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? - Seedly
 

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Asked by Li En Ng

Asked on 18 Jun 2019

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!

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Glenn Toh
Glenn Toh, Founder at Whatcard.sg
Level 4. Prodigy
Updated on 26 Jun 2019

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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Glenn Toh
Glenn Toh

on 19 Jun 2019

No problem at all!
Kenneth Lou
Kenneth Lou

on 26 Jun 2019

Solid answer Glenn! 👍👍👍
Sarah Chan
Sarah Chan, Business Administration at NUS
Level 6. Master
Updated on 19 Jun 2019

Hi Li En! Thanks for the question, I'm sure many other fresh grads beginning their personal finance journey are wondering about this too! I'm gonna break down your question into the following 3 parts: (1) Bank Account, (2) Credit Cards, (3) How to start investing. For starters, these 3 Seedly articles will be very useful for you:

Moving on to your 3 points of interest, here are some of my recommendations:

1. Bank Account

2. Credit Card

  • DBS Live Fresh (earn cashback, paired well with the DBS Multiplier, interest rate increases the more you spend/save with them)
  • OCBC 365 (reasonable amount of cashback opportunities, paired well with the OCBC 360)
  • UOB PRIVI (relatively decent miles rate, paired well with the UOB One, no min. spending)

3. How to invest

I'll begin by recommending these 2 Seedly articles to you first. Catch our #investing101 series on Instagram too!

For beginners of investing, I would recommend you SSB, ETFs, robo-advisors & insurance for yourself. But suggestions aside, I think the most important thing for you to determine is the following pointers:

  1. Have you set aside sufficient emergency funds before starting on your investment endeavour?
  2. What's your risk appetite when it comes to investing?
  3. How much effort & time would you like to put into the investment?

Sit down and plan your financial goals before making any major decisions. We've got plenty of articles on savings, credit cards & investments if you are looking to do some further research. I hope this was useful. All the best for your upcoming job :-)

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Josh Ng
Josh Ng
Level 4. Prodigy
Updated on 02 Jul 2019

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 :)

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Minghui Chng
Minghui Chng
Level 3. Wonderkid
Answered on 19 Jun 2019

Yes, I agree that DBS Multiplier is better than OCBC 360 because OCBC 360 requirements keep changing!

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Rave Ong Ci De
Rave Ong Ci De
Level 5. Genius
Answered on 02 Jul 2019

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

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Siow Nan
Siow Nan, Electrical And Computer Engineering at Nus
Level 6. Master
Answered on 25 Jun 2019

For a start, can explore dbs multiplier or uob one bank accounts. Easier to start and save right away with salary credits. I have both with salary credit going to dbs multiplier. As a fresh graduate, you might want to spend less monthly and dbs multiplier does not have a min credit card spending like the others.. So you can start getting higher interests right away with salary credit and a min credit card spend.

As for investing, you can explore that later on but for a fresh graduate my advice is to save first.

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Hi if you are looking at investing on your own, you can check out some of my articles here regarding.

1) Diversification Explained & how you can do

2) Understanding the different Asset classes

3) Asset allocation: lessons from the past

4)Portfolio strategies in a volatile and uncertain environment

I would also recommend the following books. PLEASE PLEASE PLEASE finish these book before you even start to invest as they will help you prevent mistakes that could cost you thousands of dollars. (it certainly cost me that much while learning).

  • The intelligent Investor - Benjamin Graham
  • Security analysis - Benjamin Graham
  • Common sense on mutual funds - John C Bogle

I wish you all the best.

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Mujimoro
Mujimoro
Level 4. Prodigy
Updated on 19 Jun 2019

You can start by checking out articles like:

Working Adults: How To Allocate Your Monthly Salary?

https://blog.seedly.sg/working-adults-allocate-your- monthly-salar?utm_source=app&utm_medium=share

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Joshua Csk
Joshua Csk
Level 1. Freshie
Answered on 25 Jun 2019

Dont be exploited by those trading or investing seminar that cost few K, mine is only cost few hundred. also dont put few KKK for any investment scam or scheme, bcos grow money must be by yourselves. doing the above can indirectly at least protect your capital, save for future, aalso protect your courage to further explore.

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