facebookAm thinking of setting up DBS investor-saver to qualify for the multiplier acct on 50k. Does it make sense to think this way? Currently only credit salary to DBS and uses a Dbs credit card, 25k cap? - Seedly

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Anonymous

02 Mar 2020

โˆ™

SeedlyAMA

Am thinking of setting up DBS investor-saver to qualify for the multiplier acct on 50k. Does it make sense to think this way? Currently only credit salary to DBS and uses a Dbs credit card, 25k cap?

Looking at following as they have the lowest transaction fee of 0.5% any recommendations?

  • ABF Singapore Bond Index Fund
  • Nikko AM SGD Investment Grade Corporate Bond ETF

Discussion (2)

What are your thoughts?

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.โ€‹โ€‹โ€‹

Andy Sim

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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