Asked on 04 Jul 2020
Hi Si Hong,
As 2.5% p.a. is only on the first $10K, it is possible that they could sustain this since they have capped their liability in terms of how much interest they have to pay out.
If they are hitting their limits, they could simply close new subscriptions to the Singlife account.
If their underlying assets are investment grade coporates, it's still possible to get 2.5% p.a. returns, which they don't have to pay out all.
Let's be honest.
This is a feature in their current marketing plan. Simply put, about $250 per new customer acquisition for deposits of up to $10k and 2.5% interest.
Once they analyze the result, they may stop it or even make it a permanent feature, nobody knows.
Depending on the health of the company.
But a damn good marketing campaign I would say :)
I think it is quite hard to say given that SingLife did not really specify what are they doing with our funds.
Usually, these companies will use the funds that we deposit with them to invest in different investment vehicles so that they can continue to give us the prevailing interest rate.
So I think it really depends on how their investments perform to determine if they are able to maintain the 2.5%.
It depends on the cost for funds, demand for the account and the underlying investment.
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