OCBC Bonus+ Savings Account Promotion for 2015

Those who are looking for banking account with good interest rate can take a look at OCBC Bonus+ Savings Account. This is an account that encourages the holder to save more money into it.
For example, it will award you extra interest if you do not make any withdrawal from that account in a month. On top of this, if no withdrawal was made from the account in a quarter, you will also throw in higher interest rate as a reward. This is a good deal if you are a saver.


For this lunar new year, they are offering extra promotion for this account. Fresh fund of at least $10,000 will be rewarded with an extra bonus of 1.2% p.a. for the month of march.


You can find out more details from OCBC website.

UOB PRVI Miles World MasterCard Card

There is a new credit card in town for air miles accumulation and it currently has the same miles conversion rate as the UOB PRVI Miles Amex card. This means that it has the conversion rate of

$1 = 1.6 miles for local spending
$1 = 2.5 miles for overseas spending

The good thing about this card is that it is a MasterCard. This means that it will be accepted by more vendors when compared to the Amex card that UOB previously have.

Some differences between this and the UOB Prvi Miles Amex is that

• this card does not have the Airport limousine transfer rebate that the UOB Amex offers.
• it also does not gives 20,000 bonus miles if you spend more than $50,000 in a year.

For more information about this card, please check out the UOB website.

American Express True Cashback Card

American Express has launched a new cashback card in Singapore. Its aim attraction is to provide a spending rebate of 1.5% without any conditions. It has no minimum spending, no caps on cash and the cashback is applicable to everything that you charge to the card, from online shopping to paying at the supermarket.


To be truthful, this cashback amount is among the lowest from credit cards that offer cash rebates. However, the condition free cashback will be a draw for users likes cashback card and often purchase some stuff that is not covered by the higher cashback of other cards.


If you are interest, you can find out more about it from American Express website.

Standard Chartered Fix Deposit Promotion is BACK

Standard Chartered Bank is running a promotion on its Singapore Dollars Time Deposit again.
It is offering an interest rate of 1.5% for a 3 month Singapore Dollars Time Deposit. The condition is that it must be fresh fund of at least SGD$25,000. The promotion ends on 10 Nov 2014, so hurry down to your nearest Standard Chartered Bank branch now if you are interested in this promotion.

Supplementary Retirement Scheme

If you are working in Singapore, do you know that there is a voluntary saving scheme for retirement that will lower your taxes every year? This is known as the Supplementary Retirement Scheme (SRS).


Each year, a person can contribute up to $12750 to this account and all this amount will contribute to a tax relief for that year of tax assessment, assuming that you perform the contribution before 31 December of that year. This saving is substantial if you fall into a higher tax bracket.


To open this account, you will need to go to any of the local banks in Singapore, such as DBS, OCBC or UOB. The amount that you put into the SRS account can be invested into stocks or unit trust to generate even higher return than simply putting them in cash.


When the tax assessment comes from IRAS, this amount should be automatically included, as the banks would have already passed the relevant information to IRAS.


As this is a voluntary saving scheme for retirement, it has measures in place to encourage only withdrawal after the statutory retirement age. When you hit that age and start the first withdrawal from SRS, you are given 10 years for penalty free withdrawal. For any amount that you take out, only 50% of it is subjected to taxes. And most likely, you are not working at that time and this means that the tax amount from the actual withdrawal will be either very low, or even $0.


But in the event that you do need the money before the retirement age, you can still withdraw it. However, the full withdrawal amount will be subjected to tax for that assessment year of withdrawal. In addition, there will be a 5% penalty imposed on the withdrawal.


In conclusion, this is a scheme that you should consider if you fall into a higher tax bracket. And remember, to save the taxes for this year, do contribute to it before the end of 31 December. To make it a even better deal, some of the banks have already started promotion to sweeten the contribute, giving vouchers for each contribution made.

The Hidden Cost of Direct Currency Conversion

Recently, I made an online purchase from a company and this turns out to be start of a nightmare. When I received the credit card statement, I realise that the amount in the statement is different from the amount in the merchant's invoice. Thinking that the merchant charged me wrongly, I gave them a call and they verified that they only charged me the invoice amount.


After this, I proceed to call the bank to find out more about the charges. The bank then mentioned that this transaction is a Direct Currency Conversion (DCC) transaction, where the merchant convert a foreign currency to Singapore Dollars when performing the charging. Therefore, it will inured a 0.8% admin fees on top of the transaction cost.


My instant reaction was "What?!". The merchant did not mentioned anything about conversion to me. Furthermore, although it was a foreign company, it has local presence in Singapore. Nobody buying something on a website with Singapore Dollar pricing would imagine that the merchant needs to perform DCC. If this is the case, the website should state it clearly so that consumer can make an informed choice.


So be careful when you make an online purchase, and always check if the merchant is engaging DCC when they sell you in Singapore Dollars. If not, you will be paying an additional hidden cost of 0.8% of the transaction price for nothing.

Updated T&C for Blue Chip Investment Plan (BCIP)

I just got a letter from OCBC regarding the Blue Chip Investment Plan that I am on. It has updated some terms and conditions that govern this product with effects from 15 Sept 2014.

Most of them relate to cut-off dates which they will withdraw money from your account for the shares purchase and these does not affect me much.

What is interesting about the new conditions is the one that determine how much shares will be allocated with each purchase. From their website, I have extracted the condition.



"On completion of the execution of the aggregated Purchase Instructions, the actual number of shares/units of each Security allocated to each Customer is computed by dividing Net Investment Amount by the Average Purchase Price, rounded down to the nearest whole number.

For Cash settlement, OCBC Bank will credit the unutilised portion of the Gross Investment Amount after excluding the fees (i.e. the residual monies which was not utilised to purchase Securities) back to the Customer’s GIRO-linked account.

For SRS settlement, OCBC Bank will only debit an amount equivalent to the gross investment amount plus fees for the Securities actually purchased from the Customer’s SRS account."



As some of your may have know from my earlier post, I wrote about the hidden cost of investing in BCIP. With this new condition in place, it effectively remove the hidden cost and I am very happy with the way the product operates now.

Well done OCBC for listening to consumer feedback!

OCBC 365 Credit Card

OCBC has launched a new credit card, named OCBC 365 credit card. It is a rebate card that aims to capture the "everyday spending" market by giving different rebate tiers to different spending categories. Below is a summary of the different spending tiers and their cash back rebates.


Cash back categories

• 6% for weekend local dining
• 3% for weekday local dining and overseas dining
• 3% for online shopping
• up to 18.3% for Caltex petrol
• 5% for all other petrol
• 3% for supermarket
• 3% for recurring telcos bill
• 0.3% for all other spending

As seen from the list, it is aiming the spending for daily essentials by providing more cash back for activities such as dining, petrol, groceries and bills. In a way, it seems to be competing for the same market segment as the POSB Everyday Card.


There are some conditions on the cashback though,

1. Minimum monthly spending of $600 for the card
2. Cash rebate is capped at $80 per month.

Those who are interested can find out more from the link below
http://www.ocbc.com.sg/personal-banking/cards/365card.html

OCBC FRANK Credit Card earns 6% rebate with NETS FlashPay and Online Shopping

NETS FlashPay is the contactless stored value payment solution by NETS. Do you know that you can earn 6% rebate by using NETS and doing online shopping?


Online Shopping

All transactions marked by VISA as originating from an online merchant will qualify for 6% rebate if you pay by this credit card. This is a huge list and even bill payments from Telcos are eligible. To be entitled for this 6% rebate, there are some terms and conditions that we will be covering shortly.


NETS

OCBC FRANK credit card comes embedded with NETS FlashPay. The 6% rebate is given when you use the Auto Top Up (ATU) feature of NETS FlashPay.

When you flash the card on the reader of MRT, LRT, public buses, ERP or EPS Cepas2 carpark and there is insufficient value for payment, ATU will be triggered. $50 will be charged to your credit card and the same amount will be credited to your NETS FlashPay in the credit card. With this stored amount, you can then buy any goods and services from shops that will accept NETS FlashPay. Earning 6% rebate at top up will essentially means that you are also earning 6% when using NETS FlashPay for purchases. However, there are some conditions that you will need to take note to earn the 6% rebate.


Qualifying conditions for 6% rebate

You will need to fulfil some conditions before being eligible for the 6% rebate.

1. To qualify for 6% rebate, you will need to spend at least $500 per month on the credit card.
2. The cap of rebate is $60 per month for all ATU and online transactions that are charged to the card.
3. Once a top up using the ATU is successfully, you can only do another ATU after 3 calendar days.

Conclusion

I figured that this card will be interesting for those who shop online often, or those who often buy stuff that cost less than $50 using NETS FlashPay. It is a bonus if you also often pay ERP or take public transport. Honestly, 6% rebate is quite a lot and it easily beats the rewards program of most credit cards. So depending on your spending pattern, this may yet be another good card to have in your wallet.

UOB bank is offering a 1.08% p.a. for Fixed Deposit

This news may be coming a little late, as the promotion is ending on 31 May. Nevertheless, I want to highlight that UOB is offering a 1.08% p.a. interest for a 13 month fixed deposit for Singapore Dollars. To qualify for this, you will need to bring in fresh funds of more than S$20,000.  Those who are interested can find out more at UOB branches or at their website.

Standard Chartered having a promotional rate of 1.5% p.a. for Fixed Deposit

Standard Chartered bank is having its Fixed Deposit promotion again to attract fresh funds.
This time round, it is give 1.5 % p.a. of interest for a 3-month SGD Time deposit. There as some terms and conditions as usual,

1. The maximum deposit that qualify for this promotion is S$50,000
2. It must be fresh fund and they have a new definition for this. From their website, it is stated that "Fresh funds refer to funds not originating from any existing account with the Bank and funds that are not withdrawn and re-deposited within the last 30 days".

But nevertheless, this is still a good time deposit promotion and those with excess cash and who are looking for short term deposit will certainly find this attractive.


Do check it out!

Comparing DBS Multiplier Program with OCBC 360 Account

Those who have been reading my posts will know that I have been blogging about these 2 different accounts for sometime now. From my point of view, these are fantastic new products by the banks that offer higher interest rate than what they supposing "high interest account" offers.


So with limit cash on our hands, which is the better account to deposit our money into? Lets take a look at them heads on.

Overview of DBS Multiplier program

DBS Multiplier  looks at the total transaction based on 4 activities in your associated DBS/POSB accounts. These are

• Salary crediting
• Credit Card spending
• Home Loans Instalment
• Investment Dividends

Once the total for all 4 activities in your account hit and exceed a certain threshold, you will be rewarded with a higher interest rate for the first $50,000 cash in your multiplier account. Details for the interest rate can be found
http://moneychatroom.blogspot.sg/2014/03/dbs-multipler-programme-has-increased.html


In short, there is no minimum amount that you must hit for each individual activity.

Overview of OCBC 360 Account

For this account, you will be awarded a base interest rate of 0.05% p.a. for your account. In additional, the first $50,000 in your account will be rewarded with an interest of 1% p.a. for each of the following activities.

• Credit Salary of at least $2,000 per month
• Make 3 unique bill payments from this account with OCBC Online Banking
• Spend $400 on all your OCBC credit cards per month

In theory, you can get a maximum of 3.05% p.a. of interest for the first $50,000 in the account. But even if you do not hit the requirement for all 3 activities, hitting each one would already have netted you 1% of interest.

Which one is for you?

Generally, I feel that the conditions from OCBC is easier to reach for middle income worker, as they revolves around activities that you most likely will do every month, such as paying 3 bills, spending $400 on credit cards.


Although DBS does not have a minimum amount for each activity, its minimum threshold for all activities is at $7,500, which shows that it is aiming at those who are earning and spending more. They are also targeting the group that has high home loan instalment and/or high investment income.


So you will need to work our based on your earning, spending and investment patterning to see which one can give the best return for your money.


If you do not have problem hitting the all the requirements for both, the OCBC will be better as it offers a higher interest rate of 3.05%. DBS highest interest rate is only at 2.08%. Better yet, put into both if you have more than $50,000 so that you can enjoy higher interest rate for higher amount of your cash.

OCBC 360 Account

Some time back, I wrote an article about DBS Multiplier Program where DBS rewards you with higher interest based on the total banking relationship with the bank. Hot to the heels of DBS is OCBC, where they have recently launched their OCBC 360 Account.

How does it works?

It earns a base interest of 0.05% p.a. for all money in the account.


In addition, it will award extra interest in the month on the following condition,
1% p.a. on the first $50,000 in the account if you credit your salary to that account.
1% p.a. on the first $50,000 in the account if you pay any 3 bills in that month.
1% p.a. on the first $50,000 in the account if you spend more than $400 in credit card


With everything in, this means that the maximum interest rate that one can possible earn from $50,000 is 3.05% p.a. This is a very good rate, taking into account the current low interest environment that we are living in.

Conclusion

If you indeed have banking relation with OCBC, do consider using this account to increase the rate of return of your money

More companies raising funds

Recently, quite a number of companies are trying to secure loan by issuing bonds or notes. Today, Singapore Airlines just announced that it will be raising money through bonds. SIA's $500 million bonds were sold in two tranches - $200 million of seven-year bonds at 3.145 per cent and $300 million of 10-year bonds at 3.75 per cent. The sale is part of its $2 billion multi-currency medium-term note programme launched last month. DBS is also issuing medium term notes under the a US$15b medium term note program.


One of the main reasons is that Fed had indicated that interest rate will rise next spring and companies looking for long term loans want to secure as much money as possible now, when the interest rate are still low or manageable.


This may be good news for retail investors who are looking to diversify their portfolio into bonds holding. Look out for more companies that are looking to raise money through this path. I am sure more will follow in their foot steps.

Benefits of having different types of accounts

Do you find it hard to track where your hard earn money goes to? At the end of every month, do you keep asking yourself why its so hard to save any money for the month? Fear not, you are not alone. This is a very common scenario for a number of working adults. To overcome this problem, financial experts advocate splitting your monthly pay into several accounts once you get hold of the money.

Pay yourself first

The very first account is your "saving" account. Every month after getting your pay, you should immediately take out a portion of it and put into this account. Regardless of how small the amount, "paying yourself" before you spend the rest will allow you to slowly accumulate savings over the long run. Ideally, you should save up to the point where you have 6 months of living expenses. Thereafter, you can consider channelling the excess to the "investment" account.

Invest for the long run

Reader of this blog will know what I am a strong believer of investment. Depending on interest rate of savings account will never be enough to fight inflation in the long run, so its better to invest the excess to enjoy compounding effect. This is especially useful if you are young and can ride out the investment cycles along the way. Therefore, as more money start to fill into your "investment" account, you can slowly opt to invest them. I have also written another article on regular savings plan, where you pay a fix amount every month to invest in a financial product. You can check that out.

Enjoyment fund

After paying yourself and spending for the month, if you have any left over amount for the month, you can then set it aside and transfer to the enjoyment fund. I always think that its best you save up for things that you want, be it the latest gadget or your dream holiday. Its always unwise to take up debt and credit for enjoyment purposes.




After this, the whole cycle will repeat itself in the following month. Therefore, by following this, you will be sure that you will always spend within your means and not overspend.

DBS Multipler Programme has increased the interest rate!

DBS Multiplier programme encourages consumers to perform total banking with DBS. For those who are not familiar with the DBS multiplier Programme, you can check out one of my earlier posting here.

With immediate effect, DBS bank has revised the interest rates of this programme and its to the benefit of the consumers. Below are the new interest rates. 

Total Monthly Cash Flow#	Higher Interest Rate (p.a.)*
S$7,500 to <S$10,000	0.98%
S$10,000 to <S$12,500	1.28%
S$12,500 to <S$15,000	1.48%
S$15,000 to <S$20,000	1.68%
S$20,000 and above	2.08%

When compared to the old interest rates, DBS bank has raised the interest rates of the top 3 tiers. The highest tier now enjoys the interest rate of 2.08% ( up from 1.58%  previously). This certainly makes things even more compiling to consolidate all financial transactions with DBS now.

Vicious Cycle in Property Market

Recently months, Singapore property market had witness a slow down in transaction volume. Although prices have remained somewhat stable, most experts in the sector have predicted that property prices are set to fall. They have indicated that property prices will fall between 10% to 15% before the end of the year.


These experts are not only from the property sector, even financial experts from Banks are singing to the same tune. They strongly recommend buyers to withhold their purchases if they can until the price drop.


From the way I see things, its going into a self fulfilling vicious cycle. Basically, prices are not moving at the moment. By encouraging buyers to hold back, demand is essentially cut. This leads to more people staying in the side line, as they do not want to buy a property that will lose value straightaway. This in turn further cuts the demand for property and a vicious cycle ensures. This is exactly the opposite of what happens in a bull market.


As no one really knows when the market will bottom, so I think the best way to approach this issue is to buy when you have a real need for it. When you are living in the property that you purchase, near term price fluctuation will be less meaningful, as you are in no hurry to sell anyway. And over the long term, I still believe that Singapore's Property market will remain strong, as long as our economy is doing well, as land is definitely a scarce product here.

Power of Compounding Interest

Investment advisors often advocate us to start investing while we are young, so that we can benefit from the power of compounding interest. But a lot of you may ask, "what is that"?


The idea behind this is very simple. After the investment of an initial principal sum, you will receive some interest from it on an annual basis. Subsequently, you will reinvest this interest in the product so that you can receive even higher interest on the next year. This cycle is repeated until you stop your investment. Lets do some simple calculation.


Imagine that you have a principal sum of $10,000 and the annual interest from your investment is 5%.


End of year 1, you will have obtained interest of $500, from a principal of $10,000.
End of year 2, you will have obtained interest of $525, from a principal of $10,500.
End of year 3, you will have obtained interest of $551, from a principal of $11,025.
End of year 4, you will have obtained interest of $578, from a principal of $11,576.
End of year 5, you will have obtained interest of $607, from a principal of $12,154.
End of year 6, you will have obtained interest of $638, from a principal of $12,761.
End of year 7, you will have obtained interest of $670, from a principal of $13,399.
End of year 8, you will have obtained interest of $703, from a principal of $14,069.
End of year 9, you will have obtained interest of $738, from a principal of $14,772.
End of year 10, you will have obtained interest of $775, from a principal of $15,510


At the end of 10 years, your principal plus interest will amount to $16,285.
This is effectively about 62% of your initial investment amount.


However, if you do not reinvest the interest, you will only be getting $5,000 of interest over 10 years, which amounts of 50% of the initial investment amount.


So comparing the 2, you will have obtained about 12% more of the original invested amount over 10 years just by reinvesting the interest! So it certainly pays to reinvest your interest if possible. The hard part is to make sure that your investment can constantly generate yield at that percentage.

Investing in Foreign Currencies ( Forex )

Wealth manager always advocate diversification of investments and the 2 classic groups for investment diversifications are usually bonds and equities. In recent years, investors have been chasing for yield and more classes of investment products are popping into the view of everyday investors. Some examples include precious metals, art pieces, wine and foreign currencies, or forex in short.

In this article, we will look at the possible ways of investing in forex (short form for foreign exchange). Forex is the largest market in the world with the longest trading hours. In fact, the exchange rate for various currency pairs produces quotes for 24 hours every weekday. What I will try to discuss is to invest and not speculate in forex, so forex trading platforms will not be covered.

Why invest in foreign currency?

Forex has long been recommended as an investment product with low correlation with bonds and equities . This means foreign currency price movement has very little relationship with the movement of stocks or bonds and this complements the goal of diversity for investors.


As with all investment, you will need to understand it and have a long term view of the product to have success in investing, and of course, having a long investment time horizon will also help. In a very simplistic view, if you believe that a certain country is likely to enjoy economic boom, the currency will most likely appreciate and it will be good to invest in it.


But of course, the world does not operate in a simple environment. There will be intervention by government to control their currency through price pegging, interest rate manipulation or implementing monetary policies. So you will need to adjust your views accordingly.

How to invest in forex?

Many banks have introduced multi-currencies saving accounts. After you have deposited money in this account, you will be able to exchange them to another currency at the prevailing foreign exchange rate quoted by the bank. The spread rate (i.e. the different between the buying and selling price) of the banks are using very high, so its not a good platform for short term buying and selling. But if you are looking at long term appreciation of the currency, then this spread will be insignificant and this becomes a viable way.


Another method is to open a foreign currency fix deposit account with your local banks. They also offer better interest rates when compare to the foreign currency savings account. So this is worth considering if you want to hold on to that foreign currency for quite some time. This is also useful for people who needs to spend in that currency in the future, such as paying for education fees.


For the more affluent, there is also dual currency investment, where it lets investor enjoy extra yield based on their view of the currency movement. This is usually not available to normal retailer due to the nature of higher risk

UOB Delight Credit Card

There is a new credit card in town for those who loves discount at the supermarket. It is called the UOB Delight Credit Card.

One of the key benefits include getting 10% SMART$ rebate when you shop at Cold Storage, Market Place, Jasons, Giant and Guardian. This is a huge increment over the next best card for supermarket, which is the SingPost Credit Card by Standard Chartered, which only offer 6%. However, as with all other such credit card, there is a monthly minimal spending before you are entitled to this huge rebate. Below is a table describing the rebate earned with the corresponding spending level

Consolidated monthly spend on your UOB Delight Card	Rebate earned at Cold Storage,  Market Place, Jasons, Giant and Guardian (Rebate issued in the form of SMART$)
S$1 – S$499	1%
S$500 – S$999	3%
S$1,000 and above	10%

On top of this, you will be able to enjoy another 10% discount off house brand when buying things at Cold Storage, Giant and Guardian. This is the must have card if you do shop at these places frequently.