a core inflation rate of just under 2%, which is close to its historical mean.

I would think to err on the side of planning, we can use a inflation rate of 3%.


source: tradingeconomics.com

  • Expected Investment Rate

This is the rate that you want your investment to grow yearly to reach your goals. For this to be effective, it would be easier to attribute it to your risk profile which will then lead you to the appropriate investment instrument you will find suitable.

If you are someone who is risk adverse, you might consider fixed deposits which typically gives around 1% per annum. For Singapore bonds investment, the yield typically is around 2% to 3% depending on the tenure of the bond.

For those that are more adventurous, the SPDR Gold Trust (SGX: O87) annualized 10 Years Performance is 1.29%. Straits Times Index (SGX: ES3) annualized 10 Years Performance is 4.4%. SPDR S&P 500 (SGX: S27) annualized 10 Years Performance is 12.96%. Average yields are a reference point and can be used as a pinch of salt.

Taking a pause here, all forms of investments carry risks, including the risk of losing all of the invested amount. Such activities may not be suitable for everyone. With an additional disclaimer, the above doesn’t represent a buy/sell/hold recommendation.

The Retirement Calculator

 

Final Thoughts

I think planning beyond 2022 will be an interesting discussion as we are in midst of existing developments (Russian-Ukraine, China-Taiwan, Monkeypox, COVID19). However, we should let it stop us to plan consistently for the future.

If realised you have a retirement shortfall, congratulations! It is time to do something about it. There are various instruments available and I will be glad to have an open conversation with you on how to do that with you.

If you feel like something needs to be done, the next place you need to go to is here (to read more) or simply contact me using the information below.

I wish you all the best! Take care.

 

Chengkok is a licensed Financial Services Consultant since 2012. He is an Investment and Critical Illness Specialist. Wealthdojo was created in 2019 to educate and debunk “free financial advice” that was given without context.  

Feel Free To Reach Out To Share Your Thoughts.

Contact: 94316449 (Whatsapp) chengkokoh@gmail.com (Email)
Telegram: Wealthdojo [Continuous Learning Channel]
Reviews: About Me

The views and opinions expressed in this publication are those of the author and do not reflect the official policy or position of any other agency, organisation, employer or company. Assumptions made in the analysis are not reflective of the position of any entity other than the author.

The Pros And Cons Of Dollar Cost Averaging

The Pros And Cons Of Dollar Cost Averaging

The Pros And Cons Of Dollar Cost Averaging
The Pros And Cons Of Dollar Cost Averaging

You might be thinking this is “another of those dollar cost averaging article”. I assure you that this is not. It is always during a Bear Market Survival that the topic of dollar cost averaging surfaces. Rarely, this topic is popular during a upward trending market.

Once a for all, I will discuss on the value of dollar cost averaging and what it can do in your portfolio. If you have been investing in China over the last year, you might think that dollar cost averaging is not working on China’s stocks? Read on and consider the pros and cons.

What is Dollar Cost Averaging (DCA)?

Dollar Cost Averaging is a popular investment method of investing equal amounts of money over a period of time. The opposite of this would be to invest a lump sum of money at once. I will leave you to read up about summary of DCA in this photo below.

Dollar Cost Averaging
Dollar Cost Averaging

Financial advisors are one group of people that preach about this because of the simplicity of the method. It is however, easier said than done as emotions might get better of us in the market.

One question you can ask yourself today ( 1st June 2022), are you still averaging down?

The Pros

  • Simple and systematic (if you set rules that continuously invest during ups and down): You don’t really “think” when you employ a DCA strategy. You simply trust the system and invest through the ups and downs. It will work BEST if it is via auto-transfer rather than manually transferring.
  • Downside protection: In a downward market, you will see a “bigger lost” if you do a lump sum strategy. For example, if the market corrected 20% in a month, your initial investment of $100,000 will be left with $80,000 (lost of $20,000). Now, if you do a DCA investing $10K per month, your initial investment will be left with $8,000 (lost of $2,000). You also have capital to continue investing at the “down” on the second month. For those that is retiring soon, this have great psychological benefits. I believe there is nobody that wants to lose 20% of their nest egg 6 months prior to retirement.

The Cons

  • FOMO (Fear of missing out): If this is an upward market, you risk missing out on the extra capital gains and compounding benefits. Using the same scenario as above, someone who invested $100,000 with a 20% run-up would make $20,000, while the investor DCA their first  $10k would’ve only made $2k.
  • Being too passive: DCA works best if the asset have a long term upward tread in nature. If the underlying investments are downward/sideways moving (take a look at the Japan market), DCA will not be the best strategy.

Final Thoughts

A big shout out to one of the most loyal reader of Wealthdojo Mr Sinkie. He sums up my thoughts on DCA in a single sentence. “DCA works best for assets that are volatile but have very long history of uptrend”. Thank you for being so patient and contributing to the blog. For those that are interested in his elaboration (I think you should), go over to Bear Market Survival Tips.

Looking forward to more people commenting on the blog.

If you guys need help, please reach out. I will be more than happy to have a conversation with you.

Chengkok is a licensed Financial Services Consultant since 2012. He is an Investment and Critical Illness Specialist. Wealthdojo was created in 2019 to educate and debunk “free financial advice” that was given without context.  

Feel Free To Reach Out To Share Your Thoughts.

Contact: 94316449 (Whatsapp) chengkokoh@gmail.com (Email)
Telegram: Wealthdojo [Continuous Learning Channel]
Reviews: About Me

The views and opinions expressed in this publication are those of the author and do not reflect the official policy or position of any other agency, organisation, employer or company. Assumptions made in the analysis are not reflective of the position of any entity other than the author.

Bear Market Survival Tips

Bear Market Survival Tips

I was hoping never to write this article because if you are here reading this, it could only means a few things.

  • We are in a bear market
  • You are in a long position with a possibility of being overleveraging
  • You don’t have a system that prepares you for this scenario

Whatever the reason you are here, I think it is quite certain that we are experience a market that is downward cha-cha.

Disclaimer: It is anybody’s guess where the market is going to be. This should not be taken as a buy/sell/hold recommendation. Please consider your own context or approach a financial advisor for advise.

Bear Market Survival Tips
Bear Market Survival Tips

Despite the fear, bear markets are nothing new. To put everyone on the same page, a bear market occurs when major stock indexes like the S&P 500 fall 20% or more from their most recent peak. They’ve occurred 12 times since 1946, which is on average once every 8 years. Most pullbacks above 20% have been associated with recessions. Hence, with the perfect long storm, politicians all over the world are most concerned about recessions.

On average, a bear market is around 9.5months. This would mean most of us will live to tell the tale assuming we are not shaken out of our position (mentally or by margin calls).

As I get more and more about how to invest in a bear market, I hope this article will be able to share with you some bear market survival tips to prepare yourself for the weeks to come.

Bear market survival tips

#1: Avoid making impulsive decisions

This makes the top of the list. Emotionally, people don’t like to be wrong (whether temporary or in the long run). Hence, when they see their portfolio in the red, many people have the temptation to “reset” their portfolio. This is detrimental to your wealth management journey and it is just a “quick fix” of escaping the mental strain.

Stay calm is the key in bear and highly volatile markets. If your time horizon is decades away, the best thing to do is to invest as if nothing has changed. Let me give you an example of a $1000 investment in the S&P 500 between 1/1/2009 and 12/31/2018 (the last market crash).

  • If you stayed invested the entire time, you’d have $2,775.
  • If you missed the 10 best-performing days during that period, your account value would be $1,722.
  • If you missed the 30 best-performing days in this 10-year period, you’d be left with $918.

I can’t emphasize how important it is to stay invested.

#2: Build your positions regularly over time

With dollar-cost-averaging (DCA), no thinking is really required. However, I recognized that it may not be easy. I saw friends who were excited about the recent bear market and have dollar cost average down the last few months.

However, they are all now NOT adding into new positions as the market is still going down. DCA is somewhat easy to say but not easy to execute consistently unless there is a system that is set up. Personally, I have averaged down on the China Market previously and it is still a bleeding position (Check out my latest SRS positions).

Time will tell. That being said, stay tune for my upcoming article: The pros and cons of dollar cost averaging.

#3: Change your strategy, diversify or play defensive

As a wealth manager, I realized risk management is something that I constantly address. If you’re still active in the markets and it is not working anymore, it might be time go passive with a lazy portfolio. If you find yourself taking too much risk, you might want to seek a more defensive portfolio.

Your current life stage might not allow you to take too much risk as compared to before. It is vital to re-assess your situation, your goals, your risk tolerance and discuss with a professional on your options.

#4: Go contrarian (Not recommended)

If you are a trader, you know better than to go against the trend. Consider taking a buy put options position to bet against a stock or ETF, this allows you to have a limited downside (as you are a buyer of the put option) and able to participate in the downward trending market.

WARNING: I have to emphasize that buying options is speculative. They may expire and be worthless if you do not have a game plan. If you are wondering what this is, do not do it. 

Final Thoughts

Stay strong. This may be the pivoting moment in your investment journey. There are so many resources you can turn to nowadays to prepare for a bear market. You can consider what Warren Buffett is doing amidst the noises.

Definitely reach out if you need help. I will be more than happy to have a conversation with you.

Otherwise, please watch out for my next article: The Pros and Cons of Dollar Cost Averaging. [Update: The article is out!]

 

Chengkok is a licensed Financial Services Consultant since 2012. He is an Investment and Critical Illness Specialist. Wealthdojo was created in 2019 to educate and debunk “free financial advice” that was given without context.  

Feel Free To Reach Out To Share Your Thoughts.

Contact: 94316449 (Whatsapp) chengkokoh@gmail.com (Email)
Telegram: Wealthdojo [Continuous Learning Channel]
Reviews: About Me

The views and opinions expressed in this publication are those of the author and do not reflect the official policy or position of any other agency, organisation, employer or company. Assumptions made in the analysis are not reflective of the position of any entity other than the author.

There were only two things certain in life Death and Taxes

Individual Income Tax Season 2022

It is the time of the year again. Last year, I wrote about whether an individual is required to pay taxes and my opinion of effective income tax in Singapore. This year, I will simply comment on the latest happenings and what you should take note of.

Disclaimer: Please refer to IRAS Website whenever in doubt.

There were only two things certain in life Death and Taxes
There were only two things certain in life Death and Taxes

Year Of Assessment 2022

The filing for YOA2022 have started on 1st March 2022. We will have until 18 April 2022 (*very important date*) to e-File our income taxes.

How To Reduce My Income Taxes Effective Income Tax Rates
How To Reduce My Income Taxes Effective Income Tax Rates (From YA 2017 to YA 2023)

Income tax rates will remain the same until YA2023. Thereafter, there will be changes for people earning > $320,000 as highlighted in the Budget 2022.

This year, it is stated that 7 out of 10 taxpayers in Singapore will not be required to file a tax return as there have been initiatives to simplify tax filings. This includes No-Filing Services (NFS) and Auto-inclusion Schemes. Partnerships whose revenue of up to $200K will only need a 2 line statement as compared to 4 line previously.

It is worth noting that you can make changes to your income or reliefs by making an amendment on the IRAS portal 30 days from date of tax bill. Any excess taxes can be refunded by PayNow.

Final Thoughts

Think about your Netflix subscription and you are buying their library of movies. I consider individual income tax as a subscription that I pay to stay in my country. I’m paying for my safety, the public goods and mainly the comfort to live in Singapore even if the perfect storm is coming.

I like the progressive income taxes system in Singapore but I’m like most of you, it is not fun paying taxes.

I wish you the best in your financial journey. Hope to hear from some of you. I will be arranging for a CPF webinar in the weeks ahead. Please leave a comment below if you wish to be updated on the details of the webinar.

Chengkok is a licensed Financial Services Consultant since 2012. He is an Investment and Critical Illness Specialist. Wealthdojo was created in 2019 to educate and debunk “free financial advice” that was given without context.  

Feel Free To Reach Out To Share Your Thoughts.

Contact: 94316449 (Whatsapp) chengkokoh@gmail.com (Email)
Telegram: Wealthdojo [Continuous Learning Channel]
Reviews: About Me

The views and opinions expressed in this publication are those of the author and do not reflect the official policy or position of any other agency, organisation, employer or company. Assumptions made in the analysis are not reflective of the position of any entity other than the author.