Demi ZhuangHello šš¼Ā , just some opening thoughts before we dive into the details. Iām writing this as someone who wished I had something like this when I first embarked on this journey. Money ā a means to an end, a tool. Think of personal finance as many layers of protection for what life throws at you as you journey through it. Life is uncertain but we as humans, crave for some certainty and having this āSolution Fundā can provide you with that. Hear me out. This fund is more than your Emergency Fund, itās inclusive. This is the first layer, the outermost shell in your overall personal finance set up. It protects you from / equips you to - šØš»āš»Ā Loss of Income Youāve been laid off or you simply want a break for your mental health. š„Ā Unfortunate Events Life is uncertain and you just never knowā¦ Even if you have Health Insurance. šĀ Chase that Dream Having this amount somewhere that can be drawn upon if one day you had a āwokeā moment and you want to pursue that dream youāve always had deep inside of you. šĀ Ride through Stock Market Volatility Despite knowing that the market in the short term can fall 50% and only in the long term provide us with gains and 'you just need to hold it outā, is easier said than done.
Savings without a spending goal gives you options and flexibility, the ability to wait and the opportunity to pounce. It gives you time to think. It lets you change course on your own terms. The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness Morgan Housel
What a āSolution Fundā means to me right now?
A fund that lets me go through my day to day activities without having to worry about making ends meet. It lets me go to sleep at night regardless of how my investment portfolio is doing.
It lets me make any impending purchases. For example (maybe not the best example lolā¦), if I need to fly back home urgently, like now or tomorrow, I can just buy that ticket despite the cost. You get what I mean.
How much is considered enough?
The most basic is having what others term as an āEmergency Fundā any amounts above and beyond that depends on you and what stage of life are you at right now.
ā”ļøĀ If youāre comfortable at your day job, itās stable, you donāt have any upcoming obligations then you probably might not need as much in this fund. Go ahead and invest more.
ā”ļøĀ If youāre at a point where youāre unhappy at your job but itās still bearable. Itās time to build this fund up just for some form of security and options.
ā”ļøĀ If you are planning to / are already invested in risky asset s, itās time to build this fund so you can ride through volatility and stay invested.
Ignore what others consider as āenoughā for a fund like this. Personal finance is as the name says its PERSONAL. If it gives you a peace of mind to keep $50,000 in Cash then so be it BUT you can be SMART about how youāre allocating this amount (more on this in a bit).
The funds should be LIQUID / SEMI-LIQUID (i.e. quick access to it when required) and relatively low riskā¦
The common rule of thumb for an Emergency Fund
3-6 Months of Income
e.g: Income $2,700 * 6 = $16,200
3-6 Months of Expenses
e.g: Expenses are at $1,500 a month (Fixed & Variable) = $1,500 * 6 = $9,000
How I Manage the $?
SHORT TERM:
Bank Savings Account
- Emergency use
- I can access it immediately
MEDIUM TERM:
Guaranteed Returns, No Fluctuations
- I lock in rates that might change down the road
- Relatively quick access to funds
LONG TERM:
Low Risk, Decent Returns
- Can be invested in Bonds, Money Market Funds
- Very little risk and volatility
The thought process behind my current strategy ā With the 5 figure amount that I have kept for any rainy days ahead, it is highly unlikely that I will need them all at one go.
Unless I had to suddenly fork out for a medical emergency. Even though the 2nd layer to this, we have insurance for that š. I hope you have gotten your insurance sorted, if not, WHAT ARE YOU WATING FOR?! šĀ If you want someone offering an unbiased opinion, do reach out to me. My income is not reliant on earning commissions and itās fully transparent documented in my Money Diaries series.
Even in a scenario that I had just gotten laid off and I had to find a job. I wouldnāt need $15,000 upfrontā¦ Which comes to my point that some of it could go into a semi-liquid, low risk instruments.
BUT
If youāre someone who can mange your money well i.e. you wonāt squander it all if you kept it all in one place, and have not maxed out the Bank Savings Accounts then keep it in the Bank.
Another reason why Iād do #2 is also to lock in the rates for the long term, read below.
How to earn returns on these funds?
Bank Saving Accounts
Singapore Savings Bond / T-Bills
šĀ Extract from the SSB Website
There really isnāt much to say about thisā¦ It is safe and fully backed by the Singapore Government so why not?
What about liquidity? It is SEMI-LIQUID, withdrawal can be done in any given month with no penalties. Just pay the $2 service fee. There is a little waiting time depending on which day of the month do you choose to āwithdrawā.
Average 2.81%
Rates for SSBās were really good in 2022 and 2023 when Interest rates were climbing. Now that interest rates are easing, likewise SSB rates have fallen.
It would have made sense to place into SSBās to lock in the high rate back then, now Iād say, if you donāt have at least 1 SSB in your assets, get 1 before the rates fall even more.
Iām not asking you to put 100% of your emergency funds into the Singapore savings bond. (šĀ Why not all?) The same concept as the saying goes āDonāt put all your eggs in one basketā. Think about what if you need the money NOW, instantly. The Singapore Savings Bond redemption isnāt going to give you back your money today. A regular bank savings account is still necessary for instantaneous use.
Hereās my example so you can see how much potential earnings you could receive when you decide to start on this:
My November 2022 Investment into the SSB (i still hold this):
November SSB @3.21%
Capital $4,000 | Yearly Interest | Interest paid out every 6 months |
Year 1 @ 3.08% | $123.20 | $61.60 |
Year 2 @ 3.15% | $126 | $63.00 |
Year 3 @ 3.18% | $127.20 | $63.60 |
Year 4 @ 3.19% | $127.60 | $63.80 |
Year 5 @ 3.21% | $128.40 | $64.20 |
Year 6 @ 3.23% | $129.20 | $64.60 |
Year 7 @ 3.25% | $130 | $65.00 |
Year 8 @ 3.26% | $130.40 | $65.20 |
Year 9 @ 3.28% | $131.20 | $65.60 |
Year 10 @ 3.30% | $132 | $66.00 |
Total in 10 years | $1285.20 | |
Interest I get if I kept it in the bank @ 2% | $886 | |
I lose out on | $399.20 |
You might think 10 years is really long but it really isnāt. Getting into SSB locks in the interest rate for 10 years. Think long term because bankās interest rates can and will fall back to the usual 1-2% before Covid.
Get started here:
šĀ Relevant link to help you get started with investing into the Singapore Savings Bond
Singapore T-Bills
As Iām writing this, the latest 6 months T-Bill rates was just announced - 3.74% which is great but make sure you understand that itās LOCKED! You will not be able to get access to the funds locked in a T-Bill.
šĀ Find out more here
Placing 10-20% here make sense despite being locked in for 6 months, which still is a relatively short amount of time.
Money Market Funds
(my choice of broker; Moomoo Singapore)
If youāve followed along on the channel youād know that in my own personal investments the platform of choice is Syfe Trade for S&P500, Moomoo Singapore for SG Stocks.
Hence, instead of adding another platform, Moomoo is the platform I can get access to the SGD Fullerton Cash Fund a money market fund.
A mutual fund that invests in cash, cash equivalents, good quality short-term debt instruments (i.e. bonds).
Who is this for?
- You have a lot of spare cash lying around not earning you good interest rates
- You want to let it grow but donāt want to invest into stocks (youāre already maxed out at banks)
How I personally use this fund now?
When I canāt hit bankās requirements like spending $500 in a month because compared to other digital banks like GXS, Maribank offering 2.68% and 2.70% respectively, Money Market Fund is higher at 3.5-3.8% (as of 07 September 2024)
Moomooās Money Market Fund is offering 6.8% p.a. on the first 30 Days in this fund for New Users. Iāve used mine in November and collected $208.32 on a deposit of a little over $30,000.
Get up to S$1,034 as a New User from now till ā³ 31 October 2024, 9:59PM SGT.
Note: This includes a S$20 with my exclusive link š
š„ UPDATED AUGUST 2024 ā FAQ on the Fund + My Returns, I covered in a video - https://youtu.be/8fWRuVJC5b8
Steps | Reward Value | Holding Period
(not locked in) | |
Register and Open an Account ā | |||
My link EXCLUSIVE | Deposit $100
Subscribe into Moomoo Cash Plus OR 1 Buy Trade | $20 | 30 Days |
šĀ Reward 1
Moomoo Cash Plus
šøš¬Ā Fullerton SGD Liquidity Fund
šøš¬Ā Fullerton SGD Cash Fund
šŗšøĀ USD Money Market Fund | 6.8% p.a. Guaranteed Returns
max deposit of S$80K | $447 | 30 Days |
šĀ Reward 2 | Deposit S$3,000
cumulative 3 Trades | 1x Stock Bundle S$70
| 30 Days |
šĀ Reward 3 | Deposit $10,000
cumulative 8 Trades | 3 x Stock Bundle
S$210
| 90 Days |
šĀ Reward 4 | Deposit $100,000
| 1 Apple Stock
S$287 | 90 Days |
S$1,034 |
My current set up as of September 2024
$40,000 | UOB One | Singapore Savings Bond |
Percentage Allocated (approx) | 55% | 45% |
Interest Rate | 4% on $150K | Nov 2022 - 3.21%
Dec 2022 - 3.47%
Dec 2023 - 3.4% |
Paid out | Monthly | Bi-annual |
Returns | - | $583.60 / Year |
Even though I donāt get a salary from an employer now, UOB still allows salary crediting via Bank Transfer and indicating as āsalaryā hence Iām able to enjoy an EIR of 5% on amounts up to $100,000 provided I spend $500 on a Credit Card of which I canāt for now soā¦
For when I canāt hit the monthly spending requirement I then shift the funds over to Maribank / GXS Bank offering 2.88 / 2.68% p.a. A fuss free savings account.
Moomoo SG Existing User promotion changed recently and Iām currently not participating in that. If it changes Iāll update. If youāre considering, do note that it really depends on your risk appetite because it is at the end of the day an āinvestmentā. A money market fund aims to provide you returns similar to that of a bank however fluctuations should be expected and capital losses are not 100% impossible even though itās highly unlikely.
if you want to find out more - here
I hope this has been helpful for you! If you have any questions, as always, email me or direct message me on Instagram @demiizhuangg.
Information accurate as of 07 September 2024.