Asked on 06 Dec 2018
Asking this because of course it is easier to segregate finances by putting your savings and expenses into different account so that you can keep track better. But let's say if I can get 2% with DBS multiplier, doesnt it make more sense to put all my money there so that I can get the best returns?
You are right that storing all the cash in the highest interest account will generate the best returns (between one and multiple accounts), however you don't get the best returns from just holding cash in a bank account... You can invest for better returns.
Some people hold multiple bank accounts so that each is a reserve for a different purpose, I know a colleague who holds one bank account each to handle the finances for each rental property she holds. The account balance simply becomes a quick calculation of her property returns.
Personally I hold just two, a high interest bearing one, and a separate one for spending (allowance system). The interest earned from my spending acct isn't much, but for me the benefits are
the balance tells me how much is there left for spending
there are a lot of controls built into my main / high interest account, it gives me comfort that me or scammers can't easily take money out of it, without needing to use the banking token and key in quite a few of otp passwords.
I top up my savings accounts to the extent to which I can enjoy the higher interest rates. It's important to see what the cap is for the different savings accounts.
Take for example the Citi Maxigain savings account. I currently have my Citi Maxigain savings account topped up to 100k (because beyond 150k, you don't avail the step-up interest of 2%). Currently that gives me the best interest rates with no hassle of minimum spending etc.
For the rest, I use Standard Chartered Bonus Savers account (but am not liking the minimum card spend), and the rest I have in CIMB for all the rest of it.
Yup, I put all my money in my DBS multiplier account like you said! I have a spreadsheet which tracks how much emergency funds and savings i have, so i don't accidentally spend anything.
Yes but it's best to split into :
1) Expenses / Petty cash accounts - For monthly expenses - If you use DBS / POSB then use their normal savings/current account.
2) Savings / Investment acounts - Use DBS Multiplier to get max interest and all your other $ should be here!
The benefits is also fast and easy transfer and easier to keep track all within 1 app and you can sync with Seedly app easily to track expenses by category.
#1 can also be any other banks.
I'd say split if you can, for instance, into a main account, emergency funds and investibles, as there is usally a cap on the max amount eg 50k, 70k that can earn the high interest rates.
It really depends on you. Personally, I worry about accidentally/intentionally touching the emergency funds so i'll have a current and savings account.