After reading the post by Turtle_Investor at InvestingNote on parking of cash, I decided to review how much interest my cash is earning at the moment. Since the beginning of 2020, I have been using OCBC 360, UOB One and OCBC Bonus+ to park my cash. However, over the past one and half year, interest rate has been dropping. I did a fast check and the following is the interest I am getting.
|OCBC 360||0.75% to 0.98%||Salary + Save (up by $500)|
|OCBC Bonus+||0.05% to 0.40%||No withdrawal + Save (up by $500)|
|UOB One||0.05% to 0.65%||Credit Card (spend $500) + 3 GIRO|
The one in bold is typically the interest rate I am getting. However, there are months that I don’t get them as my spending on credit card is less than $500 per month or my saving in the account does not increase by $500 per month.
In any case, the low interest has led me to search for other alternatives. Endowus Cash Smart and Syfe Cash+ caught my attention. Projected return ranged from 1.0% to 2.0%, depending on the various plans. Essentially, they are investing in a mixture of money market and short duration bond funds to provide the return. In the end, I went with Endowus as I already have an account with them and I kind of like how they explain their plans.
Core? Enhanced? Ultra?
The diagram shows the projected return of their 3 plans.
If you are interested, you can go to https://endowus.com/cash-smart to find out more how what they invested in and how they project the return.
After looking through the above description, I decided to give the Enhanced plan a try. I am thinking that I can park up to 6 months of my emergency fund here. If an emergency really occurs, I would have access to the other 6 months of emergency fund in my OCBC 360 account and I would have sufficient turnaround time to draw out the money from the Enhanced plan.
Will the rate stays?
It might not but based on historical data, the chance that it gives better return than what I am getting at the moment is high.
Why not just buy the funds directly from FSMOne?
Based on the FAQ, their fees is lower than that of FSMONE as Endowus rebates 100% of trailer fees.
Transferring money in and out?
Transferring in is pretty straightforward as one can use Internet banking or Paynow. It takes 2 days before the money will appear on the portal though. However, based on their FAQ, redeeming and transferring out the money takes a whooping 6 days. So definitely not a place to park your cash if you need it within a week.
So with this decision, this is how I am parking my cash.
- OCBC 360 for 6 months emergency fund,
- UOB One for investment opportunity fund, and
- Endowus Cash Smart for (up to) another 6 months of emergency fund.
Once I am comfortable with the new arrangement, I am likely to close my OCBC Bonus+ account.