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.

What will happen after 2022

What will happen after 2022?

I don’t think I have to repeat how bizarre is the world is right now. After contracting COVID19, I sat down (actually slept down most of the time) and thought long and hard about how financial events are shaping our economy now.

There are events in the world and many are definitely out of our control. However, some of the effects will be trickled down to be felt by us. I will be talking about my thought of the 3 most important financial events that will affect us, inflation, interest rates and wages.

Disclaimers: All thoughts are mine alone. Though I would love to hear yours in the comments section below.

What will happen after 2022
What will happen after 2022

Inflation

This is Singapore’s annual inflation rate over the past 25 years. As Singapore is only independent for 57 years, this data is what Singapore has been facing half the time. You can see for majority of the time, inflation was “well behaved” at 2%. The exception would be spike in 2008 (Financial Crisis) and for a period between 2011 to 2013.

Interestingly, inflation in 2011 to 2013 was cause by largely on account of sharp increases in car and house prices amid scarce supply.


Table 1: Inflation. Source: tradingeconomics.com

While headline inflation is forecast to come in at between 4.5 per cent and 5.5 per cent, while core inflation is projected to average between 2.5 per cent and 3.5 per cent. I will be concerned about core inflation which you can see on the chart below that it went up beyond 4% in 2008. We are definitely feeling the heat with food, electricity and gas prices have been increasing.

Singapore Core Inflation
Singapore Core Inflation

I predict (mainly because of the lack of data and research) that we will be having a inflation > 2% for at least another 2 years before it gets back the usual range. I don’t think prices will fall when inflation becomes lower. Hence, make it a point to preserve the value of your money. This is especially important if you are nearly retirement or at retirement.

Interest Rates

Singapore Housing Loan VS Fixed Deposit Trend
Graph 1: Singapore Housing Loan VS Fixed Deposit Trend

Interest rates affects various financial instruments and in the graph above. I’m hearing a lot of chatter on 4 things on the ground.

Housing Loan

When interest rates raise, housing loan rates also raises. As you can see above, the last 10 years we were living in a low interest rate environment. In the last few months, home loans are starting to move upwards to 3% (fixed rate). The implication of this is a cashflow drain.

Imagine you are servicing a 30 years housing loan of $800,000 at an interest of 1.1% previously. Your monthly mortgage works out to be $2610.

At 2%, your monthly mortgage is $2957. This is an increase of $347 monthly or $4164 annually.

At 3%, your monthly mortgage is $3373. This is an increase of $763 monthly or $9,156 annually.

Can you see why people are worried when rates increases to 3% now?

If you are looking into floating rates, Singapore is using SORA now. SORA is 0.8089% p.a. (as at 4 July 2022). A typical spread of banks would be between 0.8% to 1.2% depending on your relationship with them. I would expect the floating rates (including spread) will be between 2% to 4% in the next 2 years.

Fixed Deposits

Hurray to those of you who are cash rich. Guaranteed rates never look better. We are seeing fixed deposit rates increasing with UOB giving 2% for a 2 year lock in. Other banks are also stepping up their interest rates too.

Disclaimer: This is by no means a buy/sell recommendation

UOB Fixed Deposit July 2022
UOB Fixed Deposit July 2022

Even the Singapore Saving Bonds are giving average 3% returns in July 2022.

Singapore Saving Bonds July 2022
Singapore Saving Bonds July 2022

Looking at data, I’m concerned as the Housing Loans (15 Years) and Fixed Deposit (1 Year) are highly correlated (see graph 1). The average difference between housing loan and fixed deposit over the years is 3.3%. This means that if Fixed Deposit is 1%, there is a chance that the housing loan could go to 4.1%.

Insurance Participating Policies

Just a year ago, people were terribly concerned about insurance companies’ ability to fulfill their participating policies (think endowment policies) illustrated rates. (Read More: Participating Funds Singapore Moving Forward ; Should You Be Concerned About Dropping Illustrated Rates)

The industry has realigned expectations in July 2021. The upper illustration rate will be capped at 4.25 per cent a year, down from 4.75 per cent, and the lower illustration rate will be capped at 3 per cent a year, down from 3.25 per cent.

The previous rate change was in was in 2013, when the upper illustration rate cap was reduced from 5.25 per cent to 4.75 per cent a year. The lower illustration rate was reduced from 3.75 per cent to 3.25 per cent.

The main reason was because of the low interest decade that we were living in.

Now that interest rates are moving up, will insurance companies increase the rates in the participating policy again?

CPF Interest Rates

In a low interest environment, our CPF interest rates looks like an attractive place to reap guaranteed interest (we are leaving context aside for this statement).

Imagine if fixed deposit rates are nearing 3.5% or even 4%, I think it is very important to pause and think if people who continue contributing to their CPF (putting context aside for now) if the rates are near parity.

CPF may lose attractiveness (for a while). That being said, the CPF may change interest rates from time to time. Personally, I doubt that will happen. I am already very appreciative that CPF has kept rates the same despite the prolonged low interest environment.

 

Wages Inflation

Isn’t this something to be celebrated? Local wages grow by 7.8% in Q1, outpacing inflation. I believe that this is because there is a shortage of labor with travel restrictions. If you are looking for an opportunity, this is one of the best timing to seek a higher paying job.

 

Final Thoughts

Like I said from the start, these are some thoughts that I have jotted down and my own personal predictions for the future. I would love to hear your thoughts in the comments below.

Last but not least, do consider your own context before making your decision. Do reach out if you wish to discuss with me.

 

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.

Why Singapore's Power Providers are leaving

Why Singapore’s Power Providers are leaving?

In a span of one week, ISwitch (13 Oct 2021), Ohm (15 Oct 2021) and Best Electricity (19 Oct 2021) has publicly announced they will be exiting the Singapore’s Power Market. Union Power (18 Oct 2021) ceased 850 retail accounts but emphasized it is not exiting the market.

Why Singapore's Power Providers are leaving
Why Singapore’s Power Providers are leaving

All of them have assured there will no disruption to the power supply. The affected accounts will be transferred back to SP Group.

In my Wealthdojo’s Telegram group where I share one financial tip a day for readers, I shared about the raising oil prices in the recent months and raised the concern that inflation might creep in. I have been monitoring oil prices over the years and I was concerned about the spike in prices recently. Never would I have guessed that this would directly impact the energy scene in Singapore.

Why Singapore's Power Providers are leaving Telegram
Why Singapore’s Power Providers are leaving Telegram

Some Background

I have written on Open Market Electricity Cost Saving Guide previously and I would like to expand on the guide.

95% of Singapore’s electricity is generated from imported natural gases. Fun fact: The prices of natural gases are indexed to oil prices. This is according to the Energy Market Authority (EMA) which describes it to be the “market practice” in Asia for natural gas contracts.

As a result, a movement in oil prices will have a impact on natural gases prices.

Brent Crude Oil Prices 2016 to 2021
Brent Crude Oil Prices 2016 to 2021
Natural Gas Prices 2016 to 2021
Natural Gas Prices 2016 to 2021

Charts are obtained from Rigzone. Broadly speaking, you can see a simple co-relation between Brent Crude Oil and Natural Gas prices. As oil and natural gas are a form of commodities, they are cyclical in nature.

Why Are Prices Increasing Now?

I am not a commodities expert. Take this paragraph with a pinch of salt. In my limited economic experience and studies, commodities are heavily influenced by demand and supply factors.

Demand Factors

#1: The rebound from COVID-19 ramped up demand from Asian Economics, especially China. China have already ordered banks to ramp up funding to coal and energy companies.

#2: Heatwaves and drought in other regions of the world kept energy need high in the summer where supplies would be replenished normally.

Supply Factors

#1: Production of liquefied natural gas (LNG) is lower due to unplanned outrage.

#2: Additional capacity has been delayed by COVID-19 movement restrictions.

There potentially could be more factors. The increase in demand and the decrease in supply inevitability caused energy prices to go higher.

Is Business Really That Bad?

In the commodities market, I would expect that retailers have some kind of hedging. It is like our National Carrier, Singapore Airlines. It would be common sense to hedge against the price increase of oil.

In my research, I have discovered that the EMA requires all electricity retailers in the Open Electricity Market to hedge at least 50 per cent of their contracted load against wholesale electricity prices.

Even if the prices were to go up, it should already have been pre-planned.

My best guess is that the forward looking prices are too high to sustain future margins. Even if they can survive now, they don’t expect to survive in future.

Final Thoughts

I would expect higher electricity bills in the months to come. You can consider getting a retail package for your electricity bills. You can get a discount off regulated tariffs or a fixed price plans by going to this website.

Which will you choose? The discount off regulated tariffs or the fixed price plans? Let me know in the comments below.

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.

Biggest Crash In History By Rich Dad

Greatest Crash In History? By Rich Dad

Biggest Crash In History By Rich Dad
Biggest Crash In History By Rich Dad

You probably would have known him. Robert Kiyosaki is famously known for being the author of “Rich Dad, Poor Dad”. My friends and I religiously read his books and I felt that it was a good place to start off with for financial literacy.

The concepts he came up with was simple, easy and gamified. You might have played his Cashflow 101 game in your pursuit of earning knowledge.

This time round, he has gained media attention again for crying the the market will be crashed in October 2021.

A disclaimer as usual. This is by no means a recommendation to buy or sell any securities or financial assets.

His Predictions For October 2021

His thesis: The Evergrande looming default will spread it’s way to the USA market. Debt positions in the US is worsening. Therefore, he feels like it will be good to buy gold, silver and bitcoin but later changed it to keep some in cash.

The above is a possible interpretation from his twitter.

Robert’s Track Record

If you read his books, you will get an idea that Robert is a big fan of debt. He used debt to create huge amount of passive income by purchasing properties.

He also believes that fiat money is worth lesser and lesser due to the extensively QE. As a result, savers are being punished and that hyperinflation will come in future. He is a big believer in Gold because there is value in Gold and have recently talked more about cryptocurrencies.

The very first time (in my memory) when he talked about market crash was in 2015. He believes that a huge market crash will happen in 2016. Of course, it didn’t really happen.

In 2018, he believes that market is going to get a lot worse and we are heading into bear territory. This was the period of time when the FED was raising interest rates.

In 2020, he believes that COVID19 was the final catalyst for the market to move away from traditional assets like stocks and bonds. However, market has already crashed at the time so there wasn’t any prediction for this.

In 2021, he believes that the market will truly crash in Oct 2021.

It is also no secret that he has been talking about investing into Gold, Sliver and Bitcoin.

Biggest Crash In History By Rich Dad Tweet Gold Sliver Bitcoin
Biggest Crash In History By Rich Dad Tweet Gold Sliver Bitcoin

What I Think About His Predictions

Next year, I will be celebrating my 10th year in the financial industry. I read extensively, upgraded my knowledge and here’s what I think about his predictions.

While there is nothing wrong about having a prediction, I personally feel that Robert has a deep sense of distrust in the financial system and he is extremely bearish in nature.

I don’t know whether he is right about this prediction and I’m in no position to say so. However, his money script (more on this in the articles in future) caused him to react very negatively to money. His focus is on money being money. He will be right if people start to question the existence of fiat money and stop using fiat money altogether. As a results, gold silver and bitcoin may become storage of value then. It is a long shot but who knows.

Over the last 5 years, Gold has been doing relatively okay. If he have bought it 5 years ago (as he said he did), Gold would roughly 38% up or around 6% CAGR depending on his entry.

Biggest Crash In History By Rich Dad Gold Prices Trend
Biggest Crash In History By Rich Dad Gold Prices Trend

Final Thoughts

Personally, I’m invested in the long run. In investment, there will be volatility and it is something we have be comfortable with either through education, experience or both. Are you looking to learn about investment?

What do you feel about Robert Kiyosaki’s prediction? Let me know in the comments below.

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.

Why Dollar Cost Averaging is Not Working On China's Stocks

Why Dollar Cost Averaging is Not Working On China’s Stocks?

Why Dollar Cost Averaging is Not Working On China's Stocks
Why Dollar Cost Averaging is Not Working On China’s Stocks… yet.

The last 2 weeks was a bumpy one for China’s stocks. Technology companies ranging from Alibaba, Tencent, Didi and all the way to the educational sector pretty much spooked investors all over the world. There was massive selling and it seemed to have paused after JD reported good earnings.

Some of these company’s valuation are getting attractive once again as prices corrected in the last 2 weeks. This wasn’t music to the ears for those that are already invested. On the ground, I heard of many investors who took this opportunity to average down (buying at lower prices to lower the average prices). However, some investors seemed to have cracked under pressure and started asking why dollar cost averaging is not working.

Today, this article seeks to explain why dollar cost averaging is not working on China’s stocks… yet.

What is Dollar Cost Averaging (DCA)?

You probably have heard of this term Dollar Cost Averaging (DCA) from a friendly Financial Services Consultant as he was talking about investment. This strategy was made popular to retail investors as a way to invest by reducing the impact on volatility (the ups and downs) in the stock market.

“Time in the market, not timing the market”. This quote always serves as a reminder that investing (not speculation) is about being in the market and not timing the market. (Read More: Why Buy Low And Sell High Is Useless Advice).

Dollar Cost Averaging
Dollar Cost Averaging (Source)

The power of dollar cost averaging is making volatility your friend by buying at regular intervals. It is your objective to own as many shares as possible. In the above example, you are invest $1000 for 6 months.

Month #1: Share Price $10. You will be able to buy 100 shares ($1000/10 = 100)

Month #2: Share Price $13. You will be able to buy 77 shares now ($1000/13 ≈ 77). You have 177 (100+77) shares now. The total capital is $2000. The total value of your shares $2301 (177*$13). At this moment, you are profiting $301.

Month #3: Share Price $6. You will be able to buy 167 shares now ($1000/6 ≈ 167). You have 344 (100+77+167) shares now. The total capital is $3000. The total value of your shares $2064 (344*$6).  At this moment, you are losing $939. Most people starts to open their warchest now.

Month #4: Share Price $10.98. You will be able to buy 91 shares now ($1000/10.98 ≈ 91). You have 435 (100+77+167+91) shares now. The total capital is $4000. The total value of your shares $4776.30 (435*$10.98). At this moment, you are profiting $776.30 again. You are happy again.

Month #5: Share Price $7. You will be able to buy 143 shares ($1000/7≈143). You have 578 (100+77+167+91+143) shares now. The total capital is $5000. The total value of your shares $4046 (578*7). At this moment, you are losing $954 again. Some people start to freak out and wonder why dollar cost averaging is not working. In the case of China, the chart has been one direction downwards and “the moment” in the time for losses are prolonged.

This is the reason why people feel that dollar cost averaging is not working… yet.

Month #6: Share Price $10. You buy 100 shares. In total, you would have 678 shares. Total capital $6000. The total value of your shares $6780. You are profiting again.

You are making volatility your friend

Dollar cost averaging works when there are ups and downs. Currently, as the Chinese market is down, you will feel that it is not working. When the market recovers, DCA will suddenly “work again”. At this point, you will often hear people start talking about their investment gains.

“Time in the market, not timing the market”. 

I had to copy the quote again. Remember that investing (not speculation) is about buying shares of the companies/funds/assets you want through time. Dollar Cost Averaging is just one way that you can consider to invest.

Final Thoughts

You are not alone in this journey. I believe that there are many who have invested in the Chinese market because of good valuation. Of course, there will be non believers of Chinese market because of their tight regulations. At the end of the day, it is about investing with the strategy that you are most comfortable with.

You can buy stock tips. But you can never buy conviction.

Ask yourself if the asset allocation strategy fits your profile. Engage a professional to finetune the strategy. Lastly, do start. With every crisis, comes an opportunity.

With every crisis comes an opportunity
With every crisis comes an opportunity

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.