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Anonymous
Looking at following as they have the lowest transaction fee of 0.5% any recommendations?
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Andy Sim
02 Mar 2020
HR Professional at a Financial Institution
Hi Anon, yes you are right, if you add one more category the limit is 50k instead of 25k. But do note that if you add the invest saver as a category its only for 12 months. But I understand you can choose a different counter after the first 12 months, which then becomes valid for another 12 months, not so sure how true is this.
But please do your proper due diligence and know what you are investing in and not do it just cos of higher interest.
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I'm sharing my analysis based on 2 scenarios, which you can likely adopt, and think about the best course of action for yourself. Both scenarios assume you have $50,000 and these funds require high liquidity - therefore you want to hold them in Savings accounts.
Scenario 1 (Without DBS Investsaver):
Multiplier Account balance - $25,000 @ 1.85% interest (1 Category fulfilled)
CIMB FastSaver balance - $25,000 @ 1% interest
Salary Credited - $4,000
Credit Card Spending - Above $1
Total Interest earned p.a. = $715.50 ($462.50 + $250)
Scenario 2 (With DBS Investsaver):
Multiplier Account balance - $50,000 @ 2% interest (2 Categories fulfilled)
Salary Credited - $4,000
Credit Card Spending - Above $1
DBS Investsaver - $100/month, i.e. Capital Outlay = $1,200/year; Cost = $6/year
Total Interest earned p.a. = $1000
Difference in interest earned between Scenario 2 and 1 = $278.50 ($1,000 - $715.50 - $6)
To keep things simple, let's consider the % decline in the invested Bond ETF, so that Scenario 1 outweighs Scenario 2, i.e interest earned becomes less than $715.50.
A -23.2% decline is needed ($278,50/$1,200 * 100%), which is very unlikely (but not impossible) given the nature of the products.
Caveats to consider:
Bond ETFs used rather than Stock ETFs, which would be expected to be much more volatile.
Investment category only counts for 12 months for a particular counter (DBS Multiplier rules).
Invested amount at $100/month. If it's $1,000/month, only a -2.32% decline is needed for Scenario 1 to outweigh Scenario 2 (which is more likely to happen).
With the above being said, it's still important to know the products and risks of what you are invested in. Consider the pros and cons for your own situation and don't fulfill another category (insurance/investment) just to earn higher interests.