(I can’t help laughing at the POSB Cashback Bonus Kung Fu animation on POSB’s website, so it’s my featured image for this post ;p)
I saw this product on 15HWW’s blog last year but I must admit that I didn’t fully appreciate the structure until I’ve signed up for DBS (aka POSB too)’s mortgage. There are parts which overlaps with the low hanging fruit that the other banks are already vying for i.e. Salary crediting, credit card spending and GIRO a couple of payments.
Out of the five things, I need to fulfil 3 but I know I don’t want to do salary crediting and credit card spending anymore.
My previous post touched on my loan and the fact that I have to purchase insurance with them.
Although it is not applicable to me as mine is a new home loan, I love it that existing home loan qualifies for the cash back. I think it reflects good faith on the bank’s part; not to exclude existing customers and just purely fixated on getting new customers. Thumbs-up
Sorry I digressed. As I was saying, I have home loan and insurance, so I only had to look at investments to decide if it works for me. I need to fulfil 3 criteria, because with only 2 criteria, I get nothing.
Again, plenty of good material online. Some nuggets of wisdom were located at hardware zone (but I do wish it’s less time consuming to go through the material on forums). The gist that I distilled is it’s a good deal, but to note that it’s only a 12 months rebate on the investment chosen.
The choice of investing in ABF Bonds makes perfect sense to me. I was hunting for a higher yielding place to park the rental income. Higher returns than CPF, but not excessively risky. Given the nature of it being a Regular Savings Plan (“RSP”) where a pre specified amount will be debited monthly, I can barely ask for a better timing. Rental income will just be swept into the account automatically. I’m exchanging actively monitoring and managing this pot with the fees associated (0.5% for bonds and 1% for STI).
Wait a minute, but I get a 3% on the amount invested ;p
I get paid to invest?
And I get returns from the mortgage and insurance that I would have to pay anyway? It’s defraying my interest cost for sure!
Mortgage itself will throw out a free S$30. Insurance is negligible. Investment depends on the amount per month, but I’m inclined to throw in S$1,000 to max out the 3% rebate i.e. another free S$60. Netting out the 0.5% fees for bonds, i’m getting S$55 every month on the fresh S$1000 funds that I’m injecting. That’s a neat 5.5%!
Again, human and their inertia. I checked out how difficult it is to sign up. Painless if I may say so. HWZ’s first post (done by POSB itself) clearly listed the way to sign up on the i-banking platform. I took 2-3mins. Now I’ll just wait for the mortgage to kick in before I sign up for the RSP.
In the meantime, I will try to pin down how much I should throw into the RSP.
Lioness (majorly pleased with this discovery)