My paternal grandparents were born in the 1920s/1930s. They owned a small piece of land in Pulau Tekong where they cultivated rubber trees, grew vegetables, reared live stocks like chickens and pigs et cetera. As you all know, the island is now exclusively used for military training. My grandparents were displaced when that happened, but not without being compensated with a 3-room HDB flat right beside Tampines Mall and some money. Exactly how much, I have no idea, but at one point, my granddad had over a $100k.
At that time, that much money could get you a freehold landed property. But nope, my granddad decided that keeping it in the bank is the way to go. The outcome needs no elaboration.
While cash is king, we must remember that we are actually losing money every year if the returns on that money is lower than inflation. My portfolio consists of mainly cash now, as I wait patiently for the opportunity to pick up great companies on the cheap. I don't know when that will come, so meanwhile, the best I can do is to find the highest yielding place to park my money without taking on too much risk nor losing too much liquidity. Not that I have got tons of money though, as a bulk of my savings were spent on wedding, down-payment for my property, renovation & furnishing, having a kid, and all the other things that an ordinary, young married adult will need to spend on. What's left, I park them in the following places while waiting for the right time and opportunity.
1. OCBC 360
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| Criteria to fulfill to earn bonus interest on balances of up to $60k in OCBC 360 account. |
This is my salary crediting account, and it yields me 1.25% (1.2% bonus interest + 0.05% base rate) without me doing anything else. Of course, the other low-hanging fruit is making 3 online bill payments to earn an additional 0.5%. I am also usually able to spend $500 on my OCBC cards to earn the other 0.5%, yielding me a total of 2.25%. However, I prioritise my UOB credit card spend before OCBC's because UOB gives me a higher yield on their UOB ONE account, which brings me to the next point.
2. UOB ONE
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| Criteria to fulfill to earn bonus interest on balances of up to $50k in UOB ONE account. Note that unlike OCBC 360, spending of $500 on UOB credit card is a must for the account to qualify for any bonus interest at all. |
I strictly maintain $50k in this account, nothing more, nothing less, due to the tiered structure of its interest rates. I've already set up three GIRO bill payments, so it only makes sense for me to prioritise spending $500 with my UOB ONE Card. If I don't, I am back to earning the base rate for that month. If I do, the GIRO deductions will bump up the effective interest rates to 2.43% on the $50k balance. Spending $500 on my UOB credit card also helps me in getting higher interest rates in my 3rd account - Bank of China's SmartSaver account.
3. BOC SmartSaver
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| Criteria to fulfill to earn bonus interest on balances of up to $60k in BOC SmartSaver account. |
I maintain a minimum of $50k in this account, so my base interest is 0.40%. Together with the 3 bill payments, the account already yields me 1%. I forego the 1% from crediting my salary into this account because well, I only have 1 income source, and OCBC gives me 1.2% for that. The last criteria, $500 credit/debit card spend to give an additional 1.55% is the real deal. I am going to let you in on a little secret of mine; this mighty combo I believe many of you will be thrilled to find out. Ready? Here it goes:
The Bank of China Great Wall International Debit Card that is issued together with the SmartSaver account can be used to pay for another credit card bill. This IS the real deal. I use this as the perfect combo with UOB ONE Card. This means that I only need to spend $500 a month with UOB ONE card, and then use BOC debit card to pay for that credit card bill. Voila! I kill two birds with one stone. It's hard to chalk up so much credit card spend every month, so this works like a charm, giving me an additional 1.55% interest on the balance in this account to yield a total effective interest of 2.55%.
So if you have $170k cash, and are thinking hard about making them work harder for you, the above solution might work for you. With just $500 credit card spend, OCBC will give you 1.75%, UOB 2.43%, and BOC 2.55%. If you can chalk up $1000 credit card spend a month, OCBC can yield an additional 0.5% to make 2.25%. Not worth forcing it just for that 0.5%, but on months when you have that extra expense coming in, why not, right?
Note that bill payment is never a concern because you can simply pay $5 to the same three bills that are GIRO-ed from UOB ONE account. Do this using your OCBC and BOC accounts every month, and the outstanding amount will be GIRO-ed from UOB ONE account.
What about you? Where do you park your warchest to maximise the return while you wait?