On 4 November 2022, 3 working days after OCBC rolled out their new interest rate on their flagship 360 accounts, DBS followed up with an email that the DBS Multiplier has increased from 3.5% to 4.1%. The balance cap amount is also increased to S$100,000
The Multiplier account has always been proportioned by the transaction amount.
S$2,000 to below S$2,500
S$2,500 to below S$5,000
S$5,000 to below S$15,000
S$15,000 to below S$30,000
The next layer of categories to fulfil will be the number of categories. They are known to be:
The Salary portion has to be a GIRO transaction with code “SAL” or “PAY”, which seems pretty strict given that there are increasing numbers of the next generation in the ‘gig economy’
For dividend crediting, these eligible dividend has to be from CDP, DBS Vickers Securities, DBS Online Equity Trading, DBS Unit Trusts, DBS Online Funds Investing and Invest-Saver (Promotion their own eco-system)
Connecting and sharing financial information from SGFinDex to NAV Planner (I would think one needs to do this on a monthly basis
2. Credit Card Spend
For the monthly card spend, it has to be on any DBS credit card and has to be eligible spending. Eligible will be the usual suspects and it will be very much dependent on the MCC codes.
3. Home Loan Installment
Home Loan financing has to be from DBS or POSB (New or Refinancing). The eligible amount will be from the monthly home loan instalment amount.
Similar to my previous post on insurance and investment in these high-yield accounts. These are usually valid for a limited period and interest rates are always subject to changes. Further, only selected insurance are eligible.
Nothing much to comment on here. This section will be pretty hard for most people to fulfil.
Additional option: The PayLah! Retail Spend. Honestly, don’t seem like a good deal to me.
The ideal interest rate will be between 0.9% to 2,5%. Frankly, nothing much has changed though and I don’t think it is even worth announcing via their communication channels. I feel like there wasn’t even much thought placed into it. I just felt like it isn’t any effort to compete with these changes. With the most recent 0.75 bps increase by the US Feds, this is not anything competitive and not quite worth looking into for now.
Whenever we touch on the topic of owning cars in Singapore, there will always be a ruckus. The ambitious demands of ourselves would deem that we wish to own a car, a branded German Luxury for most. However, as much reasoning that we give, owning a car here is as good a depreciating asset or in more negative context, a liability. Owning a car isn’t exactly rocket science but there are some things to take note and the extra costs that comes in regularly. A piece of transportation that brings you from A to B, that’s something everyone appreciates if you have the luxury to do so.
Own or Grab?
Hands down, taking grab rides, gojek or comfort taxis wins owning a private car. It gives one the luxury of leaving home at any time and going anywhere without any restriction or so to say no stress. That comes with a price like any other thing.
Perhaps for a start, what are the tax and pricing related to car?
1) Open Market Value (OMV)
OMV is the price paid or payable when a vehicle is imported in Singapore. The Customs assesses the price and is inclusive of purchase price, freight, insurance and all charges. Different cars have different OMV.
2) Additional Registration Fee (ARF)
ARF is the tax payable when you register a vehicle. ARF is based on a percentage of the OMV. This is just another layer of tax on top of all other fees and taxes.
3) Excise Duty & GST
You need to pay customers excise duty to import and register a car and motorcycle or scooter. There is also a 7% GST payable to Singapore Customs based on the total cost of importing the vehicle.
4) Certificate of Entitlement (COE)
All vehicle in Singapore will require a COE. In order to register your vehicle, you need to place a bid for a COE in the different category. Once you have a successful bid, you get to own a vehicle to use on the road for a maximum period of 10 years. This is the upfront costs apart from all the taxes and fees.
5) Finally, the margins (The P&L)
After paying for all the taxes and fees, the companies who sell these cars need to cover their overheads, costs and make a margin on it.
The other costs
Now that you have paid for the car and you manage to drive it home. No, wait. Before you do that, you need to have a valid driving license.
This costs roughly from $800 to $3000 depending on how good of a driver you are and if you take a private lessons or a driving school. The school definitely provides you with an all encompassing structured lesson but it also costs more. If you fail to get your driving license on the first try. That means more practical lessons and more cost. The upside to this is that, there is no expiry once you obtained your driving license until you are deemed too old. You will be required to complete a renewal test to ensure that you are fit to drive.
In order to drive on the roads, you need to have a valid car insurance. The cost of insurance is renewed annually and depends on your age and type of car you own. You can have a comprehensive plan or a basic plan but in my opinion, you just need to go for the most comprehensive plan to get yourself covered.
Once you have paid for your car insurance, you will need to pay for your road tax. How is your road tax calculated?
a. Engine Capacity – The larger your engine’s capacity, the higher the amount of road tax (Payable 6 months or 12 months)
b. Age of your vehicle – Vehicles that are more than 10 years incur surcharge of 10-50% on top of the standard road tax. (For cars renewing beyond the initial 10 years of COE)
If you forget to pay your road tax, you will be liable for late payment and also for infringement since you are not allowed on the road. Yikes, more bills.
At the start of the article, I discussed about the price of buying a car. You can now loan up to 60% of the total cost of the sale of the car. Depending on the interest rate you can get, (Maybe around 1.88% p.a. at this point) that will be the additional interest payable on your loan amount.
Not too sure about you but it seems like the costs are piling up even before driving it on the roads.
The maintenance costs
It does seems like it doesn’t make sense to own a car anymore now but I still need to add on the maintenance cost during the 10 year life of owning the car.
The initial 3 to 5 years should be an added benefit that your dealer will throw in when you buy that car. But take note that this is just purely servicing, meaning engine oil change and those point checks and tyre rotation. Any wear and tear are still liable to be charged at their retail price.
Typical servicing starts around the 1km, 5km, 10km mark or around 3-5 months depending on which comes earlier. I mean, if the car is new there wouldn’t be an issue. But if you don’t bring your car back to the dealer then the warranty that they gave you would be voided.
During the first 3 year of owning your car, before you renew your road tax, you do not need to bring your car to a registered inspection company such as VICOM or STA. After the third year, you have to do so to ensure that you do not change certain aspects of your car when you drive on the roads. It is a small cost but it does take some time to do so. After the initial 3 years, you have to go for an inspection once every 2 years until your 10 year mark is up. For cars more than 10 years, you have to do so annually.
Car Battery Change
If you do not own an electric car, you need to change your car battery 1.5 – 2 years regularly. Depending on what kind of car you drive, the number of batteries and type will also differ in price.
Wear and Tear/ Repairs
Any wear and tear (e.g. brake pads, windscreen wipers, tyre balding, rim change, air compressors, solenoid, repairs and more) will incur cost. After all, you need to make sure your car lasts for as long as it can given how expensive they are. Your tyres need to change every 3-5 years depending on how you drive your car and there may be small damages or even faulty electronics due to wear and tear. Also, our climate is pretty warm and heat will wear most stuff out when exposed over time.
Parking and Fines
Anywhere you stop your car, you need to enter a carpark. Parking your cars comes with a cost. You can’t just stop anywhere you want. If you get a parking ticket, that amount will pay for your 1 month’s parking budget.
Take note of red light and speeding cameras. Any breaches will set you back a few hundred dollars with demerit points. In the worst case scenario, you may be charged and your driving license taken away.
Electronic Road Pricing (ERP) and New Changes
Paying tolls have never been easier. (Sarcasm) Going through expressways and roads during peak period will set you back a few bucks per day when you drive through these to ease traffic flow. These will be replaced by a satellite distance-based ERP system in the near future.
Finally, you need fuel to run your vehicle. Basically, everyone is a price taker. You can’t not fuel up your car. Not having fuel in your car will do your vehicle more harm than good. After all, you are supposed to own some form of flexibility with a car.
Don’t feel that owning a car is beyond your reach now. There are different ways to do so. To always weigh the pros and cons about owning a vehicle, you will find the answer clearly but we still see a lot of vehicles on the roads. This part of our brain is unexplainable, the comfort and flexibility of owning a car outweighs all that reasoning. I have also read about the other options to owning a car but it really depends on individuals.
a. Lease (Instead of owning it, you pay a fixed cost per month for leasing the car)
b. Drive for a private hire (You get to moonlight during your free time but perhaps not so ideal during this covid-19 situation)
c. Own a car and lease it out/rent it via apps. This will cut your cost in owning a car
d. Take the public transport and Grab/Gojek. Times are different now, we are not at the mercy of Nazi Taxi Drivers.
Personally, I just am thankful during times when it rains. I get the comfort of going to somewhere at whichever time I wish without getting drenched. There isn’t any worries of price surge or cancellation. That said.
This is not a sponsored post and purely my own opinion that I am writing about in my thoughts. If you like what you are seeing, do remember to check they out and do your diligence. Don’t be too fixated with what is the best.
For an extended period now, the Marine, Oil & Gas industry is going through trying times for some time now. Going forward, it is going to be difficult to say what is next for them and many other industries
We know that bad times don’t last so are the bankers/relationship managers just out there to sell investment products for their own benefit? During good market cycles, when the company books are looking great, bonds are being issues to help provide the working capital for these companies. The moment the cash-flow stops, the banks stop lending or restructuring. Quite a tough and sad moment though.
I discussed about bonds/debts a few posts back and talked about public/private financing in the capital markets. What most companies did was to find some banks to finance their working capital with contracts and assumption of a stable cash flow and they would pay off interest to bondholders over a period of time. What the lead banks provided are in turn offered out to retail/institutional/HNWI to take on a portion of the bond. Most of the time, financing is offered in terms of Loanable Value.
Let’s use this example: I buy Bond S.Limited on point of purchase for the initial offering at Par Price (100.00). The bank who syndicate this capital raising and offer a portion to other parties so as to diversify the risk. When “Sophisticated” investors take on these investments I offer a 60% Loanable value.
It means that for every $1 worth of S.Limited bonds. The bank will be willing to finance you $0.60. All you need is $0.40 worth of cash. On each reinvestment amount, you get another 60% in loanable term.
a. When the real problem surface
When S.Limited announces that they may have issues repaying bondholders, then the same banks who finances the bond syndication would deemed these investments as not so valuable now and decides to tell you that you can’t lend anymore from the $0.60 previously as what they have valued the investment at so you have to make back the full amount in a few days’ time.
b. The real liquidity and Loanable value changes dynamically
I would think that this is as good as lenders telling the company that they will stop lending. To raise $0.60 from elsewhere isn’t really a problem for most people but how about $600,000 or $6,000,000 which I really doubt many of us have that kind of cash waiting around somewhere.
Mathematically, it can be easily understood. (Not really isn’t it looking at this complicated piece of calculation table) This is basically a long form of maximising the full loanable amount and then re-investing them back into the same investments and over again:
With $1, the bank can loan you up to $2.50 presumably that you reinvest them into the same bond. Total investments become $3.50 (e.g. Nett of loans, $3.5 – $2.5 = $1). The Nett portfolio value still remains the same but that comes with plenty of risks:
1. You leave no buffer for any mark to market movement 2. You become concentrated into one single asset class and one company 3. Loans means you have to service the interests on a regular basis so with increase in interest rates, that brings your return lesser though you have taken more risks 4. In times of liquidity and crisis, most likely you will not be able to sell your holdings as fast 5. When you hit a margin call, you most likely have to top-up your cash balances as soon as possible or that would become a sell-out eventually at the current price.
On the flip side,
1. You maximize fully what leverage can bring you. 2. Yield is increased because of the leverage factor. 3. Returns will eventually increase with a higher risk taken.
What is your investment profile?
Again, it brings us back to basics again. That high risk taker with a long horizon? The conservative investor that is skeptical? I am not surprised that there are high risk takers who doesn’t mind this scheme. Then again, if you know the risks you are taking then take it like a man.
I’ve met and known people who are so egoist about their aggressive investments ideas. When shit his the fence, they do point the finger on others. Unfortunately, they know the risks that comes with. When it comes to money, humans behave differently.
There are businesses who keeps increasing their loan size at every maturity. When you look at the cash flow, they are paying out more than 100% from what they make. It is similar to spending more money than what you make. In this aspect, it seems like the company wanted to:
1. Keep investors happy that they are receiving the dividends 2. Ensure that their stock price on the exchange stays stable 3. Waiting out for the bad cycle to ride through and business to pick up again.
Extending Debt result
1. The money paid out have to be taken from somewhere and most of the time it is from a bond and restructured many times most likely 2. Anyone who digs deeper into the company details will know the state of their company 3. The cycle may not ever recover for the company to be relevant anymore
It is important to be thrifty and know how much you can afford to spend. Does looking rich or being rich matter more to you?