Wednesday, May 20, 2020

Singlife accout or CIMB fastsaver

I recently signed up with the Singlife account. You can read about it from other blogger's reviews or from the actual site itself, but to me, it's essentially a savings account. Since I also have CIMB fast saver, I want to explore the decision tree to decide when to put extra funds into CIMB fastsaver or into Singlife account. In my analysis, I'm really going to ignore all the extras, like retrenchment benefits, insurance parts etc of the Singlife account. 

Here's the facts:

Singlife account:
First 10k - 2.5% pa
Next 90k - 1.0% pa
Thereafter - 0% pa

CIMB fast saver:
First 50k - 1.0% pa
Next 25k - 1.5% pa
Next 25k - 1.8% pa
Thereafter - 0.6% pa

Here's the calculations of the interest earned and interest % pa for both:

Singlife account:




CIMB fast saver:




I just did up the interest for the various banding. Straight away we can see that the interest we can get for CIMB is much more for greater amounts of principal put inside, but for smaller amount of principal, Singlife will be more worth it. There must be a point where if I put x amount in Singlife account and the same x amount in CIMB fastsave, the two interest will be the same. And I know x must be somewhere between 75k to 100k.

So, let x be an amount between 75k to 100k,

Amt of interest from Singlife acct: 10,000*0.025 + (x-10,000)*0.01 = 150 + 0.01x 

Amt of interest from CIMB fastsaver: 50,000*0.01 + 25,000*0.015 + (x-75,000)*0.018 = 0.018x - 475

Equating them:

150 + 0.01x = 0.018x - 475

So, x = $78,125

And thus my decision is clear:

To get the highest interest for the same amount of dollars:
I should put it in Singlife account if I have lesser than $78,125
I should put it in CIMB fast saver if I have more than $78,125

If I have exactly $78,125, then I should put it in Singlife account because of the little bit of insurance that I didn't take into account. Both have deposit insurance of up to $75k, so there should be some safety features built into this. 

Okay, now my decision flow is clearer.


Update: 

How silly of me. In the pursuit of deciding either THIS or THAT is better, I forgot that the better solution is a blend of BOTH. Non-duality! Thanks to 15 hww and WGM for pointing this out to me. In light of that, the best solution is put money in both accounts, as shown:

First 10k - put in Singlife account for 2.5% pa - total interest: $250
Thereafter - put in CIMB fastsaver, preferably not more than 100k inside

Done! 




12 comments :

Derek said...

Hi LP,

Do you know if Singlife Account is as liquid as CIMB Fast Saver i.e. I can do a Fast Transfer from Singlife Account to my brokerage or a third party bank account and the money will be transferred immediately.

Thanks.

la papillion said...

Hi Derek,

I just tested it. The first transfer takes a while, but subsequent transfer should be near instantaneous using FAST. Once you linked your bank acct to the app, you can do FAST to the banks too, so it should be as liquid as CIMB. It cannot transfer to brokerage though, as far as I can tell.

WGM said...

Hi LP,

Given that Singlife's 2.5% is higher than CIMB's 1.8%, you will always get more interest by moving money from CIMB to Singlife, up till the first 10k in Singlife.

This means the way to maximise interest would be to maximise singlife's first 10k, then put everything else in CIMB.

Eg.
If you have 80k in CIMB, you earn 50,000*0.01 + 25,000*1.5 + 5,000*1.8 = 965 p.a.
If you have 70k in CIMB + 10k in Singlife, you earn 50,000*0.01 + 20,000*0.015 + 10,000*0.025 = 1,050 p.a.

la papillion said...

Hi wgm,

I totally agree with you. I was too engrossed to see which is better but forgot the scenario where I can do both at the same time!

That being said, there is some benefit in putting into the singlife too due to insurance. Though I didn't put it in the post, I think it is still a consideration.

My work flow for cash is this: tiered saving acct (dbs multiplier, uob one etc), singlife, cimb and mmf (poems). The interest for mmf plummeted so it's the lowest priority for me now.

Thanks for commenting :)

ziana roy said...

Thank you for sharing such great information.
It has help me in finding out more detail about disability protection insurance

My Investment Machine said...

It also find it more worth it to put just $10k into singlife then the rest into CIMB fastsaver!

Liza D'souza said...

Thank you for sharing such great information.
It has help me in finding out more detail about health insurance for children

Rach said...
This comment has been removed by the author.
Rach said...

I didn’t get it. If you have <$60k, isn’t it the same to leave all in Singlife Account since >$10k it is 1%, same as CIMB?plus Singlife Account also has the insurance benefits...why bother to split and bother move between 2?

la papillion said...

Hi Rach,

Did you read the updated conclusion?

kaikai said...

Singlife is protected under the Policy Owners’ Protection Scheme (PPS) which is administered by the Singapore Deposit Insurance Corporation (SDIC). But no under the, Deposit Insurance Scheme (DPS) which is guaranteed by SDIC for 75K.

https://betterspider.com/singlife-account-review/

Do consider

la papillion said...

Hi Betterspider,

Help me understand. It means it's dependent on a % of the sum assured of the insurance value, rather than 75k cap right?