Heard about this new promotion from Singapura Finance for children below age of 15:
Open a Singapura Blue Sky Junior Savers Account between 30 March 2013 and 30
June 2013 with a minimum amount of $500 and get a coin bank and instant cash
credit of $30.
However, the $30 cash credit is fixed, even if you deposit more than $500.
That's an instant return of 6% for your kid. But you must maintain the account for minimum 12 months.
Beside the instant interest, the account is paying 0.375% interest p.a., with interest crediting into the account every month. Assuming that your kid is keeping the $530 for one year, it will generate $1.99 interest for the year. This will give a net interest of 6.398% p.a. for your initial deposit of $500. Effectively this is the highest return that we can get from bank saving accounts nowadays.
This is a good starting bank account for children. Parents could deposit children's "angpow" (red packet) money into this account. Children also could be taught the good habit of savings when they are young and see their savings grow.
It is always good to have a head start on the road towards Financial Freedom.
Showing posts with label Saving Accounts. Show all posts
Showing posts with label Saving Accounts. Show all posts
Tuesday, 14 May 2013
Sunday, 21 April 2013
Deposit Insurance Scheme
Singapore has a sound banking system. Banks and finance companies licensed in Singapore are supervised by the Monetary Authority of Singapore (MAS) and MAS requires these banks and finance companies to have sound risk management systems, adequate internal controls, well capitalization and sufficient liquidity to meet any unforeseen needs.
However, MAS does not guarantee the soundness of individual banks and finance companies. As there is no 100% safe business in the world, therefore, a Deposit Insurance Scheme (DIS) has been set up to protect the core savings of small depositors in Singapore in the event that a full bank or finance company collapses.
This is a safety net provided to the depositors that their Singapore dollar denominated deposits, including those in CPF Investment Scheme and Supplementary Retirement Scheme placed with a DIS member bank or finance company, are insured up to a maximum of S$50,000. Foreign currency deposits, dual currency investments, structured deposits and other investment products such as shares and unit trusts are not insured because these investments require the investor to assume higher risks for higher returns and therefore these products do not form part of the core savings of small depositors.
Singapore Deposit Insurance Corporation Limited (SDIC) administers the Deposit Insurance Scheme and Insurance Policy Owners' Protection Scheme in Singapore. SDIC is a company limited by guarantee under the Companies Act. The board of directors is accountable to the Minister in charge of the Monetary Authority of Singapore (MAS).
In the event a DIS member fails, the MAS will request the SDIC to step in. The SDIC will put its crisis plan into action. Arrangements will be made for depositors to be paid either by cheque or through accounts opened for them in another financial institution.
As we have a mechanism in place to guarantee the safety of deposits, people are less likely to panic if and when things go wrong. This could prevent such incidents like disastrous bank runs. An example is the recent banking crisis in Cyprus.
As the insured amount is S$50,000 per bank, therefore, it is against our own interest to have too much money in a single bank. The old saying "do not leave all eggs in one basket" is also applicable here.
Previously I had a priority banking account with a certain bank, but the bank relationship manager was more interested that I invested money on their structured products. As I have purchased structured product with them in the past, I became a "priority" customer as the bank profiled me as one able to taking higher risk and easier parting with my money.
As I seldom go to the bank now as many transactions can be done through internet banking, I see no point in maintaining the status of priority customer. Taking full advantage and coverage of the DIS, I downgraded myself to normal banking account holder.
However, MAS does not guarantee the soundness of individual banks and finance companies. As there is no 100% safe business in the world, therefore, a Deposit Insurance Scheme (DIS) has been set up to protect the core savings of small depositors in Singapore in the event that a full bank or finance company collapses.
This is a safety net provided to the depositors that their Singapore dollar denominated deposits, including those in CPF Investment Scheme and Supplementary Retirement Scheme placed with a DIS member bank or finance company, are insured up to a maximum of S$50,000. Foreign currency deposits, dual currency investments, structured deposits and other investment products such as shares and unit trusts are not insured because these investments require the investor to assume higher risks for higher returns and therefore these products do not form part of the core savings of small depositors.
Singapore Deposit Insurance Corporation Limited (SDIC) administers the Deposit Insurance Scheme and Insurance Policy Owners' Protection Scheme in Singapore. SDIC is a company limited by guarantee under the Companies Act. The board of directors is accountable to the Minister in charge of the Monetary Authority of Singapore (MAS).
In the event a DIS member fails, the MAS will request the SDIC to step in. The SDIC will put its crisis plan into action. Arrangements will be made for depositors to be paid either by cheque or through accounts opened for them in another financial institution.
As we have a mechanism in place to guarantee the safety of deposits, people are less likely to panic if and when things go wrong. This could prevent such incidents like disastrous bank runs. An example is the recent banking crisis in Cyprus.
As the insured amount is S$50,000 per bank, therefore, it is against our own interest to have too much money in a single bank. The old saying "do not leave all eggs in one basket" is also applicable here.
Previously I had a priority banking account with a certain bank, but the bank relationship manager was more interested that I invested money on their structured products. As I have purchased structured product with them in the past, I became a "priority" customer as the bank profiled me as one able to taking higher risk and easier parting with my money.
As I seldom go to the bank now as many transactions can be done through internet banking, I see no point in maintaining the status of priority customer. Taking full advantage and coverage of the DIS, I downgraded myself to normal banking account holder.
Sunday, 7 April 2013
Best Saving Account - CIMB StarSaver Account
Savings accounts serve the purpose of regular savings and parking your money for later deployment. When the money gets to a sufficiently large amount, then you could either transfer it to fixed deposit or use it for other investments.
However, the interest rates for saving accounts are almost zero nowadays, most banks offer pathetic interest rates at 0.05% to 0.1% p.a. Even Standard Chartered's eSaver, which supposed to give higher interest rate than others because the bank does away with all non-essential services like passbook, cheque book and atm/debit cards, has dropped to 0.1% p.a. There is no longer motivation and incentive to keeping the money there.
After some looking around, I found that CIMB StarSaver Accounts offer the highest interest rates for savings accounts in the market, a massive 0.8% p.a. The interest rate of StarSaver Account is even higher than some banks' fixed deposit interest rates!
There are 2 types of StarSaver Accounts. One is a simple plain savings account and the other a checking and savings account. [For simplicity's sake, I will refer to them as savings account and checking account].
The initial deposit is $1,000 for the savings account and $5,000 for the checking account. To enjoy 0.8% p.a. interest rate, every month you need to deposit $100 or more for savings account and $500 or more for the checking account.
Even if you can't maintain the monthly incremental deposit, there is no penalty fee. Your interest rate for that month just drops to 0.5% p.a., which is already 10 times better than those banks offering 0.05% p.a.
For convenience's sake, you could also place periodic lump sum deposits that will be automatically converted by CIMB Bank into equal portions. For example, if you place a lump sum of $3,000 into the StarSaver checking account, it is equal to 6 months of incremental deposits.
I find this monthly incremental deposit a good thing, as it force you into a regular saving habit.
In addition to the 0.8% interest rate, other superior features of StarSaver checking account are the free cheque books and zero checking account maintenance fee. For comparison, some banks charge $2 a month for maintenance fee and also charge you for each new cheque book issued.
There is a $1 monthly account fee for StarSaver account. However, you could get it waived by opting for electronic statement. This save you some money and also is more environmental friendly.
There is one disadvantage with CIMB bank. CIMB has only 2 branches in Singapore as of today and the few ATM machines that they have are only available at the branches. So, it is not convenient to withdraw money and do face-to-face banking with them.
However, this disadvantage can also be considered advantage because your savings stay inside your bank account.
If really necessary, you could transfer your money out from CIMB through internet banking to your other bank accounts, which you can then conveniently access it. Moreover, the CIMB Orchard branch opens 7 days a week.
As such, I consider CIMB StarSaver Checking account the best for checking and savings purposes.
Do let me know if anyone knows of a better savings and checking account.
However, the interest rates for saving accounts are almost zero nowadays, most banks offer pathetic interest rates at 0.05% to 0.1% p.a. Even Standard Chartered's eSaver, which supposed to give higher interest rate than others because the bank does away with all non-essential services like passbook, cheque book and atm/debit cards, has dropped to 0.1% p.a. There is no longer motivation and incentive to keeping the money there.
After some looking around, I found that CIMB StarSaver Accounts offer the highest interest rates for savings accounts in the market, a massive 0.8% p.a. The interest rate of StarSaver Account is even higher than some banks' fixed deposit interest rates!
There are 2 types of StarSaver Accounts. One is a simple plain savings account and the other a checking and savings account. [For simplicity's sake, I will refer to them as savings account and checking account].
The initial deposit is $1,000 for the savings account and $5,000 for the checking account. To enjoy 0.8% p.a. interest rate, every month you need to deposit $100 or more for savings account and $500 or more for the checking account.
|
Initial Deposit
|
StarSaver Checking
|
StarSaver Savings
|
|
S$5,000
|
S$1,000
|
|
|
Interest Rate
|
Month-end incremental deposit
|
|
|
StarSaver Checking
|
StarSaver Savings
|
|
|
0.8% p.a.
|
S$500 or more
|
S$100 or more
|
|
0.5% p.a.
|
Less than S$500
|
Less than S$100
|
Even if you can't maintain the monthly incremental deposit, there is no penalty fee. Your interest rate for that month just drops to 0.5% p.a., which is already 10 times better than those banks offering 0.05% p.a.
For convenience's sake, you could also place periodic lump sum deposits that will be automatically converted by CIMB Bank into equal portions. For example, if you place a lump sum of $3,000 into the StarSaver checking account, it is equal to 6 months of incremental deposits.
I find this monthly incremental deposit a good thing, as it force you into a regular saving habit.
In addition to the 0.8% interest rate, other superior features of StarSaver checking account are the free cheque books and zero checking account maintenance fee. For comparison, some banks charge $2 a month for maintenance fee and also charge you for each new cheque book issued.
There is a $1 monthly account fee for StarSaver account. However, you could get it waived by opting for electronic statement. This save you some money and also is more environmental friendly.
There is one disadvantage with CIMB bank. CIMB has only 2 branches in Singapore as of today and the few ATM machines that they have are only available at the branches. So, it is not convenient to withdraw money and do face-to-face banking with them.
However, this disadvantage can also be considered advantage because your savings stay inside your bank account.
If really necessary, you could transfer your money out from CIMB through internet banking to your other bank accounts, which you can then conveniently access it. Moreover, the CIMB Orchard branch opens 7 days a week.
As such, I consider CIMB StarSaver Checking account the best for checking and savings purposes.
Do let me know if anyone knows of a better savings and checking account.
Saturday, 9 March 2013
My First Saving Account - POSB
I opened my first bank account
at Post Office Savings Bank (POSB) when I was in primary school. In those
days, we could buy postage stamps from our form teacher and paste them onto a
card. That was the "Save at School" card with empty boxes where you
could paste the stamps. After completing the stamp card, the teacher would
collect it, hand it to the bank and deposit into our POSB account.
POSB was also a pioneer in a number of industry innovations, such as the GIRO electronic payment system, direct salary crediting and the automated teller machine (ATM), of which it had the largest network. POSB was truly the "people's bank" then.
After I started working, I continued to use POSB for all my banking transactions, including salary crediting, GIRO, current account with free cheque book, NETS, etc. POSB at those days was also the only bank with tax exemptions on interest paid to savers.
The "people's bank" came to an end in 1998 when POSB was brought over by DBS. Over the next few years, DBS came out with several measures that destroyed POSB's long held image of the "people's bank".
The introduction of monthly service fees for small accounts drew great unhappiness for many people, as depositors were incensed that DBS would sacrifice poor Singaporeans for its bottom line.
Then, DBS started charging monthly service for current accounts and we also have to pay for new cheque book issuance.
A government tax change also meant that POSB was no longer the only bank with tax exemptions on interest paid to savers.
Many Singaporeans spoke against the merger and against POSB's new parent, DBS.
I have closed my current account with POSB immediately and over the years, also transferred my salary crediting, GIRO payments, to other banks. I just maintain my POSB saving account with a small sum over the minimum sum, so that I can still use the POSB/DBS ATM network when necessary.
I have this irrational dislike for DBS that over the years, I do not have any account (other than the original POSB account), credit card, or any other products by DBS.
This really prevents me from buying into the toxic DBS high notes during the Lehman's saga.
POSB was also a pioneer in a number of industry innovations, such as the GIRO electronic payment system, direct salary crediting and the automated teller machine (ATM), of which it had the largest network. POSB was truly the "people's bank" then.
After I started working, I continued to use POSB for all my banking transactions, including salary crediting, GIRO, current account with free cheque book, NETS, etc. POSB at those days was also the only bank with tax exemptions on interest paid to savers.
The "people's bank" came to an end in 1998 when POSB was brought over by DBS. Over the next few years, DBS came out with several measures that destroyed POSB's long held image of the "people's bank".
The introduction of monthly service fees for small accounts drew great unhappiness for many people, as depositors were incensed that DBS would sacrifice poor Singaporeans for its bottom line.
Then, DBS started charging monthly service for current accounts and we also have to pay for new cheque book issuance.
A government tax change also meant that POSB was no longer the only bank with tax exemptions on interest paid to savers.
Many Singaporeans spoke against the merger and against POSB's new parent, DBS.
I have closed my current account with POSB immediately and over the years, also transferred my salary crediting, GIRO payments, to other banks. I just maintain my POSB saving account with a small sum over the minimum sum, so that I can still use the POSB/DBS ATM network when necessary.
I have this irrational dislike for DBS that over the years, I do not have any account (other than the original POSB account), credit card, or any other products by DBS.
This really prevents me from buying into the toxic DBS high notes during the Lehman's saga.
Saturday, 2 March 2013
My Poor Fixed Deposits
After I started working, I followed my parent's old path on savings. Due to busy work schedules and occasional regional duties, I did not have much time to manage my finance actively. I saved whatever I could and deposited the money into bank Fixed Deposit accounts. At one point, I have 150K in FDs.
However, the FD interest rates kept dropping and FD was no longer the "cash cow" that it was in the old days. Over the years, the interest rate finally dropped below the inflation rate and it became obvious that my money got eroded just by idling in the bank.
I tried to look around and there were several options:
1. Stock Investment to gain regular dividends.
2. Endowments and long term saving plans
3. Unit Trusts and Investment Linked Products.
4. Bonds
5. Property
6. Structured deposits offered by the banks (which they said "have high returns" and are "perfectly safe" --- how could those giant US banks and the trusty old Lehman Brothers fail? They tried to convince me into buying)
7. Multi-level Marketing.
I will blog on my experience with the above options in later posts.
However, the FD interest rates kept dropping and FD was no longer the "cash cow" that it was in the old days. Over the years, the interest rate finally dropped below the inflation rate and it became obvious that my money got eroded just by idling in the bank.
I tried to look around and there were several options:
1. Stock Investment to gain regular dividends.
2. Endowments and long term saving plans
3. Unit Trusts and Investment Linked Products.
4. Bonds
5. Property
6. Structured deposits offered by the banks (which they said "have high returns" and are "perfectly safe" --- how could those giant US banks and the trusty old Lehman Brothers fail? They tried to convince me into buying)
7. Multi-level Marketing.
I will blog on my experience with the above options in later posts.
Wednesday, 20 February 2013
The Good Old Days
My parents do not know the idea of passive income, but they save whatever they can and deposit the extra money into a fixed deposit account. They do not know other options then.
The good old days when I was young, the banks have high interest rates on fixed deposit accounts. The interest rate was closed to 10% per annum then.
My parent's FD account matured on early November and they used the interest for the children's school books and clothing for the new year. The interest collected was like bonus for our family.
The bank did not have FD auto-renewal then, and they didn't care if you did not come to the bank to collect interest and renew your FD account. If you come late to renew your FD, the bank will just stop your FD and will not pay you interest for the lapsed days. Due to work and other commitment over the years, the mature date for the FD account slowly moved from early November to mid-November.
Later the bank implemented auto-renewal system on FD accounts. The FD account will get automatically renewed once it matured. But then the interest rate is on a downward spiral of no return. FD is no longer the "cash cow" that it was.
The bank also have these Financial Advisors, Relationship Bankers, Banking Managers/Officers, etc, etc These people always call when your FD matured or about to mature and introduce "better" and "higher returns" investment products; that are "superior" compared to the FD account. Luckily my parents are able to resist these temptations and avoided the Lehman Brother's minibond saga.
My parent's FD is still "active" nowadays, but it is generating pathetic interest.
I will blog about my investment journey in later posts.
The good old days when I was young, the banks have high interest rates on fixed deposit accounts. The interest rate was closed to 10% per annum then.
My parent's FD account matured on early November and they used the interest for the children's school books and clothing for the new year. The interest collected was like bonus for our family.
The bank did not have FD auto-renewal then, and they didn't care if you did not come to the bank to collect interest and renew your FD account. If you come late to renew your FD, the bank will just stop your FD and will not pay you interest for the lapsed days. Due to work and other commitment over the years, the mature date for the FD account slowly moved from early November to mid-November.
Later the bank implemented auto-renewal system on FD accounts. The FD account will get automatically renewed once it matured. But then the interest rate is on a downward spiral of no return. FD is no longer the "cash cow" that it was.
The bank also have these Financial Advisors, Relationship Bankers, Banking Managers/Officers, etc, etc These people always call when your FD matured or about to mature and introduce "better" and "higher returns" investment products; that are "superior" compared to the FD account. Luckily my parents are able to resist these temptations and avoided the Lehman Brother's minibond saga.
My parent's FD is still "active" nowadays, but it is generating pathetic interest.
I will blog about my investment journey in later posts.
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