Guide to Right Savings Accounts for Singaporeans
Most Singaporeans would like to achieve financial independence before retirement. To this end, they need to save as much as possible when they are still actively employed. The people can save in several ways, including opening savings accounts with their banks. This article offers to guide you in matters concerning savings accounts in Singapore.
Every strategy begins with a plan. Financial planning is essential when deciding on how your financial situation should look like. The plan guides a person through their financial life. Interestingly, a plan will help you to gain your balance after facing upheavals. Planning how to go about financial issues enables you to get a grasp of aspects like taxation and insurance. Ultimately, it is possible and easy to come up with a savings plan when your financial affairs are in order.
Maintaining a savings account is part of prudent financial planning. While savings options might be plenty for you, not all of them are safe. In addition, some of the savings alternatives might not offer interest on the principal sum. Opening a savings account in banks is one of the most secure ways of maintaining savings. However, it is not easy to get the right savings accounts without a bit of extra information.
Understanding a savings account
A savings account provides the customer with the means to put aside part of their income for rainy days. Different banks have different modalities on how to open and utilize a savings account. Nonetheless, the right savings account should be able to provide security for your money and interest on the principal sum.
Savings accounts attract small interest margins because they do not involve risk. Therefore, one should expect minimal growth for their investment. In addition, savings accounts offer customers easy access to their money. According to World Bank data, there were 67 ATMs in Singapore per 100,000 adults in 2018. Comparably, the world average during the same year was 42 ATMs per 100,000 adults. As such, Singaporeans can easily access their money hence higher liquidity.
Another attractive aspect of savings accounts in Singapore is that the deposit earns interest daily. In addition, you are eligible for cashback offers if you choose to use debit cards attached to your savings accounts. Banks in Singapore offer various means of accessing accounts. Customers can check bank statements online and perform many other actions like depositing cash and even checking balances. Ultimately, savings accounts offer a unique opportunity to secure cash and track progress conveniently.
What are the right savings accounts?
The most distinguishable difference among savings accounts is the interest rate that deposits attract. In Singapore, banks structure the interest rates differ depending on the benefit they want to accord their customers. The best savings account is one that offers higher interest rates. Nevertheless, before you settle on a particular account, it is prudent to ask; how do you choose the right savings account?
To answer the question, one must know what entails a good savings account. Some of the features of the right account for you to save money include:
This is the most logical place to kick off your search for the ideal savings account. It is important to note that some headline numbers that you see banks’ advertising does not match the real rates. Some banks might put up rates that are high in the short-term but reduce in the long term. In addition, note the conditions, if any, for earning certain interest rates on the deposit.
2. Access to the deposit
How easily and quickly can you access your money? This should be a top priority while considering savings accounts. Does the bank has a free-to-use ATM in your vicinity? Another issue you should consider is the availability of branches near you where you can visit for help in case of any problems with your account.
The right savings account does not have monthly fees. With such low-interest rates your deposit earns, any additional fees could depreciate whatever income the account earns. Some banks in Singapore do charge monthly fees, but they keep them quite low. If your lender has to charge such fees, ensure they do not crowd out the income earned from the interest rate.
For example, say you would like to invest SGD 1,000 at a 1% monthly interest rate. Further, assume that your lender charges a $10 monthly fee for maintaining the account. Your deposit will earn just $10 monthly, and a similar amount will be taken away by the bank as a monthly fee. In the end, your account does not grow beyond the $1,000 deposit no matter how long the money stays in the account.
In Singapore, the Singapore Deposit Insurance Corporation (SDIC) secures the money customers commit to banks. The institution provides protection in case your lender goes under. Normally, Singaporean law requires all lenders to become part of the Deposit Insurance Scheme administered by SDIC. However, it does not hurt to ascertain the lender’s membership before choosing a savings account.
5.Mobile/online access to the account
Mobile and online banking is possible in Singapore, thanks to the proliferation of the internet. You should not miss the convenience that comes with the development. Be sure to ascertain that your lender supports online access to the savings account. Better still, you should check account balances and access account statements through your mobile phone.
Savings provide a lifeline during tough times. Prudent financial planning ensures that you have enough cash set aside for emergencies and even retirement. However, you should make sure that you get the right savings account to maximize the potential of your savings plan. In particular, ensure that the savings account of choice offers the desired security for the deposit. The lender must offer a government guarantee for the deposits. In addition, you should access your money easily and quickly. It is an added advantage if the lender offers online/mobile access to the account. Ultimately, the lender should offer an attractive interest rate on the deposit and with minimal fees, if any.