Finance Smiths

Wife registers for DBS BYOB Promotion and SAYE Account

08.11.2017 by Finance Smiths //

Just when I had a go at criticizing the DBS Be Your Own Boss (BYOB) Promotion and Save As You Earn (SAYE) Account, my wife expresses interest in it. I can see the reason behind this. From this month onwards, my wife’s salary will be credited into a DBS savings account held in her name. She wanted to know if it’s possible for us to utilize that to our advantage. After all, salary crediting usually allows for higher interest to be earned, as you can see from the OCBC 360 and UOB One bank accounts. I’m pleased she has thought about this. Well done!

This is how we considered whether my wife should register for the DBS BYOB Promotion and SAYE Account. First, we looked at the DBS BYOB Promotion website landing page and the key conditions and benefits are highlighted on the webpage. However, we noted a few concerns about the mechanics and went to the Terms and Conditions for more information. This happens almost every time for us with DBS products and it’s my biggest problem with them.

DBS doesn’t offer easy to understand special banking accounts/products to the mass individual customer market. They like to come up with complex stuff, make you jump through additional hoops and hurdles, before giving you what you want. Don’t get me wrong. You can get good stuff at the end of the obstacle course. My main criticism is the fact that you have to put in extra and unnecessary work to get it. When they could have just given it to you in a more convenient manner.

Let’s analyse the Terms and Conditions as applied to my wife. You will be able to see why this is an annoying process even though she decided to register for the DBS BYOB Promotion and proceeded to open the SAYE Account in the end. By the time we figured out this is beneficial to us, my wife almost decided against registering for it because of the additional legwork involved.

Age Restriction

The DBS BYOB Promotion is open to customers aged from 18 to 30 years old at the point of registration. My wife is 29 years old and just made the cutoff.

Salary Crediting

My wife does not have a salary crediting arrangement with DBS between 1 September 2016 and 28 February 2017 since her salary crediting into a DBS savings account will only start this month.

Register Online

She registered online and provided her details using the link.

Open SAYE Account Online

My wife logged in to her internet banking to apply for the SAYE Account. Her DBS salary crediting account is selected as the debiting account for the maximum monthly savings amount of S$3,000 on 24th of every month into the SAYE Account. The maximum limit works for her because she can save S$3,000 every month from her salary and the timing works as well because that’s right after her salary is credited.

No Withdrawals

She should not need to withdraw from the SAYE Account as long as she continues to remain employed. If this is the case, we are basically setting aside cash she should have saved monthly anyway from her salary income in a different bank account. Besides, we have sufficient cash savings for our expenses and investments without withdrawing from the SAYE Account.

Existing POSB Principal Credit Card Member

My wife has a POSB Everyday Credit Card that is used as an EZ-Link card (i.e. EZ-Reload charges), for utilities bill payments and to make purchases of Watsons products and Golden Village movie tickets. No where near the required 5 retail transactions per calendar month. We could start charging some of our Singtel and Starhub bills to the POSB Everyday Credit Card but we are not sure whether they count. Alternatively, we could start charging some of our groceries and dining expenses to the POSB Everyday Credit Card but it’s such a waste of the better cash rebate we can get on other credit cards. We might explore the Cashback Bonus program but we only fulfill 2 of the 5 categories so far. Another gripe of ours but oh well, sacrifices need to be made.

Benefits

2% pa interest on the monthly savings in the SAYE Account credited into the same account. Another 2% pa bonus interest on the monthly savings in the SAYE Account credited into her Paylah account. S$88 cash gift because she registered by 30 September 2017. We have already maxed out the balances in the high interest (about 2% pa) OCBC 360 and UOB One bank accounts already. We are left with rotating our remaining cash funds between the relatively high (about 1% pa) CIMB FastSaver, Stan Chart ESaver (with promotion) and UOB Uniplus (with promotion) bank accounts. The combined possible 4% pa DBS BYOB Promotion and SAYE Account for the next 2 years should still beat our cash funds rotation approach.

Conclusion

We will be monitoring on a monthly basis how much interest gets credited into my wife’s PAYE and PayLah accounts where applicable after ensuring we meet our above interpretations of the conditions. We don’t like having to backcheck that we have been correctly following the requirements and will not be happy if we end up being wrong. Which is my main question to DBS. Why would you risk pissing off your customers with such complications over a long period of time? Imagine your customers tripping up unintentionally by making critical errors that should have been minor mistakes in the grand scheme of things and end up losing the interest earned. How much of a fuss/storm do you think they would kick up?

When everyone is cashed up and waiting

08.10.2017 by Finance Smiths //

Happy National Day to Singapore! It’s a public holiday here today (Wed) and I didn’t do much at all. Cooked breakfast and lunch at home with my wife before heading over to my parents-in-law’s place for dinner. Nice and quiet mid-week break from work. Anyway, I have a full day of training tomorrow so I won’t be going into the office until Fri. It will be the weekend before you know it and I will have a wedding dinner to attend on Sat night!

I have been watching quite a bit of TV (Netflix and the National Day celebrations) today (Wed) so I thought I should do something more productive now. If you are wondering what triggered this post, it’s really just an observation more than anything. As I monitor the financial news & events less frequently in an effort to disassociate myself, there are still some key economic indicators that I focus on. Nothing complex and those that are simple & easy to understand.

Ministry of Manpower (MOM) Overall Unemployment Rate

I know people can be distrusting of this statistic. The most common criticism being it is often an understatement of the actual unemployment levels in Singapore. Another being it doesn’t reflect underemployment. However, this doesn’t change the fact that it is an important indicator of the labour market.

Have a look at the annual average overall unemployment rate (%) from the MOM website for the past several years:

You see that slight uptick in 2009, which coincided with the aftermath of the 2007/2008 Global Financial Crisis. I was surprised that it only went up to 3%. In Singapore, you could argue that almost everything is propped up by the employment market. Stocks, property, etc. This link is stronger than you think when you consider how our Central Provident Fund (CPF) Ordinary Account balances can be used to invest in stocks and property.

Singapore has one of the highest mandatory employer and employee retirement contributions and most flexible use of retirement funds in the world. It’s no wonder the health of the job market remains a primary concern for the Singapore Government. Once the unemployment rate starts to creep up, the repercussions for such a small country like us with no natural resources and a high dependency on human capital can be severe. In short, we can get screwed a lot worse than other countries.

Local Banks Profits

The performance of the 3 local banks in Singapore is a strong indicator of how well our economy in general is doing. Although certain industries and sectors can be underperforming, it is possible for other areas to more than make up for it. A significant portion of these local banks’ businesses is coming from Singapore firms. SMEs, MNCs, Funds, Asset Managers, etc.

As long as the local banks’ profits are holding up, it would suggest that the Singapore economy is still sufficiently healthy since their core business is as financial intermediaries. Which again ties to the unemployment rate and circles back to the stock market, property market, etc. It doesn’t matter what the media is writing about in relation to all of these topics. The statistics should drive your analysis.

What does it say about our holding power?

Let’s have a look at the combination of factors for Singapore in the past several years:

Property prices have gone up significantly
Birth rates have gone down to below replacement levels
Unemployment rates have stayed at relatively low levels
Personal taxes continue to remain low
Wealth taxes have gone up slightly

These are prime wealth-building conditions and that’s exactly what has happened. The older generation may be suffering from a higher unemployment rate but they are able to monetise the increase in their property prices. By downsizing or moving in with their children. The younger generation may be suffering from higher property prices but they have been able to save up aggressively from staying with their parents before moving out. Besides, the children will more often than not be the beneficiaries of their parents’ wealth. In fact, when this transfer of wealth happens, it gets focused on to a smaller number of people because of the declining birth rate.

Have a look around. There are so many people all cashed up and waiting.

Graduate couples below 25 years old that are staying with their parents while waiting for their subsidised flats to be ready. But saving for their wedding, downpayment, etc.
Single/Dual-income couples between 25 and 35 years old living in their first subsidised flats that are waiting to have children or just started their families. Most of them can foot the entire monthly mortgage with their CPF OA balances without touching their cash.
Single/Dual-income couples between 35 and 45 years old that have children and are waiting to move out to a bigger apartment. Most of them have benefited from the run-up in the property prices (because of their first property) and hold sufficient equity & cash to make their next purchase.
Singles in any of these 3 age groups either still staying with their parents and saving aggressively or they have sufficient earning power to move out by themselves. For those above 35 years old, the availability of specific smaller subsidised flats helps to ensure some of those that move out do not financially overstretch themselves.

My wife and I know of extended family, friends, colleagues and acquaintances in every one of the above groups of people. Their purchasing and holding power is very real. If you reckon it’s because of our social and professional circles, I can assure you that’s not the case. When everyone you know has the ability to hold such a high level of cash savings and wait for the stock and property markets to crash before they invest, that’s how you know it’s not happening for a while. Not in such an obvious way when everyone’s waiting to capitalise.

One other thing to remember. The reason why banks have been competing to offer attractive high interest savings accounts is because there’s so much cash and liquidity sloshing around that can be utilised. If cash savings weren’t high, there would be no point in trying to capture any market share of such high interest savings accounts.

This is why I reckon bear markets and market crashes are difficult to predict and take advantage of. They happen when everyone is too afraid to step in to invest despite having sufficient cash holdings, which suggests a quick recovery cycle that’s difficult to time. Or they happen when everyone can’t step in to invest because they don’t have have sufficient cash holdings, which suggests a longer recovery cycle that’s difficult to stay invested in.

Enbloc fever catches up to my family

08.07.2017 by Finance Smiths //

You will have noticed a new addition to my Resources blogpage – Florence Regency. This is where my family is staying at and it seems like the Enbloc fever has finally caught up to them. The former HUDC estate at Hougang Ave 2 was privatized in 2014 and it was a matter of time before the Enbloc process started. After all, it’s an old estate and owners are keen to monetise their now privatised double-storey mansionette flats. They are big and spacious, which are rare in the new age of small flats and apartments.

I would have preferred for my family to continue staying there since it’s difficult to find a comparable place in size and location to move to in the current property environment. However, I understand my sister and brother will move out eventually and the flat is too big for my mum to upkeep. Especially when my dad mostly stays on the farm in Malaysia. Besides, the lure of a potential windfall is strong and a significant sum of money could be expected. Even after taking into account the purchase of a 4 or 5 room flat in the area or a different part of Singapore.

If the Enbloc process is successful and the collective sale goes ahead, it would certainly juice up my parents’ retirement funds. In addition to my mum’s part-time job income, the CPF Life payouts and Malaysia condominium rental income, this will help to alleviate the need for financial support from my siblings and I. Anyway, we already give monthly cash allowances to my parents and they are more than self-sufficient.

In any Enbloc process, the level of co-operation between the owners and committee is essential in ensuring its success. So far, they have been working relatively well together and I hope this continues. Unnecessary delays will be detrimental and it’s important that everyone is aware of that. The other key consideration is the timing in purchasing another flat. Let’s not forget that my family still needs a place to stay in and ideally not have to rent if the collective sale goes ahead. My role in this is limited because I have already moved out. I trust the capabilities of my siblings and parents to be able to coordinate this in their favour.

This is the reason why I added the Florence Regency WordPress Blog. It’s for me to monitor any updates and news in relation to the Enbloc process. At the same time, I should start looking at the prices and locations of suitable 4 or 5 rooms in areas that my family is interested to stay in. Preparation for any outcome is critical in ensuring that my family doesn’t get caught out. Even if the Enbloc process fails, it just means that nothing happens for my family and it’s business as usual. If the Enbloc process succeeds, then everything changes and I hope we are ready.