During the M1 broadband outrage on 13 May 2020, I resorted to use my mobile data to attend a zoom meeting. In 2 hours, I used 1.86 GB worth of data. The little deer my heart started to leap around. I remember vaguely my mobile data limit is 3GB and this would have used up half of my data for the month. *panics*

(Read this if you need help during COVID19: A special message during COVID19)

During my wealth management journey last year, I have already converted to a SIM-Only plan which has 30 GB limit a month. Thank god.

As much as I wish that chart looks like my investment portfolio, it is not. Hahaha. Instead, I began to think about my current mobile plans to see whether I have “optimized” my decisions.

Are SIM Only plans really better than Phone Contract Plans in 2020?

The difference between a SIM only plan and a Phone Contract plan is simple.

In the SIM only plan, you do not have a contract. You pay as you go. You can cancel if you want. You are free to switch from telco to telco if you are unhappy with the service. The monthly bills tend to be cheaper. You do not get a subsidies on the phone you want to buy.

In the Phone Contract plan you have a contract for a duration. It is common to have a contract for 2 years. During this 2 years, you will not be terminate your contract unless you want to incur high fees. The monthly bills tend to be slightly more expensive than SIM-only. However, you get a subsidies on the phone prices.

The Assumptions

Like all comparisons, we need to have a few assumptions. In this case, we will be taking the iPhone SE 128GB (SGD$719) as a comparison and a M1 mobile plan with around 30GB data.

SIM only VS Phone Contract

In the SIM only plan, the total cost is $25/month. This works out to be $600 for 2 years. If we add the cost of the iPhone into the picture, the total cost will be $1319. It includes 30GB/month which is a decent data coverage.

In the phone contract plan, the total cost is $78/month. This works out to be $1872 for 2 years. Special note to the 42 GB of mobile data in the contract plan.

This means the contract plan is $553 more expensive than the sim only plan. Putting things into perspective, you can almost buy another iPhone SE 128 GB by not signing the contract plan. In my humble opinion, not a lot of thought has been given in the pricing for the contract plan. What a scam. (Actually, it is not a scam lah. It is Wealth Management)

Here’s another bonus for some of you who asked what will happen if you remove the add-on. In this phone contract plan, the total cost is $40/month. This works out to be $1250 for 2 years inclusive of the additional $290 for buying a “lower” plan.

This means this contract plan is $69 cheaper than the sim only plan BUT you get less than half the data and the 2 years lock in period.

The Verdict

We have used the iPhone SE 128 GB as a comparison because it is the latest phone in town and I believe there will be interest in this phone soon. The conclusion is that the SIM-Only plan is the clear victor in this scenario.

Personally, we feel that getting half our data and having a 2 years lock in period is not worth $69. This works out to be a saving of $2.88 a month over 2 years. However, if you only need the 12 GB of data and a new phone and don’t mind having a 2 years contract, contract plans might be more worth it for you.

We have not compared between Starhub and Singtel as we believe it would not be of further value add to the readers.

The price subsidies for phone set are nothing but an illusion in today’s context.

PS: This might not hold true for other phone models.

No one will care about your money as much as you do.

Before you invest in any company or popular investment opportunity, be sure to do your own due diligence. If you wish to learn more about investing, I hope to nurture genuine relationships with all of my readers. Please feel free to contact me on my Instagram (@chengkokoh) or Facebook Page or my Telegram Channel! Or subscribe to our newsletter now!