Asked by Anonymous
Asked on 26 Nov 2019
Also I understand the investment (e.g. NIKKO ETF) part for DBS multiplier is only applicable for 1 year as an additional category, how do we work around this? Thanks!
Firstly, I would disregard the category of "Home Loan Installment" and "Insurance Premium" because assuming most of us take HDB Loan; and "insurance premium" only applies for 1st year + must buy insurance from the bank.
That meant about probably $5,000 of the total transactions for average Singaporean: (salary + credit card + bank investment). A return of 2% realistically.
Also, should only keep 3-6months or 6-12 months (depending on your occupation) of cash in the bank for an emergency fund, so technically you shouldn't hit the highest tier of interest. Even if you do, it only applies to the balance after the first $50,000.
Invest in SSB (over 10 years) or other instruments would be a way of investment diversification in hopes of getting high interest. Money in the bank serves a different purpose - the interest rate is just a token of appreciation from the bank haha
If you read DBS Multiplier terms and conditions, there are several ways to hit a ~2% interest:
You spend $15,000 - $30,000/ month in 1 of the following transaction (Credit Card, Home Loan and Insurance/Investment)
That is not very acheivable by most if we are only spending through our credit card.
Assuming we are already spending through out credit card, investing in SSB allow us to unlock higher interest as we are now also spending on Investments.
As most people would want their funds to be relatively liquid and risk free, SSB is the appropriate investment for people to park their DBS multiplier funds in.
Hope it makes sense!