You're listening to AC N A podcast. Hey, there. It's Andrea Heng. And this is the Money Talks podcast where we discuss everything there is to know about personal finance. If this is the kind of topic you're interested in and you probably are. That's why you're here. Follow us on Spotify Apple podcasts and youtube music, you'll be notified immediately when a new episode drops and it will make a huge difference to us. If you follow us, let us know your burning questions and we'll
get them answered for you. Now, let's get into some quick headlines that you may have missed this week. Hey, Tiffany. Hey. All right. So what are we starting with? Let's start with a question for you on a scale of 1 to 10. How comfortable are you about declaring all your personal information to your insurance provider? I'm talking here about your income assets and information about your dependents to my insurance provider. You know what? I actually don't think
twice about it. I probably go all out. Same. I do the same as well because I've never considered how much data I'm giving. I always assume that this is crucial information exactly. That's what I think you're about to tell me that that's not the case. Well, that still is the case but that may change because the monetary authority of Singapore is proposing to cut down the information that customers need to give when buying simple insurance policies. Oh, wow, that's huge. Ok.
So what is considered simple though? So for example, we're talking about life insurance policy, standard critical illness riders that are sold with term life insurance and stand alone critical illness policies. Basically almost everything
that I have. I am relieved, but at the same time stupefied because I'm thinking, wow, why didn't I think about the ramifications of giving away my privacy or my data to someone like an insurance agent, like I would have thought that would be absolutely vital, right? Ok. So what sort of information then do I not have to reveal if this policy goes ahead? Yeah, so you don't have to reveal details like your employment status, your assets and your liabilities. But let's talk about stuff
that you must declare still, right? Things like your annual income and your financial objectives. Sure. Yeah. So for anyone who's listening now, if you like the idea that insurance companies shouldn't collect too much of your data, you have until 15th March to give your feedback to the MA S, you know, this is so important especially now in an age where your personal data might just be floating around anywhere and you don't know how safe
these providers, these companies are going to be guarding hacks. Right. Exactly. Exactly. Wow, this is huge. I might actually fill up that feedback form to the MS. Ok. So moving on quickly to another piece of news, can't ignore this one. Is this finally the end of the Lazada retrenchment saga just to prime us off last week, Lazada and the unions representing the retrench workers said they came to an amicable settlement. An NTUC spokesperson told CN A that union members can
be assured that they will now be better off. But here's the caveat. They didn't disclose what the final payout will look like because of a confidentiality agreement. Ok. So I guess we can just take it as surface value that is better off. Yeah, exactly. Here's hoping that the money can still help these workers t through at least a few months before they find a new job.
I personally have a story that I will say for next week when we look at how to manage your finances, if you're retrenched, making that episode was significant for me because it made me wish that I had someone to walk me through this. But then you know what, that's what we are here for to help you. Every Singaporeans first bank account is one that's set up by his or her parents and then we grow up, we strike out on our own because you know, we
want to take charge of our finances. We're adults. Right. So we do what we do best. We go out. Well, these days we go online to shop around for a new bank account that best serves our financial needs and goals. But when there are so many types of savings accounts offered by so many banks, it gets really overwhelming. Well, this episode is here to cut through the noise and we're going to get help from Prashant Agarwal CEO at Money Hero Group. Hey Prashant. Hey
and very nice to meet you.
Wise, likewise. Thanks for coming in. So before we begin, I'm curious, do you have more than one savings account? I do. Ok. Alright, please walk me through this. How many do you have and why I
in fact have three, you
have three savings account and what does each one do
look? I think diversification of accounts is important, right? And I actually personally encourage that quite a bit. When I say three accounts, you're talking about one account for your everyday expenses. You're using one account for your savings. Ok. Right. Which is emergency fund, right? And one account, which is your wealth management account, right? Which is where you do
most of the investments. Now, why do I believe in having more than one account is because firstly, it makes a of sense to have multiple accounts to diverse your risk, right? You know, we know that we are all in Singapore. All bank accounts are protected. By SD I and that limit is 75,000 Singapore dollars for now. But that is going to change to $100,000 starting first of April. Now, I do believe that in Singapore banking system is incredibly safe.
It is probably one of the safest banking systems in the world to be here. Absolutely, absolutely. We all should be very proud of the infrastructure that our regulators have created for us. But having said that diversifying and splitting your risk is still a good idea. The second reason I believe is having a backup for emergencies. Now, as much as our banking systems are very stable and
you know, most of the transactions are done digitally. We have had instances where the digital platforms have gone down, right? And we've had more than one such instances. So you don't want to be in that position where you're stuck, need to make an urgent payment and and you're unable
to do that. So that's another reason for that. Um The third one is personally for me that I'm very passionate about is maximizing my returns now because there are so many options available, there are such great deals available. You can split your money into multiple bank accounts and maximize your returns. So that I feel is a great opportunity not to be missed. And lastly, it just helps
you manage your finances better personally for me. But even for the younger generation that I all always talk to or I mentor is use the 50 30 20 rule which is use 50% not more than 50% of your total salary in expenses. Ok. 30% in investments and put 20% in savings for your emergency fund. It may be a good idea to put them in a separate bank account out of sight, out of mind. No withdrawal
card needed.
Absolutely.
That's a good move. That's a good move. I like that rule 50 30 20. Ok. So as you right, there are so many types of accounts out there, there's a savings account, a current account, multi currency, even fixed deposit accounts. And these tend to be the most common ones. What's the difference between all of these different accounts? I'll
try and explain this in a very simple current account is as the name suggests, it's an account you use for your everyday expense, right? Have enough money in it that you're using your transactions, your daily transactions, your inflows and outflows from it. But be careful. Actually, I would say in all of them that they could be minimum balance requirements, right? So current account is typically used for your current expenses, savings accounts,
as I said previously is your emergency, right? So do not do not touch, right? Do not touch until you absolutely need to. And a fixed deposits as we know are deposits that get locked in. So while fixed deposits are a great way to earn some some income, but you know that it is not liquid asset, right? If you urgently need money, you're going to lose, you're going to have to pay some penalty to break your fixed deposit. So fixed deposits is, is kept quite separately.
And then of course, you know, you have your investment accounts that are used primarily for your stock trading, for your equity trading or your other investment
needs. What's your take on the multi currency accounts? Where do they fall in terms of popularity? I guess in terms of, I would say utility
multi currency accounts, it depends significantly on the individual needs. Now, I can talk about my own example. I have lived in seven countries.
That's the dream.
Now, of course, Singapore is home for me. I'm very proud of being here, but that means that I do have some financial interest in multiple countries. All right. So multi currency account specifically for me is very, very useful because I do need to transfer funds into multiple accounts. And I love to have a consolidated view of all my, all my expenses and all my incomes. Now I do some rental incomes from properties which are overseas and I
would like to keep them in my consolidated account. So that is one use case, there could be other use cases as well, which means sometimes you may want to just park some money in a different foreign exchange account because you see that the rates are really good. Like, for example, a lot of people are, now we're looking at Singapore, Japanese yen or even Singapore Australian dollar Malaysian ring it. Right. So it could be a great way
to make some small trades for yourselves. And the difference between trading and a multi currency account is this is your own asset. It's sitting with you. You're not speculating it on a daily basis.
You're just parking it in there and watching it move.
Absolutely. Absolutely. So those utilities now, I do feel that there was another utility which is gradually going down, which was travel. Yes. And now you have so many more options. You have travel cards, you have multi currency, travel cards which are kind of disrupting the multi currency account. But you know, it depends each to yourself. You know, what, what's your spending habit? What's your usage habit? There is some utility of travel
there. That's a great primer. Thanks very much for that. So I wanted to go back to history a little bit. So back in the day, it's really just a very simple bank account to what it is now where there are so many different ones. I mean, what's changed or what's prompted this emergence of having just so many accounts out there.
Let me say the wealth of Singaporeans. I mean, we are, we are very, I mean, it's a real reason, very wealthy country, right? And at the same time, so banks see us as a very attractive market. Now, I categorize banks in four broad categories. So you've got the big three Singaporean banks. Then you have the large international banks, right,
then you have the challenger banks, right. These are banks which are regional banks who are trying to make a presence in Singapore and actually have seen unprecedented growth, significant growth in the recent times. I can think of a few actually. And then you have the digital banks. That's right. Right. The new new kids on the block. Now, what is interesting is each of these are looking to attract a
different kind of customer, right? Because some of the banks like your large Singaporean banks may want to deepen a relationship with the customer. A digital bank is looking for acquisition, right? A Challenger Bank may want to attract you again from an acquisition perspective, they want to attract you or they have very, very attractive exchange rates between Singapore and their home countries. So
they're all attracting different types of customers. And that fundamentally means that there is something great for all of us, irrespective of how much money we make, what our age is, what our financial status is. There is a great bank account available for all of us. All we need to do is make sure that we are doing our research, we understand what our financial needs are. We're doing our research, we use platforms which simplify the benefits of all these bank accounts for you
match your requirements to it and make a decision. So, so we're in a very good position actually. Yeah,
we spot for choice. We're the ultimate buffet table if I can put it that way. All right. So what are the things that we need to think about when it comes to deciding which type of account to open? I'm thinking here, the difference between function and goal.
It's a really good question. Now, there are some very fundamental things that we should look at when we are looking to search for a bank account. The first thing is what is the interest rate that we're going to earn from it. And especially since the interest rates have gone up, there are some very attractive offers out there. The second thing is to look at fees, right? And not be blindsided because some accounts do attract fee if you go below a minimum balance.
The third one is convenience. Now, convenience can be broken down into two. The number of atms that the bank has now that is becoming increasingly less important for someone like me. And I think for most of us since COVID, because now we do a lot of digital payments. Having said that every once in a while you do need a little bit of cash. So you need to make sure that the bank that you choose has some ATM coverage. The second part of convenience is the digital banking app. How easy it is to
use. It is so crucial.
This exactly because you have to make payments, you have to receive money, you have to check your accounts. So how easy it is for you to use. And last and definitely not the least is the rewards and the gifts or the incentive. I'm
really curious about this angle here. I mean, obviously it's attractive to me as a customer, but what's in it for the bank? I mean, what's the mechanism here? Try and walk me through this psychology of offering these gifts and extra rewards for signing up with them.
I think it's a way for banks to attract new customers. It's as simple as that, right? Gifts are a great way to advertise to market a product and it is a great incentive for a customer to make a decision. Now, I'll tell you in very simplistic form, right? You and I are talking about it as friends and we're thinking about, yeah, we, you know, we should maybe this account, maybe that account,
let's do our research. Now, when you see a gift, it prompts you to make a decision, you stop thinking you actually act
like, oh, I want that. I'll sign up just to get
that correct. So I don't recommend people to simply pick a product because the gift is attractive.
Yeah, see I wouldn't, I wouldn't either. And I'm trying to understand the psychology of the people that do. I mean, is, is that what it really is. It's just trying to draw the customer to that particular product that may actually be inferior perhaps.
And I don't think so. I don't think that's the idea the key objective is to make people act, right? I think rewards help people make the decision faster and act, which means you don't procrastinate your decision, right? So my recommendation always is know what your needs are, right? And let's go through those, let's say in a bank account, what are typically your needs? Your first need is you've got a certain amount of deposit that you want to park somewhere. The second is have your salary.
Yes, I was going to ask about that. Yeah, that
should be credited somewhere. So you need an account to credit your salary. Third is going to be a credit card, you know, you make certain payments. Fourth is bill payments, right? You're making utility payments, telco payments, et cetera. Now these four things are pretty much table take standard for everyone, then comes other products such as home loan, right? Insurance
and investment accounts. Now what banks are doing is it's very easy to understand that banks will share with you or incentivize you if they make money. Sure, of course, it's simple business which means the more money they make from you, the more they're willing to incentivize. Yeah, they're
basically paying for your loyalty.
Absolutely. So mapping what your needs are. Now, there are banks, I can tell you which can give you about 3 3.5% of interest on savings account. Six, for crediting your salary, making bill payments and spending more than $500 on their credit card in one account just simply doing that. But you also need to then see, is there a catch, it may be banks that don't have a very vast branch network or they do not have a very vast ATM network. So you may need
to balance it out. Similarly, if you are someone like me who's in my late forties, I've got a family, I've got kids. So if my needs are more complicated and my needs include pretty much all seven aspects I spoke about right, which adds home loan, my mortgage, my investment account, my insurance needs and hence more traditional banks
actually incentivize very well. If you are a wholesome customer where you're using all the services or bits and pieces of all the services and there are savings accounts that can give you up to 7%.
You can obviously opt not to do that right to stay within the same ecosystem. Is there something to be said about the benefit of going to different banks for different needs? So for example, my salary is credited into one account with one bank and then my investment account is with another bank and so on and so forth. Is there any value to that as
well? 100%? And it all comes down to what incentives the banks are actually giving away to give you a very, very simple example. There are banks which are simply incentivizing you for putting their money in the savings account and they don't expect you to transact. They, they don't expect you to put your salary credits on it, but simply incentivize you on the quantum of money that you're actually putting in right now. That is a great account for me as a savings account. I was just thinking that
I don't want to touch that money. It's my emergency fund. I don't want to transact. Why wouldn't I put it in a bank where I can earn a little bit of interest rather than in the consolidated bank, which is not incentivizing, correct. So this is where spending a little bit of time on these platforms, learning about the options can actually save you a lot of money and don't forget this is 100% risk
free. Yeah, and it's not just saving you money, it's making you money in some instance. Indeed. Yeah. Ok. So you've talked about the fees and charges that need to be aware of. Can we expand a little bit more on that? What are the kinds of charges that we need to look out for when we're considering and shopping around for a bank account?
The most fundamental and basic one is account fee. Now most banks you would see will waive off the account fee unless your minimum balances drop under a certain level. So you need to be very well aware of that. Right. So that is most basic, the other fees that comes in and I'll move more into the wealth accounts, priority banking accounts. There is a number of fees right. There will be an account management fee. There could be fees on buying and selling of securities, there'll be fee
on foreign exchange transactions, um and conversions. Now, one of the things that I've often seen is that when people go for investment accounts, they do don't necessarily understand that fee structure well enough because it comes in that link that comes along with your account, the
unsubscribe link it all the way at the bottom, it's buried and then you have to find what language it's written in.
Right? Indeed, indeed. And that's why again, using platforms that are supposed to help you with this, the platforms that are helping you simplify the understanding of that fee. But one of the simple things I'd say is call up the bank and ask them very clearly. And and they will tell you what are all the fees that I'm paying and compare those
fees as well. Now, less crucial in a savings account because in savings accounts are very simple, very standard as well, very standard, very simple, but definitely very crucial when you go into wealth accounts or investment
accounts. Ok. That's a very good reminder actually, for us to really ask the right questions and not just blindly sign up on the dotted line. So a big reason a lot of my peers tend to choose a particular bank is to open an account that has nothing to do with finances. And we touched a little bit on this earlier and that's convenience. My question is, how big of a factor is this when it comes to choosing
an account? How important is this consideration? You know, having the range of services, the online access, et cetera?
I think it's very critical, right? I think it's very critical in today's world because we do need to remind ourselves that there is a functional need we need to fulfill with our banks, right? There is an everyday need that everyday need of making payments, that everyday need of receiving payments of splitting bills with friends of needing cash to make emergency payments. I think convenience plays a very, very crucial part where it comes down to again is understanding
that how are you splitting between convenience and return? Exactly right. And that's where I would go back to splitting my money into multiple accounts to say there are accounts which are paying me a higher return, but I have to sacrifice convenience. I'm going to put in my emergency funds there. I'm not going to put in my daily usage funds. But if for my current account usage for my daily usage convenience does play a
critical part. So one of the things that I would do because I look at my bank accounts on an annual basis. Right. I would review and I will see whether I have the right accounts. Am I making the best decisions? And I would open the account? I would try out the online banking. Right. And the convenience factor, especially around how easy it is for me to transfer funds in and out of the banks, how intuitive it
is for me. And I have had instances where I didn't like the online banking and I actually canceled my account and I and I called up the bank and I told them I said, look, the only reason I'm canceling is I actually don't like the interface. I don't find it useful for me and hence, I don't think it serves my purpose.
Wow. So you have actually canceled accounts because you just did not like the way it worked. I think that's a valid reason to leave the bank in that respect. And along the same vein then is the reputation of the bank equally important here because I'm thinking about the emergence of digital banks, right? With the emergence of
digital options. Now, I'm thinking about the reputation of a bank and how credible and crucial it is when making that decision because I'm not just putting in $50 100 dollars, $1000 in there. I'm talking about copious amounts of money. I
think in that aspect we are quite fortunate that the MA S as a regulator is very, very stringent, right? And it is one of the best regulators across the world. So I think two things there, one, the very fact that these financial institutions are licensed by MA S gives us a lot of credibility. So personally, for me, I don't feel that my money is at risk. Right. Secondly, the ST IC, as I mentioned before, that all our money
is guaranteed up to $75,000 or, or $100,000. Uh from first of April, I think that is a reasonable amount of insurance. Now, while we have seen big banks collapse in, in the US, we saw in Europe in Switzerland recently, while I don't expect any of that such thing to happen in Singapore or actually in most parts of Asia where banking systems are pretty advanced. But I think it gives me a lot of credibility that MA s is very stringent. It's very stringent in giving
digital banking licenses. It's very stringent in the ongoing compliance and regulation that everybody has to deal with and abide by and that gives us a lot of confidence. So I think we can be not careless, but absolutely go for the features and I have a lot of trust in the system.
You know, you're right, you're right in saying that by virtue of the fact that it's very stringent rules and regulations to manage any risk to customers. It really makes us spoiled for choice. Like we have the we have the opportunity to for the lack of a better description play around and experiment with different types of accounts including
digital banks. So my final question then to you is while we're on the digital vein here, is there a need then for digital wallets and investment accounts and platforms like stash or sci or and da when banks these days have offered the very same functions, do we need one?
Then I would always say that we always need more products, right? Why not? Why not? Right. Because as consumers, we should have more choices, the more choices we have the better decisions we can make. So I welcome competition. I think competition is great. It is healthy. Let's not forget that a lot of traditional banks have now improve their platforms because of the challenges, right?
That's the way to look at
it. Yeah, I mean, for years they were dominant. I mean, I don't know, refresh my memory, but biggest breakthrough in technology in banking before the digital banks was what? ATM
Exactly. And then when digital banking came on our phones like wow, I can do this on my phone now. Correct? And then all these other options came up. All these other functions were introduced by competitors, as you said, and now they are giving the big banks a run for their money.
And I think as a consumer, I love it as a business owner. I love it because I want that innovation to continue this will push the innovators to innovate even further, which will push the traditional banks to follow suit and maybe even try to beat them in some aspect. So why
not? But don't you think though that it will lead to option paralysis for consumers?
Well, that's where we come in. That's where businesses like ours really into picture because our job is to make financial decisions easier for people to see through all the complexity and help people make decisions based on their specific needs. So I think as long as platforms like these exist that can help people make decisions, the choices are good. All right.
And that's exactly what you've come on the Money Talks podcast to do and you've done a very good job of it. I might add Prashant, we're so glad to be able to have you break this down for us. Thank you so much for coming on the Money Talks podcast. It's been
my pleasure. Thank
you. I hope you had fun. Thanks a big thank you to you too. Listener. If you liked this episode, you know, show us, leave us a comment or a dating on wherever you get your podcasts. Well, if you want to find us in case you don't know, we're streaming on Apple podcasts and Spotify as well as youtube for Money Talks. The team is Joanne Chan Tiffany Ang Christina Roberts win. I'm Andrea Heng.