Parking my Savings with Cash Smart

 

Recently, many of us have experienced various high yielding interest bank accounts (the likes of DBS Multiplier, UOB One, OCBC 360 and even CIMB FastSaver) butchering cutting interest rates, even Singapore Savings Bonds rates have plummeted too.

There's many products out there using higher interest to attract crowds saying that no longer accepting new sign-ups or slashing interest rates thereafter.

While it is expected considering the low to negative interest rate environment, it is quite frustrating.

In fact, I stopped updating the ever falling OCBC 360 interest rates because nowadays the interest from it is so little that I just leave the cash inside for short term needs and shift the rest elsewhere.

With many products, I thought it would be hard to track on top of my own finances (especially I have multiple brokerage accounts).

So after much thought, I decided to partition my funds in a simple way while earning a reasonable amount of interest.

Here comes Endowus, offering a cash management solution, on top of managing some of funds such as CPF investment and savings I set aside for my parents.

The product they are having is called Cash Smart, which you can find more details about it here.

It works for both Cash and SRS funds, especially for those with higher balances but are a risk adverse and do not wish to invest them. 

I also like that they have no lock-up periods or early termination fees and a 100% online sign-up process. What's more, they rebate trailer fees, unlike the fund industry, to clients, which means they are aligned with us.

Cash Smart has 3 portfolios, namely, Core, Enhanced and Ultra.

 

The Core Portfolio focuses on safety by blending a cash fund that consists of institutional bank fixed deposits and a money market fund which consists of high grade very short duration government and company debt which are almost cash-equivalent due to their liquidity. As the focus is on safety, the likelihood of negative performance is close to zero.

The Enhanced Portfolio tries to get a higher yield by taking slightly more risk, using a short duration bond fund instead of a cash fund, which consists of high grade government and company debt that are on average 2 years or less to maturity. There would be extremely rare periods of negative performance so any funds that requires immediate needs may not be a good idea.

The Ultra Portfolio further attempts to maximise yield by increasing exposure to a higher yielding short duration bond fund (notice it is no longer 50:50, but 70:30). Naturally, this results in an slightly increased amount of price fluctuations compared to the Enhanced Portfolio so do take note. One thing to note is that the Ultra Portfolio has to be manually setup via the Fund Smart option, more details can be found here.

It is also good to know that when you withdraw, it takes about 6 business days which is slightly more than a week.

So in light of all these information (and perhaps more if you read the website), how do I allocate my cash?

Here is my thought process:

We look at how soon we might need them and split them up accordingly.

For short term requirements such as daily expenses, funds will remain in my bank account for immediate access.

For cash reserves such as emergency funds of 3-6 months, I leave about 1 month's worth in my bank account under OCBC 360 Savings Goals and shift the rest to the Core Portfolio in Cash Smart. This allows me to have some buffer in case of an emergency and start to withdraw from Cash Smart. The reason for focusing only on the Core is that, even the likelihood is rare, I do not want to be hit by a low probability event for something more critical like my emergency funds.

For savings 3 months or less, I would also use the Core portfolio too.

For the remainder which are more than 6 months and up to 3 years, I would park them in the Enhanced Portfolio (just to let you guys know that when I was using Cash Smart, there wasn't the Ultra yet). This allows me to squeeze a little more money without taking too much volatility, this is especially important when you are saving for your large expenses in the near term where a significant drawdown is definitely not welcome.

Did I also mention that Endowus uses a Goal-based feature too? Just as I love the OCBC 360 Savings Goals feature and Endowus allows us to allocate according to what we need.

Another thing going for it is that you can enable recurring savings or disable it any time. You can even do one time savings or withdrawals too, say you managed to set aside an extra $100 this month, you can squirrel it away to one of your goals. This is a really neat flexible feature I enjoy using compared to many Regular Savings Plan

You could set a goal for your  upcoming wedding, house renovations or even downpayment. Or even something as small as saving up for a Playstation 5.

How to Get Started

At the main page, click on Create an Account:

It will bring you to the login page and proceed to create your account. Endowus now links with MyInfo from Singpass to help you to smooth the process.

Follow the instructions until they ask you for your Funding Source which is "Cash".

When you reached your first investment goal. As we are looking to save, for ease of simplicity, Pick Cash Smart for the Core or Enhanced portfolio. If you like to pick the Ultra option, you can follow their guide here which uses the Fund Smart Option.

Endowus will run through more fact finding questions and you will arrive at the initial investment amount and the selection screen for Core or Enhanced.

Click on Continue.

For this instance, I choose the Core Portfolio and it will bring you to this screen with all the information about the funds.

If everything is fine, proceed to Confirm by SMS and enter the OTP you are given.

You can proceed to fund your account via iBanking, funding instructions are here.

 

Creating More Goals

You can proceed to create more goals by going to your Dashboard and Clicking Add Goals:

 

You can select Cash Smart for Core or Enhanced portfolios or Fund Smart for the Ultra Portfolio option. For this example, I will be using Cash Smart.

Choose Cash as the Funding Source. Note that you can actually park your SRS funds to gain more interest too, but I would think given the long duration, investing it should be a better idea, unless you are using SRS as an alternative to CPF and contributing it for tax savings, while acting as an emergency buffer.

You will get to the same screen as above to select Core or Enhanced.

Give your goal a name to identify with what you wish to do.

Review the funds and information and proceed to Confirm by SMS. Proceed to fund your goal by using the funding instructions here.

 

Setting Up or Managing Recurring Savings

A reminder that you can set a recurring savings option or end the recurring savings for convenience.

Go to your Dashboard and select Invest | Redeem.

In the Invest tab, choose the goal you wish to set recurring and click Invest.

They will ask you to select the funding source (I selected Cash).

Input how much you wish to save monthly and the day of the month (I typically set to the day after Pay Day for simplicity).

It is also good to know that, this method can be used for a One-Time saving amount by using the option One-Time.

You will see a Projection screen, click Continue.

Review the information and click Confirm by SMS.

And you're done. Endowus has actually put a very nice guide about setting the recurring funding source for both the Website and the iBanking sections here.

If you wish to edit your recurring savings, you can go to the Manage Recurring Tab in the Invest | Redeem section.

Select the Goal you want and select Manage. From there you can stop or edit your recurring savings as you desire.

Conclusion

There you have it.

For those of you are not really into investments or perhaps considering while thinking whether or not to dip your toes in. Or maybe you just wish to park your money with Endowus Cash Smart.

As a sweetener, Endowus is offering free $100 worth of LionGlobal All Seasons Fund (Growth) units when you open an account with them and put $10,000 upfront with them, the terms and conditions are here.

You can start here by signing up via this link. 

Note that if you sign up using my link, I will get a small referral fee. There is no extra charge to you, in fact, you will get $10,000 advised fee free for 6 months (about $20 savings), it is not much but hey, $20 saved is $20 earned :)
This is not a sponsored post. 

 

Related Posts:

• My Experience investing my CPF OA using Endowus
• Setting Aside some Funds as a Long Term Savings Goal for my Parents' Retirement