Saving money is a good habit that ought to be cultivated from young.
When I was a kid, I have a piggy bank which I would save my money into but the piggy bank was never full because I would use up my savings to purchase things that could only satisfy my impulsion temporarily.
Looking back, I realised how foolish I was to have spent my money on unnecessary wants and I regretted not heeding the wise counsel of my parents. If only I had understood the real value of money back then, I would probably have used my money to invest in assets that would grow over time. An asset is any item of economic value, especially that which could be converted to cash. Some general examples of assets are house, stocks, and machinery.
If you share similar sentiments as me, I would like to tell you that it is never too late to start saving up. You probably might have this question, “How much should I save every month and how much savings should I have in my bank account?”
As a general rule of thumb, you should ideally be saving at least 20% of your salary every month and you should have an emergency fund of at least 6 months’ worth of salary. For example, if you earn SGD$1,800 a month, you should be setting aside SGD$360 and saving it up; and you should ideally have SGD$10,800 in your bank account as an emergency fund. If you diligently save 20% of your salary every month, it will take you exactly 30 months [2.5 years] to build up your emergency fund.
Your emergency fund should not be used at any point of time unless you are facing a dire crisis that are caused by sudden medical expenses, unemployment and natural disasters [which are not very likely to happen in Singapore].
What next after you have 6 months’ worth of salary in your emergency fund?
Once your emergency fund is complete, you should open a fixed deposit account where you can put it aside to accumulate interests. However, you should bear in mind that the interest rate for fixed deposits is rather low and putting your money into fixed deposits will erode the value of your money over time. Hence, it is important to counteract the effects of inflation by investing in assets that will accumulate wealth for you.
Fixed Deposit Interest Rates
(information accurate as of 6 April 2014)
| Banks | DBS Bank | CitiBank | Standard Chartered Bank | UOB Bank | OCBC Bank |
| Interest Rate | 0.55% | 0.1% | 0.75% | 0.65% | 0.65% |
| Remarks | Minimum SGD$1000 Deposit
Maximum Tenor of 24 Months |
Minimum SGD$10000 Deposit
Maximum Tenor of 36 Months |
Minimum SGD$5000 Deposit
Maximum Tenor of 60 Months |
Minimum SGD$5000 Deposit
Maximum Tenor of 36 Months |
Minimum SGD$5000 Deposit
Maximum Tenor of 36 Months |
What if you want to save and invest at the same time? If you want to do both at the same time, it is possible but you have to be really disciplined and manage your finances wisely.
Here’s how you can invest and save at the same time.
There are a few ways that you can go about to invest your money but for starters whom do not have a big sum of money and the expertise to do so, there are a few investment plans in Singapore which you can tap on.
| Saving-Investment Plans | POSB Invest Saver | OCBC Blue Chip Investment Plan | Phillip Capital Share Builders Plan |
| Remarks | Investing only in the Nikko AM Singapore STI Exchange Traded Fund
Can start investing from SGD$100/month Low sales charge of 1% per transaction based on a monthly investment amount of SGD$100 No fees for selling the units
|
20 over counters to choose from
Can start investing from SGD$100/month Buying Fees: 0.30% of the total investment amount or SGD$5 per counter, whichever is higher Selling Fees: 0.30% of the total sales proceeds or SGD$5 per counter, whichever is higher To Transfer Shares to CDP Account: SGD$10.70 per counter |
20 over counters to choose from
Can start investing from SGD$100/month To Transfer Shares to CDP Account: SGD$20 per counter Handling Fees- Total Investment Amount Less Than SGD$1000: SGD$6 if less than 2 counters and SGD$10 if more than 3 counters Total Investment Amount More Thn SGD$1000: 0.2% of total investment amount of SGD$10, whichever is higher |
There are pros and cons to each regular investment plans but ultimately, you should choose one that suits your needs the most. We will be sharing more about Savings and Investments in our upcoming articles so do look out for it if it is a topic that will appeal to you!
