Any Compounding Interest Saving Account ?

[camholicx]

Is Citibank MaxiGain a compounding interest saving account?

 

[XtraderX]

I'm confused but isn't all savings account compounding?

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[camholicx]

Sorry I am not clear
Compound but have unlimited or high cap

Example Uob one is compounding but effective (good)interest end at 50k

 

[BBCWatcher]

Sorry I am not clear
Compound but have unlimited or high cap

No, that's an integral part of the design for these "rewards" accounts.

 

[JuniorLion]

Is Citibank MaxiGain a compounding interest saving account?

The first $150k is capped at: 1.2% + ( 0.8 x 1 month SIBOR rate)
Subsequent amount above $150k is capped at 1.2%

For example, if you have $200k in Citibank Maxigain, you will be getting:
(0.02*150k) + (0.012*50k) per annum. Assumption is that 1 month SIBOR is at 1%.

 

[Perisher]

If you are parking more than 150k in savings account, maybe it’s time you explore investing.
There are bonds for the more than 150k that are relatively safer than stocks.

 

[a4973]

If you are parking more than 150k in savings account, maybe it’s time you explore investing.
There are bonds for the more than 150k that are relatively safer than stocks.

Please sic some good suggestions, thanks

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[BBCWatcher]

How about Singapore Savings Bonds (SSBs)? Quite simple, safe (safest Singapore dollar savings), better interest than a fixed deposit, and almost as liquid as an ordinary bank account.

 

[JuniorLion]

6 years endowment plan from etiqa?

 

[Perisher]

How about Singapore Savings Bonds (SSBs)? Quite simple, safe (safest Singapore dollar savings), better interest than a fixed deposit, and almost as liquid as an ordinary bank account.

Erm, Maxigain account is comparably better, more liquid, higher interest after a year. But I can see both being useful. At least for the risk-adverse.

 

[BBCWatcher]

Erm, Maxigain account is comparably better, more liquid, higher interest after a year. But I can see both being useful. At least for the risk-adverse.

Citi’s Maxigain has some deficiencies compared to SSBs:

1. You have to play some games to get the 2% interest (e.g. deposit at least another dollar every month).

2. Withdraw anything and the 2% interest, once attained, is reset down. It takes another 6 months of game playing to claw back.

3. The 2% interest is not guaranteed. (Specifically, if/when SIBOR falls, so does Maxigain interest). SSB interest rates are locked in for 10 years, guaranteed. (If market interest rates rise considerably you’re then free to cash out a SSB and repurchase, so you have some ability to play the upside while fully protecting the downside.)

4. Deposit insurance only covers your first $50,000 total at Citi.

5. A 2% interest rate isn’t actually as high as SSB interest if the latter is held to term (or near term). So the SSB starts off higher and finishes higher.

6. The minimum Maxigain is $10,000, and you have to maintain at least $15,000 total at Citi to avoid monthly fees. SSBs are minimum $500.

 

[Perisher]

Citi’s Maxigain has some deficiencies compared to SSBs:

1. You have to play some games to get the 2% interest (e.g. deposit at least another dollar every month).

2. Withdraw anything and the 2% interest, once attained, is reset down. It takes another 6 months of game playing to claw back.

3. The 2% interest is not guaranteed. (Specifically, if/when SIBOR falls, so does Maxigain interest). SSB interest rates are locked in for 10 years, guaranteed. (If market interest rates rise considerably you’re then free to cash out a SSB and repurchase, so you have some ability to play the upside while fully protecting the downside.)

4. Deposit insurance only covers your first $50,000 total at Citi.

5. A 2% interest rate isn’t actually as high as SSB interest if the latter is held to term (or near term). So the SSB starts off higher and finishes higher.

6. The minimum Maxigain is $10,000, and you have to maintain at least $15,000 total at Citi to avoid monthly fees. SSBs are minimum $500.

Number 1 is wrong, u just need to maintain actually. So there isn’t any game to play.

As for 2, ssb reset to 0 once you withdraw since you can’t withdraw partially? And even when reset, it still goes up faster than if you reset with SSB, no?

3, at current rate, it’s on quite even footing or slightly better than SSB after a year, you start off at 0.8% currently. I agree it isn’t guaranteed but interest rate even at current status is higher

4, that’s true lor, but SSB max out at 100k, so ya. If worried about bank going bankrupt, just put 50k

5, the start off higher is a tad misleading, it only start off higher for a few month, after which maxi totally win it for a few years assuming sibor stays or goes up. Then loses nearer to 6th year... but you get a higher return earlier n monthly.
So overall it’s near the same since SSB averages about 2%+

6, that’s true, So $15k parking is needed. One thing it really lose to SSB here.

 

[BBCWatcher]

Number 1 is wrong, u just need to maintain actually. So there isn’t any game to play.

OK.

As for 2, ssb reset to 0 once you withdraw since you can’t withdraw partially?

No, you can withdraw partially. It just has to be in a $500 multiple, that’s all.

3, at current rate, it’s on quite even footing or slightly better than SSB after a year, you start off at 0.8% currently. I agree it isn’t guaranteed but interest rate even at current status is higher

But if the market interest rate (the 1 month SIBOR) falls, even a little, then you’re worse off than a SSB. For example, if the 1 month SIBOR falls such that base MaxGain interest falls to 0.5% (from 0.8%), your SSB (December, 2017) starts to pull ahead on the first day of Year 3.

4, that’s true lor, but SSB max out at 100k, so ya. If worried about bank going bankrupt, just put 50k

Yes, but that’s the point: you can have twice as much protected in SSBs, and there’s no insurance subtraction for other funds you have at that same bank.

 

[revhappy]

With Singapore planning to raise taxes and its demographics timebomb, I see SGD weakening.
If US cut taxes and it's markets are running up in anticipation, the opposite should be true for Singapore.

I would take some exposure in foreign currencies, emerging market currencies too selectively.

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[Perisher]

OK.


No, you can withdraw partially. It just has to be in a $500 multiple, that’s all.


But if the market interest rate (the 1 month SIBOR) falls, even a little, then you’re worse off than a SSB. For example, if the 1 month SIBOR falls such that base MaxGain interest falls to 0.5% (from 0.8%), your SSB (December, 2017) starts to pull ahead on the first day of Year 3.


Yes, but that’s the point: you can have twice as much protected in SSBs, and there’s no insurance subtraction for other funds you have at that same bank.

both has its merit... see if one prefers which after understanding the different nuances.

 

[Mecisteus]

Maxigain is like a call option on the SIBOR. Downside is limited to the base interest rate but upside is very good.

If SIBOR rises, the interest rate for maxigain will rise quickly. Other Banks and SSB will be slower to adjust higher.

 

[heng_ah]

OK.


No, you can withdraw partially. It just has to be in a $500 multiple, that’s all.


But if the market interest rate (the 1 month SIBOR) falls, even a little, then you’re worse off than a SSB. For example, if the 1 month SIBOR falls such that base MaxGain interest falls to 0.5% (from 0.8%), your SSB (December, 2017) starts to pull ahead on the first day of Year 3.


Yes, but that’s the point: you can have twice as much protected in SSBs, and there’s no insurance subtraction for other funds you have at that same bank.

SSB has some transactions fee, no?
Maxigain does not.

 

[Purplestars]

Maxigain is like a call option on the SIBOR. Downside is limited to the base interest rate but upside is very good.

If SIBOR rises, the interest rate for maxigain will rise quickly. Other Banks and SSB will be slower to adjust higher.

This is nowhere near true. Sibor doesn't have to go up for you to make money with Maxigain. It just has to maintain. Even if it falls, it can easily still be a better deal than buying SSBs and A35.

A35 has very low return after factoring in fees and commissions. SSBs are just unwieldy and unsuited for a young person who wants to rebalance his portfolio. How do you sell your SSBs to rebalance? Everytime you have to sell to rebalance, you reset your interest.

 

[revhappy]

I'm confused but isn't all savings account compounding?

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Yes, the only difference is how the interest rate is marketed. For example, if an account is paying out interest of 2%PA every month. It can be marketed as either 2% annual interest compounded every month or 2.xx% simple interest, because at the end of the year, the simple interest will be higher than 2. So if some bank tells you 2% simple interest, that means the compound interest is much lower.