facebookI’m a fresh graduate who’s starting work in August. How should I start investing and which bank accounts are good for depositing my salary in? What kind of credit cards do you recommend? - Seedly

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I’m a fresh graduate who’s starting work in August. How should I start investing and which bank accounts are good for depositing my salary in? What kind of credit cards do you recommend?

Trying to get my personal finance in order before I start work proper! Pls give any advice, thanks!

Discussion (13)

What are your thoughts?

You can always start by investing in regular savings plan and/or via robo advisor. I assumed you are below the age of 26, so you can create a standard chartered jumpstart account to get 2% interest for your first $20,000.

For credit cards, I think it really depends on what you perceive as good value based on your lifestyle.

If you want no nonsense and get cash rebate without the hassle of doing any additional step, cashback cards are your best friend, and they can be coupled up with platforms like grabpay, fave, or shopback to maximize further savings. The cons to cashback is that there is a cap to the rebate, and it's usually 1.5% for transactions below a certain threshold. That means if you have $10k worth of lump sum payment, the 1.5% is capped at a certain amount.

For airmiles, if you fancy redeeming business class flights without wanting to fork your own money, this is probably the way to do it. There is some science done to the cost per mile (cpm) which is relatively $0.02. So if you have 10k miles, you can argue that you have $200 worth of miles. The great thing about collecting miles per transaction is that there isn't a fixed cap, meaning you can get cheaper miles for what it is currently priced (by taking advantage of welcome sign on miles with amex krisflyer cards) or using the right air miles card for different type of purchase (capped at 4 miles per dollar). What that means is every dollar you pay and charge to the credit card, you get 4 miles back. For e-commerce purchase for eg, you want to use DBS world women card as it gives you 4mpd capped at $2k per month. You could also do the same with offline purchase at courts / Harvey Norman with ocbc titantium card which gives you 4mpd. There are many more air miles hack which you can search and find online.

I think at this point you can see that there is more strategy and game plan with collecting miles, and you need to do more steps, but the value you get in monetary terms will be bigger than cash rebates as there is no specific cap. What works so well is you can use the miles to take advantage of airlines promotion where they run discounts on miles required to redeem flights. If you manage to capitalize on those, your value of mile increases as the price of the ticket is fixed, but the miles you pay reduces; thus your miles are now worth more (than $0.02).

I can get why critics of airmiles would argue cash rebate is better because collecting miles would encourage you to spend more naturally, which is why it goes back to the question of the type of lifestyle you eventually desire to live with, and is $250 cash better for you, or a round trip economy fully paid to any SEA country better for you (which could cost $300+ depending on seasonality)?

Personally I only use miles to redeem for business class for mid haul flights more than 8 hours for comfort and enjoyment but you pick your own poison :)

Investing

Go and read up and find out about the different styles of investing. See which one would suit you, and what are the pros and cons. E.g. Index investing VS income investing, rebound trading VS momentum trading, property investing VS REITs investing, etc etc.
Bank account

I would think DBS Multiplier is quite decent for fresh graduates, as a starting high yield account. Reason being, the salary credited, which is a mandatory criteria for higher interest, is not specified. Also, the credit card spending has no minimum, meaning you would be less likely to spend just to reach the minimum spend.
Credit card

I would think cashback cards would be better suited, as opposed to miles card. As you are just starting out, you wouldn’t really know what your expenditure is like. Besides, not all things are chargeable to credit cards, e.g. Hawker centre food, parents allowance. Cash back is also given in the following month, while miles have an expiry date. I would say OCBC Cashflow card would be a good card, since it automatically splits payment above $100 into 3 installment, interest free. This feature would save you in case you accidentally over swipe your card. =P

Glenn Toh

Glenn Toh

26 Jun 2019

Level 5·Founder at Whatcard.sg

As a fresh graduate from just a few years ago, will share my personal experiences.

Banks Account: I started with the OCBC360 account, it works quite well as long as you pair it together with other OCBC products to maximise the bonus interest rates (e.g. using the OCBC 365 credit card).
Recently I have moved over to the DBS Multiplier account because of the constant changes in the OCBC360 account interest rates and requirements (all downhill...). I find that the DBS Multiplier is much easier to work with, main condition being that you need to hit a large monthly earning+spending to achieve good interest rates. It would work increasingly well as your salary increases over time.

Investing: This is a massive topic of which entire books can be written on... But my personal take is to start small and passively invest whatever part of your salary you manage to save. Together with the OCB360 account I used their Blue Chip Investment Plan (BCIP) to invest a small amount on a monthly basis. This monthly investment plan really helped me to maintain discipline in saving/investment over time and you will be surprised at how much it adds up over time!
Cards: Depends on what rewards you are looking for (cashback, airline miles, reward points) and also whether you want to use credit cards from the same bank where you are crediting your salary to in order to maximise bonus interest.

  • OCBC: OCBC 365 (cashback), OCB Titanium Rewards (miles)
  • DBS: DBS Altitude (miles), DBS Womans World Card (miles)
  • If you are indifferent to bank: Citi Rewards Visa (miles), BOC Family Card (Cashback)

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For a start, can explore dbs multiplier or uob one bank accounts. Easier to start and save right awa...

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